10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

☐       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to____________

NORTHWEST NATURAL HOLDING COMPANY

NORTHWEST NATURAL GAS COMPANY

(Exact name of registrant as specified in its charter)

(Exact name of registrant as specified in its charter)

Commission file number

1-38681

Commission file number

1-15973

Oregon

82-4710680

Oregon

93-0256722

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

250 SW Taylor Street

250 SW Taylor Street

Portland

Oregon

97204

Portland

Oregon

97204

(Address of principal executive offices)

(Zip Code)

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number:

(503)

226-4211

Registrant’s telephone number:

(503)

226-4211

Securities registered pursuant to Section 12(b) of the Act:

Registrant

Title of each class

Trading Symbol

Name of each exchange on which registered

NORTHWEST NATURAL HOLDING COMPANY

Common Stock

NWN

New York Stock Exchange

NORTHWEST NATURAL GAS COMPANY

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

NORTHWEST NATURAL HOLDING COMPANY

Yes

☒

No

☐

NORTHWEST NATURAL GAS COMPANY

Yes

☒

No

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

NORTHWEST NATURAL HOLDING COMPANY

Yes

☒

No

☐

NORTHWEST NATURAL GAS COMPANY

Yes

☒

No

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

NORTHWEST NATURAL HOLDING COMPANY

NORTHWEST NATURAL GAS COMPANY

Large Accelerated Filer

☒

Large Accelerated Filer

☐

Accelerated Filer

☐

Accelerated Filer

☐

Non-accelerated Filer

☐

Non-accelerated Filer

☒

Smaller Reporting Company

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

NORTHWEST NATURAL HOLDING COMPANY

Yes

☐

No

☒

NORTHWEST NATURAL GAS COMPANY

Yes

☐

No

☒

At July 23, 2021, 30,672,722 shares of Northwest Natural Holding Company's Common Stock (the only class of Common Stock) were outstanding. All shares of Northwest Natural Gas Company's Common Stock (the only class of Common Stock) outstanding were held by Northwest Natural Holding Company.

This combined Form 10-Q is separately filed by Northwest Natural Holding Company and Northwest Natural Gas Company. Information contained in this document relating to Northwest Natural Gas Company is filed by Northwest Natural Holding Company and separately by Northwest Natural Gas Company. Northwest Natural Gas Company makes no representation as to information relating to Northwest Natural Holding Company or its subsidiaries, except as it may relate to Northwest Natural Gas Company and its subsidiaries.

NORTHWEST NATURAL GAS COMPANY

NORTHWEST NATURAL HOLDING COMPANY

For the Quarterly Period Ended June 30, 2021

TABLE OF CONTENTS

PART 1.	FINANCIAL INFORMATION	Page
	Forward-Looking Statements	4
Item 1.	Unaudited Financial Statements:
	Consolidated Statements of Comprehensive Income of Northwest Natural Holding Company for the three and six months ended June 30, 2021 and 2020	6
	Consolidated Balance Sheets of Northwest Natural Holding Company at June 30, 2021 and 2020 and December 31, 2020	7
	Consolidated Statements of Shareholders' Equity of Northwest Natural Holding Company for the three and six months ended June 30, 2021 and 2020	9
	Consolidated Statements of Cash Flows of Northwest Natural Holding Company for the six months ended June 30, 2021 and 2020	10
	Consolidated Statements of Comprehensive Income of Northwest Natural Gas Company for the three and six months ended June 30, 2021 and 2020	11
	Consolidated Balance Sheets of Northwest Natural Gas Company at June 30, 2021 and 2020 and December 31, 2020	12
	Consolidated Statements of Shareholder's Equity of Northwest Natural Gas Company for the three and six months ended June 30, 2021 and 2020	14
	Consolidated Statements of Cash Flows of Northwest Natural Gas Company for the six months ended June 30, 2021 and 2020	15
	Notes to Unaudited Consolidated Financial Statements	16
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	41
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	64
Item 4.	Controls and Procedures	64
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	65
Item 1A.	Risk Factors	65
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 6.	Exhibits	65
	Signature	67

PART I. FINANCIAL INFORMATION

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which are subject to the safe harbors created by such Act. Forward-looking statements can be identified by words such as anticipates, assumes, intends, plans, seeks, believes, estimates, expects, and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements regarding the following:

•plans, projections and predictions;

•objectives, goals, visions or strategies;

•assumptions, generalizations and estimates;

•ongoing continuation of past practices or patterns;

•future events or performance;

•trends;

•risks;

•uncertainties;

•timing and cyclicality;

•economic conditions;

•earnings and dividends;

•capital expenditures and allocation;

•capital markets or access to capital;

•capital or organizational structure;

•matters related to climate change and our role in a low-carbon, renewable-energy future;

•renewable natural gas and hydrogen;

•our strategy to reduce greenhouse gas emissions;

•the policies and priorities of the current presidential administration;

•growth;

•customer rates;

•pandemic and related illness or quarantine;

•labor relations and workforce succession;

•commodity costs;

•desirability and cost competitiveness of natural gas;

•gas reserves;

•operational performance and costs;

•energy policy, infrastructure and preferences;

•public policy approach and involvement;

•efficacy of derivatives and hedges;

•liquidity, financial positions, and planned securities issuances;

•valuations;

•project and program development, expansion, or investment;

•business development efforts, including acquisitions and integration thereof;

•implementation and execution of our water strategy;

•pipeline capacity, demand, location, and reliability;

•adequacy of property rights and operations center development;

•technology implementation and cybersecurity practices;

•competition;

•procurement and development of gas (including renewable natural gas) and water supplies;

•estimated expenditures, supply chain and third party availability and impairment;

•costs of compliance;

•customers bypassing our infrastructure;

•credit exposures;

•uncollectible account amounts;

•rate or regulatory outcomes, recovery or refunds, and the availability of public utility commissions to take action;

•impacts or changes of executive orders, laws, rules and regulations;

•tax liabilities or refunds, including effects of tax legislation;

•levels and pricing of gas storage contracts and gas storage markets;

•outcomes, timing and effects of potential claims, litigation, regulatory actions, and other administrative matters;

•projected obligations, expectations and treatment with respect to, and the impact of new legislation on, retirement plans;

•accuracy of projections related to, and our ability to mitigate the effects of, the novel coronavirus (COVID-19), variants thereof, such as Delta variant, and the economic conditions resulting therefrom, the timing of our return to normal business practices and the recognition of late and disconnection fee revenue, as well as the timing, extent and impact of COVID-19 vaccine campaigns on our workforce and customers;

•disruptions caused by social unrest, including related protests or disturbances;

•availability, adequacy, and shift in mix, of gas and water supplies;

•effects of new or anticipated changes in critical accounting policies or estimates;

3

•approval and adequacy of regulatory deferrals;

•effects and efficacy of regulatory mechanisms; and

•environmental, regulatory, litigation and insurance costs and recoveries, and timing thereof.

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We therefore caution you against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements are discussed in NW Holdings' and NW Natural's 2020 Annual Report on Form 10-K, Part I, Item 1A “Risk Factors” and Part II, Item 7 and Item 7A, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosures about Market Risk,” and in Part I, Items 2 and 3, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosures About Market Risk”, respectively, of Part II of this report.

Any forward-looking statement made in this report speaks only as of the date on which it is made. Factors or events that could cause actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

4

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

NORTHWEST NATURAL HOLDING COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands, except per share data	2021		2020		2021		2020
Operating revenues	$	148,917	$	134,971	$	464,863	$	420,122
Operating expenses:
Cost of gas	41,193		41,210		153,403		149,748
Operations and maintenance	50,047		43,983		102,238		92,904
Environmental remediation	1,509		1,622		5,286		5,627
General taxes	8,914		8,373		20,283		18,268
Revenue taxes	5,671		4,454		18,335		16,197
Depreciation and amortization	28,144		25,836		56,241		50,511
Other operating expenses	815		551		1,747		1,479
Total operating expenses	136,293		126,029		357,533		334,734
Income from operations	12,624		8,942		107,330		85,388
Other income (expense), net	(2,597)		(3,040)		(6,139)		(6,615)
Interest expense, net	11,028		12,706		22,154		23,174
Income (loss) before income taxes	(1,001)		(6,804)		79,037		55,599
Income tax expense (benefit)	(277)		(1,672)		20,244		12,455
Net income (loss) from continuing operations	(724)		(5,132)		58,793		43,144
Income (loss) from discontinued operations, net of tax	—		280		—		(498)
Net income (loss)	(724)		(4,852)		58,793		42,646
Other comprehensive income:
Amortization of non-qualified employee benefit plan liability, net of taxes of $80 and $58 for the three months ended and $160 and $116 for the six months ended June 30, 2021 and 2020, respectively	221		160		442		320
Comprehensive income (loss)	$	(503)	$	(4,692)	$	59,235	$	42,966
Average common shares outstanding:
Basic	30,664		30,537		30,639		30,514
Diluted	30,664		30,537		30,671		30,559
Earnings (loss) from continuing operations per share of common stock:
Basic	$	(0.02)	$	(0.17)	$	1.92	$	1.41
Diluted	(0.02)		(0.17)		1.92		1.41
Earnings (loss) from discontinued operations per share of common stock:
Basic	$	—	$	0.01	$	—	$	(0.01)
Diluted	—		0.01		—		(0.01)
Earnings (loss) per share of common stock:
Basic	$	(0.02)	$	(0.16)	$	1.92	$	1.40
Diluted	(0.02)		(0.16)		1.92		1.40

See Notes to Unaudited Consolidated Financial Statements

5

NORTHWEST NATURAL HOLDING COMPANY

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	June 30,		June 30,		December 31,
In thousands	2021		2020		2020
Assets:
Current assets:
Cash and cash equivalents	$	20,084	$	137,057	$	30,168
Accounts receivable	60,713		35,196		88,083
Accrued unbilled revenue	13,592		15,393		57,949
Allowance for uncollectible accounts	(3,283)		(1,592)		(3,219)
Regulatory assets	60,672		30,021		31,745
Derivative instruments	46,168		5,996		13,678
Inventories	39,024		44,009		42,691
Gas reserves	8,444		13,646		11,409
Income taxes receivable	6,000		—		6,000
Other current assets	22,427		20,318		44,741
Discontinued operations - current assets (Note 17)	—		16,392		—
Total current assets	273,841		316,436		323,245
Non-current assets:
Property, plant, and equipment	3,849,792		3,608,902		3,734,039
Less: Accumulated depreciation	1,093,863		1,062,299		1,079,269
Total property, plant, and equipment, net	2,755,929		2,546,603		2,654,770
Gas reserves	29,852		41,459		34,484
Regulatory assets	330,710		324,358		348,927
Derivative instruments	7,912		3,958		6,135
Other investments	47,725		62,130		49,259
Operating lease right of use asset, net	76,294		78,566		77,446
Assets under sales-type leases	141,408		146,208		143,759
Goodwill	69,313		70,183		69,225
Other non-current assets	50,516		51,446		49,129
Total non-current assets	3,509,659		3,324,911		3,433,134
Total assets	$	3,783,500	$	3,641,347	$	3,756,379

See Notes to Unaudited Consolidated Financial Statements

6

NORTHWEST NATURAL HOLDING COMPANY

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	June 30,		June 30,		December 31,
In thousands, including share information	2021		2020		2020
Liabilities and equity:
Current liabilities:
Short-term debt	$	240,000	$	233,000	$	304,525
Current maturities of long-term debt	60,274		35,209		95,344
Accounts payable	97,854		79,903		97,966
Taxes accrued	15,143		18,535		13,812
Interest accrued	7,425		7,234		7,441
Regulatory liabilities	103,210		41,126		50,362
Derivative instruments	3,393		3,067		4,198
Operating lease liabilities	1,228		931		1,105
Other current liabilities	43,946		54,323		52,330
Discontinued operations - current liabilities (Note 17)	—		13,574		—
Total current liabilities	572,473		486,902		627,083
Long-term debt	915,501		918,887		860,081
Deferred credits and other non-current liabilities:
Deferred tax liabilities	325,600		297,995		319,292
Regulatory liabilities	645,046		632,400		639,663
Pension and other postretirement benefit liabilities	203,854		218,493		217,287
Derivative instruments	453		1,658		2,852
Operating lease liabilities	80,088		80,159		80,621
Other non-current liabilities	117,659		120,852		120,767
Total deferred credits and other non-current liabilities	1,372,700		1,351,557		1,380,482
Commitments and contingencies (Note 16)
Equity:
Common stock - no par value; authorized 100,000 shares; issued and outstanding 30,672, 30,546, and 30,589 at June 30, 2021 and 2020, and December 31, 2020, respectively	569,785		562,766		565,112
Retained earnings	365,501		331,648		336,523
Accumulated other comprehensive loss	(12,460)		(10,413)		(12,902)
Total equity	922,826		884,001		888,733
Total liabilities and equity	$	3,783,500	$	3,641,347	$	3,756,379

See Notes to Unaudited Consolidated Financial Statements

7

NORTHWEST NATURAL HOLDING COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

In thousands, except per share amounts	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Total shareholders' equity, beginning balances	$	936,324	$	901,741	$	888,733	$	865,999
Common stock:
Beginning balances	568,066		561,264		565,112		558,282
Stock-based compensation	416		254		2,446		3,626
Shares issued pursuant to equity-based plans, net of shares withheld for taxes	1,303		1,248		2,227		858
Ending balances	569,785		562,766		569,785		562,766
Retained earnings:
Beginning balances	380,939		351,050		336,523		318,450
Net income (loss)	(724)		(4,852)		58,793		42,646
Dividends on common stock	(14,714)		(14,550)		(29,815)		(29,448)
Ending balances	365,501		331,648		365,501		331,648
Accumulated other comprehensive income (loss):
Beginning balances	(12,681)		(10,573)		(12,902)		(10,733)
Other comprehensive income	221		160		442		320
Ending balances	(12,460)		(10,413)		(12,460)		(10,413)
Total shareholders' equity, ending balances	$	922,826	$	884,001	$	922,826	$	884,001
Dividends per share of common stock	$	0.4800	$	0.4775	$	0.9600	$	0.9550

See Notes to Unaudited Consolidated Financial Statements

8

NORTHWEST NATURAL HOLDING COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended June 30,
In thousands	2021		2020
Operating activities:
Net income	$	58,793	$	42,646
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization	56,241		50,511
Regulatory amortization of gas reserves	7,597		8,567
Deferred income taxes	1,048		(2,004)
Qualified defined benefit pension plan expense	7,874		8,892
Contributions to qualified defined benefit pension plans	(9,590)		(8,470)
Deferred environmental expenditures, net	(9,625)		(9,897)
Amortization of environmental remediation	5,286		5,627
Other	1,610		(5,931)
Changes in assets and liabilities:
Receivables, net	73,133		73,954
Inventories	3,666		(52)
Income and other taxes	21,467		20,966
Accounts payable	(17,239)		(18,919)
Deferred gas costs	(26,962)		115
Asset optimization revenue sharing	36,872		(11,657)
Decoupling mechanism	(6,860)		4,281
Other, net	(9,030)		3,967
Discontinued operations	—		(547)
Cash provided by operating activities	194,281		162,049
Investing activities:
Capital expenditures	(130,108)		(122,282)
Acquisitions, net of cash acquired	(55)		(37,940)
Leasehold improvement expenditures	(163)		(7,519)
Proceeds from the sale of assets	2,234		7,905
Other	209		263
Discontinued operations	—		(846)
Cash used in investing activities	(127,883)		(160,419)
Financing activities:
Proceeds from common stock issued	—		68
Long-term debt issued	55,000		150,000
Long-term debt retired	(35,000)		(75,000)
Proceeds from term loan due within one year	100,000		150,000
Repayments of commercial paper, maturities greater than 90 days	(195,025)		—
Change in other short-term debt, net	30,500		(66,100)
Cash dividend payments on common stock	(27,842)		(27,679)
Other	(1,175)		(3,007)
Cash (used in) provided by financing activities	(73,542)		128,282
Increase (decrease) in cash, cash equivalents and restricted cash	(7,144)		129,912
Cash, cash equivalents and restricted cash, beginning of period	35,454		12,636
Cash, cash equivalents and restricted cash, end of period	$	28,310	$	142,548
Supplemental disclosure of cash flow information:
Interest paid, net of capitalization	$	21,971	$	23,156
Income taxes paid, net of refunds	7,405		544

See Notes to Unaudited Consolidated Financial Statements

9

NORTHWEST NATURAL GAS COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2021		2020		2021		2020
Operating revenues	$	144,579	$	131,157	$	456,929	$	413,686
Operating expenses:
Cost of gas	41,249		41,265		153,515		149,860
Operations and maintenance	44,939		41,198		94,126		87,454
Environmental remediation	1,509		1,622		5,286		5,627
General taxes	8,783		8,211		20,042		18,010
Revenue taxes	5,650		4,454		18,305		16,197
Depreciation and amortization	27,530		24,986		54,699		49,176
Other operating expenses	780		522		1,699		1,442
Total operating expenses	130,440		122,258		347,672		327,766
Income from operations	14,139		8,899		109,257		85,920
Other income (expense), net	(2,566)		(3,179)		(6,231)		(6,742)
Interest expense, net	10,696		11,851		21,486		21,712
Income (loss) before income taxes	877		(6,131)		81,540		57,466
Income tax expense (benefit)	288		(1,419)		20,840		12,999
Net income (loss)	589		(4,712)		60,700		44,467
Other comprehensive income:
Amortization of non-qualified employee benefit plan liability, net of taxes of $80 and $58 for the three months ended and $160 and $116 for the six months ended June 30, 2021 and 2020, respectively	221		160		442		320
Comprehensive income (loss)	$	810	$	(4,552)	$	61,142	$	44,787

See Notes to Unaudited Consolidated Financial Statements

10

NORTHWEST NATURAL GAS COMPANY

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	June 30,		June 30,		December 31,
In thousands	2021		2020		2020
Assets:
Current assets:
Cash and cash equivalents	$	11,488	$	120,284	$	10,453
Accounts receivable	51,849		33,985		80,035
Accrued unbilled revenue	13,474		15,236		57,890
Receivables from affiliates	301		563		660
Allowance for uncollectible accounts	(3,239)		(1,591)		(3,107)
Regulatory assets	60,672		30,021		31,745
Derivative instruments	46,168		5,996		13,678
Inventories	38,549		43,619		42,325
Gas reserves	8,444		13,646		11,409
Other current assets	22,186		20,287		37,909
Total current assets	249,892		282,046		282,997
Non-current assets:
Property, plant, and equipment	3,794,870		3,564,707		3,683,776
Less: Accumulated depreciation	1,088,743		1,059,760		1,075,446
Total property, plant, and equipment, net	2,706,127		2,504,947		2,608,330
Gas reserves	29,852		41,459		34,484
Regulatory assets	330,670		324,320		348,887
Derivative instruments	7,912		3,958		6,135
Other investments	47,695		48,673		49,242
Operating lease right of use asset, net	76,211		78,464		77,328
Assets under sales-type leases	141,408		146,208		143,759
Other non-current assets	49,665		50,629		48,174
Total non-current assets	3,389,540		3,198,658		3,316,339
Total assets	$	3,639,432	$	3,480,704	$	3,599,336

See Notes to Unaudited Consolidated Financial Statements

11

NORTHWEST NATURAL GAS COMPANY

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	June 30,		June 30,		December 31,
In thousands	2021		2020		2020
Liabilities and equity:
Current liabilities:
Short-term debt	$	198,000	$	153,000	$	231,525
Current maturities of long-term debt	59,987		—		59,955
Accounts payable	95,109		77,993		95,170
Payables to affiliates	22,869		18,450		13,820
Taxes accrued	10,072		7,376		13,724
Interest accrued	7,373		7,156		7,338
Regulatory liabilities	103,210		41,126		50,362
Derivative instruments	3,393		3,067		4,198
Operating lease liabilities	1,193		868		1,054
Other current liabilities	43,389		52,939		51,907
Total current liabilities	544,595		361,975		529,053
Long-term debt	857,422		917,012		857,265
Deferred credits and other non-current liabilities:
Deferred tax liabilities	323,522		309,977		318,034
Regulatory liabilities	644,177		631,531		638,793
Pension and other postretirement benefit liabilities	203,854		218,493		217,287
Derivative instruments	453		1,658		2,852
Operating lease liabilities	80,043		80,120		80,559
Other non-current liabilities	116,975		120,569		120,309
Total deferred credits and other non-current liabilities	1,369,024		1,362,348		1,377,834
Commitments and contingencies (Note 16)
Equity:
Common stock	319,506		319,557		319,506
Retained earnings	561,345		530,225		528,580
Accumulated other comprehensive loss	(12,460)		(10,413)		(12,902)
Total equity	868,391		839,369		835,184
Total liabilities and equity	$	3,639,432	$	3,480,704	$	3,599,336

See Notes to Unaudited Consolidated Financial Statements

12

NORTHWEST NATURAL GAS COMPANY

CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY (UNAUDITED)

In thousands	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Total shareholder's equity, beginning balances	$	881,565	$	857,739	$	835,184	$	822,196
Common stock	319,506		319,557		319,506		319,557
Retained earnings:
Beginning balances	574,740		548,755		528,580		513,372
Net income (loss)	589		(4,712)		60,700		44,467
Dividends on common stock	(13,984)		(13,818)		(27,935)		(27,614)
Ending balances	561,345		530,225		561,345		530,225
Accumulated other comprehensive income (loss):
Beginning balances	(12,681)		(10,573)		(12,902)		(10,733)
Other comprehensive income	221		160		442		320
Ending balances	(12,460)		(10,413)		(12,460)		(10,413)
Total shareholder's equity, ending balances	$	868,391	$	839,369	$	868,391	$	839,369

See Notes to Unaudited Consolidated Financial Statements

13

NORTHWEST NATURAL GAS COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended June 30,
In thousands	2021		2020
Operating activities:
Net income	$	60,700	$	44,467
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization	54,699		49,176
Regulatory amortization of gas reserves	7,597		8,567
Deferred income taxes	201		(2,766)
Qualified defined benefit pension plan expense	7,874		8,892
Contributions to qualified defined benefit pension plans	(9,590)		(8,470)
Deferred environmental expenditures, net	(9,625)		(9,897)
Amortization of environmental remediation	5,286		5,627
Other	481		(6,746)
Changes in assets and liabilities:
Receivables, net	74,354		74,625
Inventories	3,775		249
Income and other taxes	19,440		22,038
Accounts payable	(19,936)		(22,186)
Deferred gas costs	(26,962)		115
Asset optimization revenue sharing	36,872		(11,657)
Decoupling mechanism	(6,860)		4,281
Other, net	(8,361)		5,979
Cash provided by operating activities	189,945		162,294
Investing activities:
Capital expenditures	(125,167)		(118,227)
Leasehold improvement expenditures	(163)		(7,519)
Proceeds from the sale of assets	2,234		7,905
Other	209		269
Cash used in investing activities	(122,887)		(117,572)
Financing activities:
Long-term debt issued	—		150,000
Long-term debt retired	—		(75,000)
Proceeds from term loan due within one year	100,000		150,000
Repayments of commercial paper, maturities greater than 90 days	(195,025)		—
Change in other short-term debt, net	61,500		(122,100)
Cash dividend payments on common stock	(27,935)		(27,614)
Other	(1,623)		(3,140)
Cash (used in) provided by financing activities	(63,083)		72,146
Increase in cash, cash equivalents and restricted cash	3,975		116,868
Cash, cash equivalents and restricted cash, beginning of period	15,739		8,907
Cash, cash equivalents and restricted cash, end of period	$	19,714	$	125,775
Supplemental disclosure of cash flow information:
Interest paid, net of capitalization	$	21,285	$	21,794
Income taxes paid, net of refunds	10,910		950

See Notes to Unaudited Consolidated Financial Statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. ORGANIZATION AND PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements represent the respective, consolidated financial results of NW Holdings and NW Natural and all respective companies that each registrant directly or indirectly controls, either through majority ownership or otherwise. This is a combined report of NW Holdings and NW Natural, which includes separate consolidated financial statements for each registrant.

NW Natural's regulated natural gas distribution activities are reported in the natural gas distribution (NGD) segment. The NGD segment is NW Natural's core operating business and serves residential, commercial, and industrial customers in Oregon and southwest Washington. The NGD segment is the only reportable segment for NW Holdings and NW Natural. All other activities, water businesses, and other investments are aggregated and reported as other at their respective registrant.

Investments in corporate joint ventures and partnerships that NW Holdings does not directly or indirectly control, and for which it is not the primary beneficiary, include NNG Financial's investment in Kelso-Beaver Pipeline, which is accounted for under the equity method, and NWN Energy's investment in Trail West Holdings, LLC (TWH), which was accounted for under the equity method through August 6, 2020. See Note 13 for activity related to TWH. NW Holdings and its direct and indirect subsidiaries are collectively referred to herein as NW Holdings, and NW Natural and its direct and indirect subsidiaries are collectively referred to herein as NW Natural. The consolidated financial statements of NW Holdings and NW Natural are presented after elimination of all intercompany balances and transactions.

Information presented in these interim consolidated financial statements is unaudited, but includes all material adjustments management considers necessary for a fair statement of the results for each period reported including normal recurring accruals. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in NW Holdings' and NW Natural's combined 2020 Annual Report on Form 10-K (2020 Form 10-K). A significant part of NW Holdings' and NW Natural's business is of a seasonal nature; therefore, NW Holdings and NW Natural results of operations for interim periods are not necessarily indicative of full year results. Seasonality affects the comparability of the results of other operations across quarters but not across years.

In June 2018, NWN Gas Storage, a wholly-owned subsidiary of NW Natural at the time and now a wholly-owned subsidiary of NW Holdings, entered into a Purchase and Sale Agreement that provides for the sale of all of the membership interests in its wholly-owned subsidiary, Gill Ranch. We concluded that the sale of Gill Ranch qualified as assets and liabilities held for sale and discontinued operations. As such, the results of Gill Ranch were presented as a discontinued operation for NW Holdings for all periods presented on the consolidated statements of comprehensive income and cash flows, and the assets and liabilities associated with Gill Ranch have been classified as discontinued operations assets and liabilities on the NW Holdings consolidated balance sheet. The sale closed on December 4, 2020. See Note 17 for additional information.

Notes to the consolidated financial statements reflect the activity of continuing operations for both NW Holdings and NW Natural for all periods presented, unless otherwise noted. Certain reclassifications have been made to conform prior period information to the current presentation. The reclassifications did not have a material effect on our consolidated financial statements.

2. SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies are described in Note 2 of the 2020 Form 10-K. There were no material changes to those accounting policies during the six months ended June 30, 2021 other than those set forth in this Note 2. The following are current updates to certain critical accounting policy estimates and new accounting standards.

Industry Regulation  

In applying regulatory accounting principles, NW Holdings and NW Natural capitalize or defer certain costs and revenues as regulatory assets and liabilities pursuant to orders of the Oregon Public Utilities Commission (OPUC), Washington Utilities and Transportation Commission (WUTC), Idaho Public Utilities Commission (IPUC) or Public Utility Commission of Texas (PUCT), which provide for the recovery of revenues or expenses from, or refunds to, utility customers in future periods, including a return or a carrying charge in certain cases.

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Amounts deferred as regulatory assets and liabilities for NW Holdings and NW Natural were as follows:

	Regulatory Assets
	June 30,				December 31,
In thousands	2021		2020		2020
NW Natural:
Current:
Unrealized loss on derivatives(1)	$	3,393	$	2,956	$	4,198
Gas costs	29,486		6,046		1,979
Environmental costs(2)	5,688		4,176		4,992
Decoupling(3)	1,011		85		361
Pension balancing(4)	7,131		7,131		7,131
Income taxes	2,345		2,208		3,484
Other(5)	11,618		7,419		9,600
Total current	$	60,672	$	30,021	$	31,745
Non-current:
Unrealized loss on derivatives(1)	$	453	$	1,658	$	2,852
Pension balancing(4)	40,342		45,315		43,383
Income taxes	13,903		17,608		15,368
Pension and other postretirement benefit liabilities	160,385		164,091		170,812
Environmental costs(2)	85,423		81,757		90,623
Gas costs	5,742		94		3,925
Decoupling(3)	198		—		1,031
Other(5)	24,224		13,797		20,893
Total non-current	$	330,670	$	324,320	$	348,887
Other (NW Holdings)	40		38		40
Total non-current - NW Holdings	$	330,710	$	324,358	$	348,927

	Regulatory Liabilities
	June 30,				December 31,
In thousands	2021		2020		2020
NW Natural:
Current:
Gas costs	$	1,519	$	3,767	$	1,118
Unrealized gain on derivatives(1)	46,168		5,950		13,674
Decoupling(3)	5,821		11,498		11,793
Income taxes	8,217		7,098		8,217
Asset optimization revenue sharing	39,348		7,116		10,298
Other(5)	2,137		5,697		5,262
Total current	$	103,210	$	41,126	$	50,362
Non-current:
Gas costs	$	101	$	538	$	314
Unrealized gain on derivatives(1)	7,912		3,958		6,135
Decoupling(3)	652		2,108		1,723
Income taxes(6)	182,977		193,414		189,587
Accrued asset removal costs(7)	439,685		414,719		427,960
Other(5)	12,850		16,794		13,074
Total non-current - NW Natural	$	644,177	$	631,531	$	638,793
Other (NW Holdings)	869		869		870
Total non-current - NW Holdings	$	645,046	$	632,400	$	639,663

(1)Unrealized gains or losses on derivatives are non-cash items and therefore do not earn a rate of return or a carrying charge. These amounts are recoverable through NGD rates as part of the annual Purchased Gas Adjustment (PGA) mechanism when realized at settlement.

(2)Refer to footnote (3) of the Deferred Regulatory Asset table in Note 16 for a description of environmental costs.

(3)This deferral represents the margin adjustment resulting from differences between actual and expected volumes. 

(4)Balance represents deferred net periodic benefit costs as approved by the OPUC.

(5)Balances consist of deferrals and amortizations under approved regulatory mechanisms and typically earn a rate of return or carrying charge.

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(6)Balance represents excess deferred income tax benefits subject to regulatory flow-through.

(7)Estimated costs of removal on certain regulated properties are collected through rates.

We believe all costs incurred and deferred at June 30, 2021 are prudent. All regulatory assets and liabilities are reviewed annually for recoverability, or more often if circumstances warrant. If we should determine that all or a portion of these regulatory assets or liabilities no longer meet the criteria for continued application of regulatory accounting, then NW Holdings and NW Natural would be required to write-off the net unrecoverable balances in the period such determination is made.

Supplemental Cash Flow Information

Restricted cash is primarily comprised of funds from public purpose charges for programs that assist low-income customers with bill payments or energy efficiency. Prior period amounts have been reclassified to conform prior period information to the current presentation.

The following table provides a reconciliation of the cash, cash equivalents and restricted cash balances at NW Holdings as of June 30, 2021 and 2020 and December 31, 2020:

	June 30,				December 31,
In thousands	2021		2020		2020
Cash and cash equivalents	$	20,084	$	137,057	$	30,168
Restricted cash included in other current assets	8,226		5,491		5,286
Cash, cash equivalents and restricted cash	$	28,310	$	142,548	$	35,454

The following table provides a reconciliation of the cash, cash equivalents and restricted cash balances at NW Natural as of June 30, 2021 and 2020 and December 31, 2020:

	June 30,				December 31,
In thousands	2021		2020		2020
Cash and cash equivalents	$	11,488	$	120,284	$	10,453
Restricted cash included in other current assets	8,226		5,491		5,286
Cash, cash equivalents and restricted cash	$	19,714	$	125,775	$	15,739

Accounts Receivable and Allowance for Uncollectible Accounts

Accounts receivable consist primarily of amounts due for natural gas sales and transportation services to NGD customers, plus amounts due for gas storage services. NW Holdings and NW Natural establish allowances for uncollectible accounts (allowance) for trade receivables, including accrued unbilled revenue, based on the aging of receivables, collection experience of past due account balances including payment plans, and historical trends of write-offs as a percent of revenues. A specific allowance is established and recorded for large individual customer receivables when amounts are identified as unlikely to be partially or fully recovered. Inactive accounts are written-off against the allowance after they are 120 days past due or when deemed uncollectible. Differences between the estimated allowance and actual write-offs will occur based on a number of factors, including changes in economic conditions, customer creditworthiness, and natural gas prices. The allowance for uncollectible accounts is adjusted quarterly, as necessary, based on information currently available.

Allowance for Trade Receivables

Accounts receivable consist primarily of amounts due for natural gas sales and transportation services to NGD customers and amounts due for gas storage services. The payment term of these receivables is generally 15 days. For these short-term receivables, it is not expected that forecasted economic conditions would significantly affect the loss estimates under stable economic conditions. For extreme situations like a financial crisis, natural disaster, and the economic slowdown caused by the COVID-19 pandemic, we enhance our review and analysis.

After considering the significant exposure to quarantine-related job losses in Oregon and Washington state, NW Holdings and NW Natural expanded our standard review procedures for our allowance for uncollectible accounts calculation, including analyzing the significant indications of unemployment rate and comparing to historic economic data during the 2007-2009 time period when the country experienced an economic recession. We then considered other qualitative information including recent customer interactions related to payment plans and credit issues, statistics from our website related to credit inquiries, and economic stimulus provided by the federal government which could have a beneficial impact on residential and commercial customers' abilities to ultimately make payment on their accounts. Our provision calculation for residential accounts is estimated based on the factors noted above including a review of percentage of accounts with no payment received for 90 or more days. In addition, for the residential allowance calculation we also consider the funds applied or granted to customers through the special COVID arrearage forgiveness programs in Oregon and Washington. For commercial accounts, we have resumed normal collection processes and our provision is based on historical write-off trends and current information on delinquent accounts. For industrial accounts, we continue to analyze those accounts on an account-by-account basis with specific reserves taken as necessary.

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The following table presents the activity related to the NW Holdings provision for uncollectible accounts by pool, substantially all of which is related to NW Natural's accounts receivable:

	As of						As of
	December 31, 2020		Six Months Ended June 30, 2021				June 30, 2021
In thousands	Beginning Balance		Provision recorded, net of adjustments		Write-offs recognized, net of recoveries		Ending Balance(1)
Allowance for uncollectible accounts:
Residential	$	2,153	$	1,294	$	(637)	$	2,810
Commercial	704		(233)		(265)		206
Industrial	142		(68)		5		79
Accrued unbilled and other	220		22		(54)		188
Total	$	3,219	$	1,015	$	(951)	$	3,283

(1) Includes $2.9 million that was deferred to a regulatory asset for costs associated with COVID-19 that are recoverable in future rates.

Allowance for Net Investments in Sales-Type Leases

NW Natural currently holds two net investments in sales-type leases, with substantially all of the net investment balance related to the North Mist natural gas storage agreement with Portland General Electric (PGE) which is billed under an OPUC-approved rate schedule. See Note 6 for more information on the North Mist lease. Due to the nature of this service, PGE may recover the costs of the lease through general rate cases. Therefore, we expect the risk of loss due to the credit of this lessee to be remote. As such, no allowance for uncollectability was recorded for our sales-type lease receivables. NW Natural will continue monitoring the credit health of the lessees and the overall economic environment, including the economic factors closely tied to the financial health of our current and future lessees.

COVID-19 Impact

During 2020, our regulated utilities received approval in their respective jurisdictions to defer certain financial impacts associated with COVID-19 such as bad debt expense, financing costs to secure liquidity, lost revenues related to late fees, and other COVID-19 related costs, net of offsetting direct expense reductions associated with COVID-19. As of June 30, 2021, we deferred to a regulatory asset approximately $5.8 million for incurred costs associated with COVID-19 that we believe are recoverable.

New Accounting Standards

We consider the applicability and impact of all accounting standards updates (ASUs) issued by the Financial Accounting Standards Board (FASB). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on NW Holdings' or NW Natural's consolidated financial position or results of operations.

Recently Adopted Accounting Pronouncements

INCOME TAXES. On December 18, 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." The purpose of the amendment is to reduce cost and complexity related to accounting for income taxes by removing certain exceptions to the general principles and improving consistent application for other areas in Topic 740. The amendments in this ASU were effective beginning January 1, 2021. The amended presentation and disclosure guidance was applied retrospectively. The adoption did not materially affect the financial statements and disclosures of NW Holdings or NW Natural.

REFERENCE RATE REFORM. On March 12, 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The purpose of the amendment is to provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

On January 7, 2021, the FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848): Scope." The purpose of the amendment is to clarify guidance on reference rate reform activities, specifically related to accounting for derivative contracts and certain hedging relationships affected by changes in the interest rates used for discounting, margining, and contract price alignment (the "discounting transition"). The amendments in ASUs 2020-04 and 2021-01 are effective for all entities as of March 12, 2020 through December 31, 2022. We do not expect the ASUs to materially affect the financial statements and disclosures of NW Holdings or NW Natural.

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3. EARNINGS PER SHARE

Basic earnings per share are computed using NW Holdings' net income and the weighted average number of common shares outstanding for each period presented. Diluted earnings per share are computed in the same manner, except using the weighted average number of common shares outstanding plus the effects of the assumed exercise of stock options and the payment of estimated stock awards from other stock-based compensation plans that are outstanding at the end of each period presented. Anti-dilutive stock awards are excluded from the calculation of diluted earnings per common share.

NW Holdings' diluted earnings or loss per share are calculated as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands, except per share data	2021		2020		2021		2020
Net income (loss) from continuing operations	$	(724)	$	(5,132)	$	58,793	$	43,144
Income (loss) from discontinued operations, net of tax	—		280		—		(498)
Net income (loss)	$	(724)	$	(4,852)	$	58,793	$	42,646
Average common shares outstanding - basic	30,664		30,537		30,639		30,514
Additional shares for stock-based compensation plans (See Note 7)	—		—		32		45
Average common shares outstanding - diluted	30,664		30,537		30,671		30,559
Earnings (loss) from continuing operations per share of common stock:
Basic	$	(0.02)	$	(0.17)	$	1.92	$	1.41
Diluted	$	(0.02)	$	(0.17)	$	1.92	$	1.41
Earnings (loss) from discontinued operations per share of common stock:
Basic	$	—	$	0.01	$	—	$	(0.01)
Diluted	$	—	$	0.01	$	—	$	(0.01)
Earnings (loss) per share of common stock:
Basic	$	(0.02)	$	(0.16)	$	1.92	$	1.40
Diluted	$	(0.02)	$	(0.16)	$	1.92	$	1.40
Additional information:
Anti-dilutive shares	48		41		7		—

4. SEGMENT INFORMATION

We primarily operate in one reportable business segment, which is NW Natural's local gas distribution business and is referred to as the NGD segment. NW Natural and NW Holdings also have investments and business activities not specifically related to the NGD, which are aggregated and reported as other and described below for each entity.

Natural Gas Distribution

NW Natural's local gas distribution segment is a regulated utility principally engaged in the purchase, sale, and delivery of natural gas and related services to customers in Oregon and southwest Washington. In addition to NW Natural's local gas distribution business, the NGD segment also includes the portion of the Mist underground storage facility used to serve NGD customers, the North Mist gas storage expansion, NWN Gas Reserves, which is a wholly-owned subsidiary of Energy Corp, and NW Natural RNG Holding Company, LLC, a holding company established to invest in the development and procurement of renewable natural gas.

NW Natural

NW Natural's activities in Other include Interstate Storage Services and third-party asset management service for NW Natural’s contracted interstate pipeline and storage capacity, appliance retail center operations, and corporate operating and non-operating revenues and expenses that cannot be allocated to NGD operations.

Earnings from third party asset management include earnings from the management of upstream interstate pipeline and storage capacity when not needed to serve NGD customers. Under the Oregon sharing mechanism, NW Natural retains 80% of the pre-tax income from these services when the costs of the capacity were not included in NGD rates, or 10% of the pre-tax income when the costs have been included in these rates. The remaining 20% and 90%, respectively, are recorded in a deferred regulatory account for prospective NGD customer billing credits.

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NW Holdings

NW Holdings' activities in Other include all remaining activities not associated with NW Natural, specifically: NWN Water, which consolidates the water and wastewater utility operations and is pursuing other investments in the water sector through itself and wholly-owned subsidiaries; NWN Gas Storage, a wholly-owned subsidiary of NWN Energy; NWN Energy's equity investment in TWH through August 6, 2020; and other pipeline assets in NNG Financial. For more information on the sale of TWH, see Note 13. Other also includes corporate revenues and expenses that cannot be allocated to other operations, including certain business development activities.

Segment Information Summary

Inter-segment transactions were immaterial for the periods presented. The following table presents summary financial information concerning the reportable segment and other of continuing operations. See Note 17 for information regarding discontinued operations for NW Holdings.

	Three Months Ended June 30,
In thousands	NGD		Other (NW Natural)		NW Natural		Other (NW Holdings)		NW Holdings
2021
Operating revenues	$	139,614	$	4,965	$	144,579	$	4,338	$	148,917
Depreciation and amortization	27,273		257		27,530		614		28,144
Income (loss) from operations	11,331		2,808		14,139		(1,515)		12,624
Net income (loss) from continuing operations	(1,381)		1,970		589		(1,313)		(724)
Capital expenditures	60,376		693		61,069		3,337		64,406
2020
Operating revenues	$	126,992	$	4,165	$	131,157	$	3,814	$	134,971
Depreciation and amortization	24,738		248		24,986		850		25,836
Income (loss) from operations	6,434		2,465		8,899		43		8,942
Net income (loss) from continuing operations	(6,347)		1,635		(4,712)		(420)		(5,132)
Capital expenditures	61,472		521		61,993		2,843		64,836

	Six Months Ended June 30,
In thousands	NGD		Other (NW Natural)		NW Natural		Other (NW Holdings)		NW Holdings
2021
Operating revenues	$	440,952	$	15,977	$	456,929	$	7,934	$	464,863
Depreciation and amortization	54,186		513		54,699		1,542		56,241
Income (loss) from operations	97,818		11,439		109,257		(1,927)		107,330
Net income (loss) from continuing operations	52,544		8,156		60,700		(1,907)		58,793
Capital expenditures	124,368		799		125,167		4,941		130,108
Total assets at June 30, 2021	3,587,966		51,466		3,639,432		144,068		3,783,500
2020
Operating revenues	$	405,479	$	8,207	$	413,686	$	6,436	$	420,122
Depreciation and amortization	48,684		492		49,176		1,335		50,511
Income (loss) from operations	81,692		4,228		85,920		(532)		85,388
Net income (loss) from continuing operations	41,596		2,871		44,467		(1,323)		43,144
Capital expenditures	117,629		598		118,227		4,055		122,282
Total assets at June 30, 2020(1)	3,470,306		10,398		3,480,704		144,251		3,624,955
Total assets at December 31, 2020	3,549,868		49,468		3,599,336		157,043		3,756,379

(1)     Total assets for NW Holdings exclude assets related to discontinued operations of $16.4 million as of June 30, 2020.

Natural Gas Distribution Margin

NGD margin is a financial measure used by the Chief Operating Decision Maker (CODM), consisting of NGD operating revenues, reduced by the associated cost of gas, environmental remediation expense, and revenue taxes. The cost of gas purchased for NGD customers is generally a pass-through cost in the amount of revenues billed to regulated NGD customers. Environmental remediation expense represents collections received from customers through the environmental recovery mechanism in Oregon as well as adjustments for the environmental earnings test when applicable. This is offset by environmental remediation expense presented in operating expenses. Revenue taxes are collected from NGD customers and remitted to taxing authorities. The collections from customers are offset by the expense recognition of the obligation to the taxing

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authority. By subtracting cost of gas, environmental remediation expense, and revenue taxes from NGD operating revenues, NGD margin provides a key metric used by the CODM in assessing the performance of the NGD segment.

The following table presents additional segment information concerning NGD margin:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2021		2020		2021		2020
NGD margin calculation:
NGD distribution revenues	$	134,849	$	122,071	$	431,402	$	395,632
Other regulated services	4,765		4,921		9,550		9,847
Total NGD operating revenues	139,614		126,992		440,952		405,479
Less: NGD cost of gas	41,249		41,265		153,515		149,860
Environmental remediation	1,509		1,622		5,286		5,627
Revenue taxes	5,650		4,454		18,305		16,197
NGD margin	$	91,206	$	79,651	$	263,846	$	233,795

5. REVENUE

The following tables present disaggregated revenue from continuing operations:

	Three Months Ended June 30,
In thousands	NGD		Other (NW Natural)		NW Natural		Other (NW Holdings)		NW Holdings
2021
Natural gas sales	$	123,739	$	—	$	123,739	$	—	$	123,739
Gas storage revenue, net	—		2,805		2,805		—		2,805
Asset management revenue, net	—		817		817		—		817
Appliance retail center revenue	—		1,343		1,343		—		1,343
Other revenue	399		—		399		4,338		4,737
Revenue from contracts with customers	124,138		4,965		129,103		4,338		133,441
Alternative revenue	11,083		—		11,083		—		11,083
Leasing revenue	4,393		—		4,393		—		4,393
Total operating revenues	$	139,614	$	4,965	$	144,579	$	4,338	$	148,917
2020
Natural gas sales	$	116,682	$	—	$	116,682	$	—	$	116,682
Gas storage revenue, net	—		2,449		2,449		—		2,449
Asset management revenue, net	—		910		910		—		910
Appliance retail center revenue	—		806		806		—		806
Other revenue	332		—		332		3,814		4,146
Revenue from contracts with customers	117,014		4,165		121,179		3,814		124,993
Alternative revenue	5,365		—		5,365		—		5,365
Leasing revenue	4,613		—		4,613		—		4,613
Total operating revenues	$	126,992	$	4,165	$	131,157	$	3,814	$	134,971

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	Six Months Ended June 30,
In thousands	NGD		Other (NW Natural)		NW Natural		Other (NW Holdings)		NW Holdings
2021
Natural gas sales	$	419,822	$	—	$	419,822	$	—	$	419,822
Gas storage revenue, net	—		5,300		5,300		—		5,300
Asset management revenue, net	—		7,745		7,745		—		7,745
Appliance retail center revenue	—		2,932		2,932		—		2,932
Other revenue	814		—		814		7,934		8,748
Revenue from contracts with customers	420,636		15,977		436,613		7,934		444,547
Alternative revenue	11,536		—		11,536		—		11,536
Leasing revenue	8,780		—		8,780		—		8,780
Total operating revenues	$	440,952	$	15,977	$	456,929	$	7,934	$	464,863
2020
Natural gas sales	$	390,686	$	—	$	390,686	$	—	$	390,686
Gas storage revenue, net	—		4,785		4,785		—		4,785
Asset management revenue, net	—		1,060		1,060		—		1,060
Appliance retail center revenue	—		2,362		2,362		—		2,362
Other revenue	669		—		669		6,436		7,105
Revenue from contracts with customers	391,355		8,207		399,562		6,436		405,998
Alternative revenue	4,893		—		4,893		—		4,893
Leasing revenue	9,231		—		9,231		—		9,231
Total operating revenues	$	405,479	$	8,207	$	413,686	$	6,436	$	420,122

NW Natural's revenue represents substantially all of NW Holdings' revenue and is recognized for both registrants when the obligation to customers is satisfied and in the amount expected to be received in exchange for transferring goods or providing services. Revenue from contracts with customers contains one performance obligation that is generally satisfied over time, using the output method based on time elapsed, due to the continuous nature of the service provided. The transaction price is determined by a set price agreed upon in the contract or dependent on regulatory tariffs. Customer accounts are settled on a monthly basis or paid at time of sale and based on historical experience. It is probable that we will collect substantially all of the consideration to which we are entitled. We evaluated the probability of collection in accordance with the current expected credit losses standard.

NW Holdings and NW Natural do not have any material contract assets, as net accounts receivable and accrued unbilled revenue balances are unconditional and only involve the passage of time until such balances are billed and collected. NW Holdings and NW Natural do not have any material contract liabilities.

Revenue taxes are included in operating revenues with an offsetting expense recognized in operating expense in the consolidated statements of comprehensive income. Revenue-based taxes are primarily franchise taxes, which are collected from customers and remitted to taxing authorities.

Natural Gas Distribution

Natural Gas Sales

NW Natural's primary source of revenue is providing natural gas to customers in the NGD service territory, which includes residential, commercial, industrial and transportation customers. NGD revenue is generally recognized over time upon delivery of the gas commodity or service to the customer, and the amount of consideration received and recognized as revenue is dependent on the Oregon and Washington tariffs. Customer accounts are to be paid in full each month, and there is no right of return or warranty for services provided. Revenues include firm and interruptible sales and transportation services, franchise taxes recovered from the customer, late payment fees, service fees, and accruals for gas delivered but not yet billed (accrued unbilled revenue). The accrued unbilled revenue balance is based on estimates of deliveries during the period from the last meter reading and management judgment is required for a number of factors used in this calculation, including customer use and weather factors.

We applied the significant financing practical expedient and have not adjusted the consideration NW Natural expects to receive from NGD customers for the effects of a significant financing component as all payment arrangements are settled annually. Due to the election of the right to invoice practical expedient, we do not disclose the value of unsatisfied performance obligations.

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Alternative Revenue

Weather normalization (WARM) and decoupling mechanisms are considered to be alternative revenue programs. Alternative revenue programs are considered to be contracts between NW Natural and its regulator and are excluded from revenue from contracts with customers.

Leasing Revenue

Leasing revenue primarily consists of revenues from NW Natural's North Mist Storage contract with Portland General Electric (PGE) in support of PGE's gas-fired electric power generation facilities under an initial 30-year contract with options to extend, totaling up to an additional 50 years upon mutual agreement of the parties. The facility is accounted for as a sales-type lease with regulatory accounting deferral treatment. The investment is included in rate base under an established cost-of-service tariff schedule, with revenues recognized according to the tariff schedule and as such, profit upon commencement was deferred and will be amortized over the lease term. Leasing revenue also contains rental revenue from small leases of property owned by NW Natural to third parties. The majority of these transactions are accounted for as operating leases and the revenue is recognized over the term of the lease agreement. Lease revenue is excluded from revenue from contracts with customers. See Note 6 for additional information.

NW Natural Other

Gas Storage Revenue

NW Natural's other revenue includes gas storage activity, which includes Interstate Storage Services used to store natural gas for customers. Gas storage revenue is generally recognized over time as the gas storage service is provided to the customer and the amount of consideration received and recognized as revenue is dependent on set rates defined per the storage agreements. Noncash consideration in the form of dekatherms of natural gas is received as consideration for providing gas injection services to gas storage customers. This noncash consideration is measured at fair value using the average spot rate. Customer accounts are generally paid in full each month, and there is no right of return or warranty for services provided. Revenues include firm and interruptible storage services, net of the profit sharing amount refunded to NGD customers.

Asset Management Revenue

Revenues include the optimization of third-party storage assets and pipeline capacity and are provided net of the profit sharing amount refunded to NGD customers. Certain asset management revenues received are recognized over time using a straight-line approach over the term of each contract, and the amount of consideration received and recognized as revenue is dependent on a variable pricing model. Variable revenues earned above guaranteed amounts are estimated and recognized at the end of each period using the most likely amount approach. Additionally, other asset management revenues may be based on a fixed rate. Generally, asset management accounts are settled on a monthly basis.

As of June 30, 2021, unrecognized revenue for the fixed component of the transaction price related to gas storage and asset management revenue was approximately $79.2 million. Of this amount, approximately $9.6 million will be recognized during the remainder of 2021, $19.4 million in 2022, $17.8 million in 2023, $14.0 million in 2024, $11.1 million in 2025 and $7.3 million thereafter. The amounts presented here are calculated using current contracted rates.

Appliance Retail Center Revenue

NW Natural owns and operates an appliance store that is open to the public, where customers can purchase natural gas home appliances. Revenue from the sale of appliances is recognized at the point in time in which the appliance is transferred to the third party responsible for delivery and installation services and when the customer has legal title to the appliance. It is required that the sale be paid for in full prior to transfer of legal title. The amount of consideration received and recognized as revenue varies with changes in marketing incentives and discounts offered to customers.

NW Holdings Other

NW Holdings' primary source of other revenue is providing water and wastewater services to customers. Water and wastewater service revenue is generally recognized over time upon delivery of the water commodity or service to the customer, and the amount of consideration received and recognized as revenue is dependent on the tariffs established in the state we operate. Customer accounts are to be paid in full each month, and there is no right of return or warranty for services provided.

We applied the significant financing practical expedient and have not adjusted the consideration we expect to receive from water distribution customers for the effects of a significant financing component as all payment arrangements are settled annually. Due to the election of the right to invoice practical expedient, we do not disclose the value of unsatisfied performance obligations.

6. LEASES

Lease Revenue

Leasing revenue primarily consists of NW Natural's North Mist natural gas storage agreement with Portland General Electric (PGE), which is billed under an OPUC-approved rate schedule and includes an initial 30-year term with options to extend, totaling up to an additional 50 years upon mutual agreement of the parties. Under U.S. GAAP, this agreement is classified as a sales-type lease and qualifies for regulatory accounting deferral treatment. The investment in the storage facility is included in rate base under a separately established cost-of-service tariff, with revenues recognized according to the tariff schedule. As such, the selling profit that was calculated upon commencement as part of the sale-type lease recognition was deferred and will

23

be amortized over the lease term. Billing rates under the cost-of-service tariff will be updated annually to reflect current information including depreciable asset levels, forecasted operating expenses, and the results of regulatory proceedings, as applicable, and revenue received under this agreement is recognized as operating revenue on the consolidated statements of comprehensive income. There are no variable payments or residual value guarantees. The lease does not contain an option to purchase the underlying assets.

NW Natural also maintains a sales-type lease for specialized compressor facilities to provide high pressure compressed natural gas (CNG) services. Lease payments are outlined in an OPUC-approved rate schedule over a 10-year term. There are no variable payments or residual value guarantees. The selling profit computed upon lease commencement was not significant.

Our lessor portfolio also contains small leases of property owned by NW Natural to third parties. These transactions are accounted for as operating leases and the revenue is recognized over the term of the lease agreement.

The components of lease revenue at NW Natural were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2021		2020		2021		2020
Lease revenue
Operating leases	$	25	$	25	$	43	$	53
Sales-type leases	4,368		4,588		8,737		9,178
Total lease revenue	$	4,393	$	4,613	$	8,780	$	9,231

Total future minimum lease payments to be received under non-cancellable leases at June 30, 2021 are as follows:

In thousands	Operating		Sales-Type		Total
NW Natural:
Remainder of 2021	$	36	$	8,701	$	8,737
2022	72		17,026		17,098
2023	64		16,557		16,621
2024	65		15,867		15,932
2025	60		15,306		15,366
Thereafter	229		251,721		251,950
Total lease revenue	$	526	$	325,178	$	325,704
Less: imputed interest			183,237
Total leases receivable			$	141,941
Other (NW Holdings):
Remainder of 2021	$	25	$	—	$	25
2022	50		—		50
2023	51		—		51
2024	52		—		52
2025	53		—		53
Thereafter	970		—		970
Total lease revenue	$	1,201	$	—	$	1,201
NW Holdings:
Remainder of 2021	$	61	$	8,701	$	8,762
2022	122		17,026		17,148
2023	115		16,557		16,672
2024	117		15,867		15,984
2025	113		15,306		15,419
Thereafter	1,199		251,721		252,920
Total lease revenue	$	1,727	$	325,178	$	326,905
Less: imputed interest			183,237
Total leases receivable			$	141,941

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The total leases receivable above is reported under the NGD segment and the short- and long-term portions are included within other current assets and assets under sales-type leases on the consolidated balance sheets, respectively. The total amount of unguaranteed residual assets was $4.5 million, $4.1 million and $4.3 million at June 30, 2021 and 2020 and December 31, 2020, respectively, and is included in assets under sales-type leases on the consolidated balance sheets. Additionally, under regulatory accounting, the revenues and expenses associated with these agreements are presented on the consolidated statements of comprehensive income such that their presentation aligns with similar regulated activities at NW Natural.

Lease Expense

Operating Leases

We have operating leases for land, buildings and equipment. Our primary lease is for NW Natural's corporate operations center. Our leases have remaining lease terms of two months to 19 years. Many of our lease agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. Short-term leases with a term of 12 months or less are not recorded on the balance sheet. As most of our leases do not provide an implicit rate and are entered into by NW Natural, we use an estimated discount rate representing the rate we would have incurred to finance the funds necessary to purchase the leased asset and is based on information available at the lease commencement date in determining the present value of lease payments.

The components of lease expense, a portion of which is capitalized, were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2021		2020		2021		2020
NW Natural:
Operating lease expense	$	1,710	$	914	$	3,388	$	2,116
Short-term lease expense	$	349	$	285	$	569	$	483
Other (NW Holdings):
Operating lease expense	$	18	$	40	$	36	$	92
NW Holdings:
Operating lease expense	$	1,728	$	954	$	3,424	$	2,208
Short-term lease expense	$	349	$	285	$	569	$	483

Supplemental balance sheet information related to operating leases as of June 30, 2021 is as follows:

In thousands	June 30,				December 31,
	2021		2020		2020
NW Natural:
Operating lease right of use asset	$	76,211	$	78,464	$	77,328
Operating lease liabilities - current liabilities	$	1,193	$	868	$	1,054
Operating lease liabilities - non-current liabilities	80,043		80,120		80,559
Total operating lease liabilities	$	81,236	$	80,988	$	81,613
Other (NW Holdings):
Operating lease right of use asset	$	83	$	102	$	118
Operating lease liabilities - current liabilities	$	35	$	63	$	51
Operating lease liabilities - non-current liabilities	45		39		62
Total operating lease liabilities	$	80	$	102	$	113
NW Holdings:
Operating lease right of use asset	$	76,294	$	78,566	$	77,446
Operating lease liabilities - current liabilities	$	1,228	$	931	$	1,105
Operating lease liabilities - non-current liabilities	80,088		80,159		80,621
Total operating lease liabilities	$	81,316	$	81,090	$	81,726

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The weighted-average remaining lease terms and weighted-average discount rates for the operating leases at NW Natural were as follows:

In thousands	June 30,				December 31,
	2021		2020		2020
Weighted-average remaining lease term (years)	18.7		19.7		19.2
Weighted-average discount rate	7.2	%	7.2	%	7.2	%

Commencement of Significant Lease

NW Natural commenced a 20-year operating lease agreement in March 2020 for a new corporate operations center in Portland, Oregon. Total estimated base rent payments over the life of the lease are $159.4 million. There is an option to extend the term of the lease for two additional periods of seven years.

There is a material timing difference between the minimum lease payments and expense recognition as calculated under operating lease accounting rules. OPUC issued an order allowing us to align our expense recognition with cash payments for ratemaking purposes. We recorded the difference between the minimum lease payments and the aggregate of the imputed interest on the finance lease obligation and amortization of the right-of-use asset as a deferred regulatory asset on our balance sheet. The balance of the regulatory asset was $5.0 million, $2.4 million and $4.2 million as of June 30, 2021 and 2020 and December 31, 2020, respectively.

Maturities of operating lease liabilities at June 30, 2021 were as follows:

In thousands	NW Natural		Other (NW Holdings)		NW Holdings
Remainder of 2021	$	3,445	$	25	$	3,470
2022	6,933		24		6,957
2023	6,986		6		6,992
2024	7,150		6		7,156
2025	7,185		6		7,191
Thereafter	123,784		24		123,808
Total lease payments	155,483		91		155,574
Less: imputed interest	74,247		11		74,258
Total lease obligations	81,236		80		81,316
Less: current obligations	1,193		35		1,228
Long-term lease obligations	$	80,043	$	45	$	80,088

As of June 30, 2021, finance lease liabilities with maturities of less than one year were $0.2 million at NW Natural.

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Supplemental cash flow information related to leases was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2021		2020		2021		2020
NW Natural:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,717	$	931	$	3,386	$	2,127
Finance cash flows from finance leases	$	134	$	302	$	678	$	457
Right of use assets obtained in exchange for lease obligations
Operating leases	$	—	$	445	$	154	$	78,433
Finance leases	$	20	$	477	$	94	$	710
Other (NW Holdings):
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	17	$	39	$	33	$	91
NW Holdings:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,734	$	970	$	3,419	$	2,218
Finance cash flows from finance leases	$	134	$	302	$	678	$	457
Right of use assets obtained in exchange for lease obligations
Operating leases	$	—	$	445	$	154	$	78,433
Finance leases	$	20	$	477	$	94	$	710

Finance Leases

NW Natural also leases building storage spaces for use as a gas meter room in order to provide natural gas to multifamily or mixed use developments. These contracts are accounted for as finance leases and typically involve a one-time upfront payment with no remaining liability. The right of use assets for finance leases were $1.9 million, $1.1 million and $1.8 million at June 30, 2021 and 2020 and at December 31, 2020, respectively.

7. STOCK-BASED COMPENSATION

Stock-based compensation plans are designed to promote stock ownership in NW Holdings by employees and officers. These compensation plans include a Long Term Incentive Plan (LTIP), an Employee Stock Purchase Plan (ESPP), and a Restated Stock Option Plan. For additional information on stock-based compensation plans, see Note 8 in the 2020 Form 10-K and the updates provided below.

Long Term Incentive Plan

Performance Shares

LTIP performance shares incorporate a combination of market, performance, and service-based factors. During the six months ended June 30, 2021, the final performance factor under the 2019 LTIP was approved and 28,866 performance-based shares were granted under the 2019 LTIP for accounting purposes. As such, NW Natural and other subsidiaries began recognizing compensation expense. In February 2020 and 2021, LTIP shares were awarded to participants; however, the agreements allow for one of the performance factors to remain variable until the first quarter of the third year of the award period. As the performance factor will not be approved until the first quarters of 2022 and 2023, respectively, there is not a mutual understanding of the awards' key terms and conditions between NW Holdings and the participants as of June 30, 2021, and therefore, no expense was recognized for the 2020 and 2021 awards. NW Holdings will calculate the grant date fair value and NW Natural will recognize expense over the remaining service period for each award once the final performance factor has been approved.

For the 2020 and 2021 LTIP awards, share payouts range from a threshold of 0% to a maximum of 200% based on achievement of pre-established goals. The performance criteria for the 2020 and 2021 performance shares consists of a three-year Return on Invested Capital (ROIC) threshold that must be satisfied and a cumulative EPS factor, which can be modified by a total shareholder return factor (TSR modifier) relative to the performance of peer group companies over the performance period of three years for each respective award. If the targets were achieved for the 2020 and 2021 awards, NW Holdings would grant for accounting purposes 31,830 and 56,335 shares in the first quarters of 2022 and 2023, respectively.

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As of June 30, 2021, there was $0.2 million of unrecognized compensation cost associated with the 2019 LTIP grants, which is expected to be recognized through 2021.

Restricted Stock Units

During the six months ended June 30, 2021, 37,756 RSUs were granted under the LTIP with a weighted-average grant date fair value of $49.16 per share. Generally, the RSUs awarded are forfeitable and include a performance-based threshold as well as a vesting period of four years from the grant date. The majority of our RSU grants obligate NW Holdings, upon vesting, to issue the RSU holder one share of common stock. The grant may also include a cash payment equal to the total amount of dividends paid per share between the grant date and vesting date of that portion of the RSU depending on the structure of the award agreement. The fair value of an RSU is equal to the closing market price of common stock on the grant date. As of June 30, 2021, there was $4.2 million of unrecognized compensation cost from grants of RSUs, which is expected to be recognized by NW Natural and other subsidiaries over a period extending through 2025.

Restated Stock Option Plan

The Restated Stock Option Plan (Restated SOP) was terminated with respect to new grants in 2012; however, options granted before the Restated SOP was terminated remained outstanding until the earlier of their expiration, forfeiture, or exercise. Options were exercisable for shares of NW Holdings common stock. As of June 30, 2021 there were no options exercisable or outstanding.

8. DEBT

Short-Term Debt

In June 2021, NW Natural entered into a $100.0 million 364-Day Term Loan Credit Agreement (Term Loan) and borrowed the full amount. All principal and unpaid interest under the Term Loan is due and payable in June 2022. The Term Loan requires NW Natural to maintain a consolidated indebtedness to total capitalization ratio of 70% or less. Failure to comply with this covenant would entitle the lenders to terminate their lending commitments and accelerate the maturity of all amounts outstanding. NW Natural was in compliance with this covenant at June 30, 2021, with a consolidated indebtedness to total capitalization ratio of 56.2%.

At June 30, 2021, NW Holdings and NW Natural had short-term debt outstanding of $240.0 million and $198.0 million, respectively. NW Holdings' short-term debt consisted of $42.0 million in revolving credit agreement loans at NW Holdings, $98.0 million of commercial paper outstanding at NW Natural, and the aforementioned $100.0 million Term Loan. The weighted average interest rate on the revolving credit agreement at June 30, 2021 was 1.1% at NW Holdings. The weighted average interest rate of commercial paper and the Term Loan outstanding at June 30, 2021 was 0.2% and 0.6%, respectively, at NW Natural. At June 30, 2021, NW Natural's commercial paper had a maximum remaining maturity of 29 days and an average remaining maturity of 15 days.

Long-Term Debt

At June 30, 2021, NW Holdings and NW Natural had long-term debt outstanding of $975.8 million and $917.4 million, respectively, which included $7.4 million and $7.3 million of unamortized debt issuance costs at NW Holdings and NW Natural, respectively. NW Natural's long-term debt consists of first mortgage bonds (FMBs) with maturity dates ranging from 2021 through 2050, interest rates ranging from 2.8% to 9.1%, and a weighted average interest rate of 4.6%.

In June 2019, NW Natural Water, a wholly-owned subsidiary of NW Holdings, entered into a two-year term loan agreement for $35.0 million. The loan was repaid in June 2021 upon its maturity date.

In June 2021, NW Natural Water entered into a five-year term loan credit agreement for $55.0 million and borrowed the full amount. The loan carried an interest rate of 0.9% at June 30, 2021, which is based upon the one-month LIBOR rate plus a spread. The loan is guaranteed by NW Holdings and requires NW Holdings to maintain a consolidated indebtedness to total capitalization ratio of 70% or less. Failure to comply with this covenant would entitle the lenders to terminate their lending commitments and accelerate the maturity of all amounts outstanding. NW Holdings was in compliance with this covenant at June 30, 2021, with a consolidated indebtedness to total capitalization ratio of 56.8%.

Fair Value of Long-Term Debt

NW Holdings' and NW Natural's outstanding debt does not trade in active markets. The fair value of long-term debt is estimated using the value of outstanding debt at natural gas distribution companies with similar credit ratings, terms, and remaining maturities to NW Holdings' and NW Natural's debt that actively trade in public markets. Substantially all outstanding debt at NW Holdings is comprised of NW Natural debt. These valuations are based on Level 2 inputs as defined in the fair value hierarchy. See Note 2 in the 2020 Form 10-K for a description of the fair value hierarchy.

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The following table provides an estimate of the fair value of NW Holdings' long-term debt, including current maturities of long-term debt, using market prices in effect on the valuation date:

	NW Holdings
	June 30,				December 31,
In thousands	2021		2020		2020
Gross long-term debt	$	983,221	$	961,784	$	962,905
Unamortized debt issuance costs	(7,446)		(7,688)		(7,480)
Carrying amount	$	975,775	$	954,096	$	955,425
Estimated fair value(1)	$	1,104,230	$	1,135,349	$	1,136,311

(1) Estimated fair value does not include unamortized debt issuance costs.

The following table provides an estimate of the fair value of NW Natural's long-term debt, including current maturities of long-term debt, using market prices in effect on the valuation date:

	NW Natural
	June 30,				December 31,
In thousands	2021		2020		2020
Gross long-term debt	$	924,700	$	924,700	$	924,700
Unamortized debt issuance costs	(7,291)		(7,688)		(7,480)
Carrying amount	$	917,409	$	917,012	$	917,220
Estimated fair value(1)	$	1,043,696	$	1,097,188	$	1,097,348

(1) Estimated fair value does not include unamortized debt issuance costs.

9. PENSION AND OTHER POSTRETIREMENT BENEFIT COSTS

NW Natural maintains a qualified non-contributory defined benefit pension plan (Pension Plan), non-qualified supplemental pension plans for eligible executive officers and other key employees, and other postretirement employee benefit plans. NW Natural also has a qualified defined contribution plan (Retirement K Savings Plan) for all eligible employees. The Pension Plan and Retirement K Savings Plan have plan assets, which are held in qualified trusts to fund retirement benefits.

The service cost component of net periodic benefit cost for NW Natural pension and other postretirement benefit plans is recognized in operations and maintenance expense in the consolidated statements of comprehensive income. The other non-service cost components are recognized in other income (expense), net in the consolidated statements of comprehensive income.

The following table provides the components of net periodic benefit cost for the pension and other postretirement benefit plans:

	Three Months Ended June 30,								Six Months Ended June 30,
	Pension Benefits				Other Postretirement Benefits				Pension Benefits				Other Postretirement Benefits
In thousands	2021		2020		2021		2020		2021		2020		2021		2020
Service cost	$	1,714	$	1,658	$	56	$	64	$	3,428	$	3,315	$	111	$	128
Interest cost	3,342		4,011		165		223		6,685		8,022		330		446
Expected return on plan assets	(6,099)		(5,496)		—		—		(12,198)		(10,992)		—		—
Amortization of prior service credit	—		—		(117)		(117)		—		—		(234)		(234)
Amortization of net actuarial loss	5,500		4,778		131		142		11,001		9,556		262		285
Net periodic benefit cost	4,457		4,951		235		312		8,916		9,901		469		625
Amount allocated to construction	(743)		(680)		(22)		(23)		(1,469)		(1,348)		(43)		(46)
Net periodic benefit cost charged to expense	3,714		4,271		213		289		7,447		8,553		426		579
Amortization of regulatory balancing account	1,281		1,281		—		—		4,082		4,082		—		—
Net amount charged to expense	$	4,995	$	5,552	$	213	$	289	$	11,529	$	12,635	$	426	$	579

Net periodic benefit costs are reduced by amounts capitalized to NGD plant. In addition, net periodic benefit costs were recorded to a regulatory balancing account as approved by the OPUC and amortized accordingly.

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The following table presents amounts recognized in accumulated other comprehensive loss (AOCL) and the changes in AOCL related to non-qualified employee benefit plans:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2021		2020		2021		2020
Beginning balance	$	(12,681)	$	(10,573)	$	(12,902)	$	(10,733)
Amounts reclassified from AOCL:
Amortization of actuarial losses	301		218		602		436
Total reclassifications before tax	301		218		602		436
Tax benefit	(80)		(58)		(160)		(116)
Total reclassifications for the period	221		160		442		320
Ending balance	$	(12,460)	$	(10,413)	$	(12,460)	$	(10,413)

Employer Contributions to Company-Sponsored Defined Benefit Pension Plans

For the six months ended June 30, 2021, NW Natural made cash contributions totaling $9.6 million to qualified defined benefit pension plans. The American Rescue Plan, which was signed into law on March 11, 2021, includes a provision for pension relief that extends the amortization period for required contributions from 7 to 15 years and provides for the stabilization of interest rates used to calculate future required contributions. As a result, NW Natural does not expect to make any further plan contributions during the remainder of 2021.

Defined Contribution Plan

The Retirement K Savings Plan is a qualified defined contribution plan under Internal Revenue Code Sections 401(a) and 401(k). Employer contributions totaled $4.7 million and $4.4 million for the six months ended June 30, 2021 and 2020, respectively.

See Note 10 in the 2020 Form 10-K for more information concerning these retirement and other postretirement benefit plans.

10. INCOME TAX

An estimate of annual income tax expense is made each interim period using estimates for annual pre-tax income, regulatory flow-through adjustments, tax credits, and other items. The estimated annual effective tax rate is applied to year-to-date, pre-tax income to determine income tax expense for the interim period consistent with the annual estimate. Discrete events are recorded in the interim period in which they occur or become known.

The effective income tax rate varied from the federal statutory rate due to the following:

	Three Months Ended June 30,
	NW Holdings						NW Natural
In thousands	2021			2020			2021			2020
Income tax at statutory rate (federal)	$	(210)		$	(1,429)		$	184		$	(1,287)
State income tax	(48)			(333)			41			(281)
Increase (decrease):
Differences required to be flowed-through by regulatory commissions	21			173			21			173
Other, net	(40)			(83)			42			(24)
Total provision for income taxes on continuing operations	$	(277)		$	(1,672)		$	288		$	(1,419)
Effective income tax rate for continuing operations	27.7		%	24.6		%	32.8		%	23.1		%

	Six Months Ended June 30,
	NW Holdings						NW Natural
In thousands	2021			2020			2021			2020
Income tax at statutory rate (federal)	$	16,598		$	11,676		$	17,123		$	12,068
State income tax	7,260			3,344			7,366			3,456
Increase (decrease):
Differences required to be flowed-through by regulatory commissions	(3,584)			(2,352)			(3,584)			(2,352)
Other, net	(30)			(213)			(65)			(173)
Total provision for income taxes on continuing operations	$	20,244		$	12,455		$	20,840		$	12,999
Effective income tax rate for continuing operations	25.6		%	22.4		%	25.6		%	22.6		%

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The NW Holdings and NW Natural effective income tax rates for the six months ended June 30, 2021 compared to the same period in 2020 changed primarily as a result of changes in pre-tax income, the Oregon Corporate Activity Tax (CAT), and regulatory amortization of deferred Tax Cuts and Jobs Act (TCJA) benefits. See Note 11 in the 2020 Form 10-K for more detail on income taxes and effective tax rates.

The IRS Compliance Assurance Process (CAP) examination of the 2019 tax year was completed during the first quarter of 2021. There were no material changes to the return as filed. The 2020 and 2021 tax years are subject to examination under CAP.

11. PROPERTY, PLANT, AND EQUIPMENT

The following table sets forth the major classifications of property, plant, and equipment and accumulated depreciation of continuing operations:

	June 30,				December 31,
In thousands	2021		2020		2020
NW Natural:
NGD plant in service	$	3,623,092	$	3,404,145	$	3,548,543
NGD work in progress	99,646		90,903		63,901
Less: Accumulated depreciation	1,068,603		1,040,616		1,055,809
NGD plant, net	2,654,135		2,454,432		2,556,635
Other plant in service	66,315		64,317		66,300
Other construction work in progress	5,817		5,342		5,032
Less: Accumulated depreciation	20,140		19,144		19,637
Other plant, net	51,992		50,515		51,695
Total property, plant, and equipment, net	$	2,706,127	$	2,504,947	$	2,608,330
Other (NW Holdings):
Other plant in service	$	54,922	$	44,195	$	50,263
Less: Accumulated depreciation	5,120		2,539		3,823
Other plant, net	$	49,802	$	41,656	$	46,440
NW Holdings:
Total property, plant, and equipment, net	$	2,755,929	$	2,546,603	$	2,654,770
NW Natural:
Capital expenditures in accrued liabilities	$	37,968	$	31,847	$	25,129
NW Holdings:
Capital expenditures in accrued liabilities	$	38,395	$	31,847	$	25,129

NW Holdings

Other plant balances include long-lived assets associated with water and wastewater utility operations and non-regulated activities not held by NW Natural or its subsidiaries.

NW Natural

Other plant balances primarily include non-utility gas storage assets at the Mist facility and other long-lived assets not related to NGD.

12. GAS RESERVES

NW Natural has invested $188 million through the gas reserves program in the Jonah Field located in Wyoming as of June 30, 2021. Gas reserves are stated at cost, net of regulatory amortization, with the associated deferred tax benefits recorded as liabilities in the consolidated balance sheets. The investment in gas reserves provides long-term price protection for NGD customers through the original agreement with Encana Oil & Gas (USA) Inc. under which NW Natural invested $178 million and the amended agreement with Jonah Energy LLC under which an additional $10 million was invested.

The cost of gas, including a carrying cost for the rate base investment, is included in the annual Oregon PGA filing, which allows NW Natural to recover these costs through customer rates. The investment under the original agreement, less accumulated amortization and deferred taxes, earns a rate of return. See Note 13 in the 2020 Form 10-K.

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Gas produced from the additional wells is included in the Oregon PGA at a fixed rate of $0.4725 per therm, which approximates the 10-year hedge rate plus financing costs at the inception of the investment.

The following table outlines NW Natural's net gas reserves investment:

	June 30,				December 31,
In thousands	2021		2020		2020
Gas reserves, current	$	8,444	$	13,646	$	11,409
Gas reserves, non-current	178,863		173,661		175,898
Less: Accumulated amortization	149,011		132,202		141,414
Total gas reserves(1)	38,296		55,105		45,893
Less: Deferred taxes on gas reserves	8,760		13,324		10,572
Net investment in gas reserves	$	29,536	$	41,781	$	35,321

(1)     The net investment in additional wells included in total gas reserves was $2.7 million, $3.4 million and $3.0 million at June 30, 2021 and 2020 and December 31, 2020, respectively.

NW Natural's investment is included in NW Holdings' and NW Natural's consolidated balance sheets under gas reserves with the maximum loss exposure limited to the investment balance.

13. INVESTMENTS

Investment in Life Insurance Policies

Other investments include financial investments in life insurance policies, which are accounted for at cash surrender value, net of policy loans. See Note 14 in the 2020 Form 10-K.

Investments in Gas Pipeline

On August 6, 2020, NWN Energy completed the sale of 100% of its interest in Trail West Holdings, LLC (TWH) to an unrelated third party for a purchase price of $14.0 million, $7.0 million of which was paid upon closing the transaction, and $7.0 million is to be paid upon the one-year anniversary of the close date. The completion of the sale resulted in an after-tax gain of approximately $0.5 million.

TWH was a variable interest entity reported under equity method accounting through its sale. The investment in TWH did not meet the criteria to be classified as held for sale or discontinued operations. The investment balance in TWH was $13.4 million at June 30, 2020. See Note 14 in the 2020 Form 10-K.

14. BUSINESS COMBINATIONS

2021 Business Combinations

During the six months ended June 30, 2021, NWN Water completed one acquisition of a water system that qualified as a business combination. The aggregate fair value of the preliminary consideration transferred for this acquisition was not material and is not significant to NW Holdings' results of operations.

2020 Business Combinations

During 2020, NWN Water and its subsidiaries completed two significant acquisitions qualifying as business combinations. The aggregate fair value of the total cash consideration transferred for these acquisitions was $38.1 million, most of which was allocated to property, plant and equipment and goodwill. These transactions align with NW Holdings' water sector strategy as it continues to expand its water services territories in the Pacific Northwest and beyond and included:

•Suncadia Water Company, LLC and Suncadia Environmental Company, LLC which were acquired by NWN Water of Washington on January 31, 2020, and

•T&W Water Service Company which was acquired by NWN Water of Texas on March 2, 2020.

As each of these acquisitions met the criteria of a business combination, a preliminary allocation of the consideration to the acquired net assets based on their estimated fair value as of the acquisition date was performed. In accordance with U.S. GAAP, the fair value determination involves management judgment in determining the significant estimates and assumptions used and was made using existing regulatory conditions for net assets associated with Suncadia Water Company, LLC and T&W Water Service Company.

Final goodwill of $18.2 million was recognized from the acquisitions described above. No intangible assets aside from goodwill were acquired. The goodwill recognized is attributable to the regulated water utility service territories, experienced workforces, and the strategic benefits from both the water and wastewater utilities expected from growth in their service territories. The total amount of goodwill that is expected to be deductible for income tax purposes is approximately $16.5 million. The acquisition costs associated with each business combination were expensed as incurred. The results of these business combinations were not material to the consolidated financial results of NW Holdings.

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Other Business Combinations

During 2020, NWN Water completed three additional acquisitions, comprised of four water systems and one wastewater system, which qualified as business combinations. The aggregate fair value of the preliminary consideration transferred for these acquisitions was approximately $1.5 million. These business combinations were not significant to NW Holdings' results of operations.

Goodwill

NW Holdings allocates goodwill to reporting units based on the expected benefit from the business combination. We perform an annual impairment assessment of goodwill at the reporting unit level, or more frequently if events and circumstances indicate that goodwill might be impaired. An impairment loss is recognized if the carrying value of a reporting unit’s goodwill exceeds its fair value.

As a result of all acquisitions completed, total goodwill was $69.3 million, $70.2 million and $69.2 million as of June 30, 2021, June 30, 2020 and December 31, 2020, respectively. The decrease in the goodwill balance from the second quarter of 2020 is primarily due to a measurement period adjustment that occurred in the fourth quarter of 2020, partially offset by acquisitions in the water sector. The increase in the goodwill balance from the fourth quarter of 2020 is primarily due to additions associated with our acquisitions in the water sector. All of our goodwill is related to water and wastewater acquisitions and is included in the other category for segment reporting purposes. The annual impairment assessment of goodwill occurs in the fourth quarter of each year. There have been no impairments recognized to date.

15. DERIVATIVE INSTRUMENTS

NW Natural enters into financial derivative contracts to hedge a portion of the NGD segment's natural gas sales requirements. These contracts include swaps, options, and combinations of option contracts. These derivative financial instruments are primarily used to manage commodity price variability. A small portion of NW Natural's derivative hedging strategy involves foreign currency exchange contracts.

NW Natural enters into these financial derivatives, up to prescribed limits, primarily to hedge price variability related to physical gas supply contracts as well as to hedge spot purchases of natural gas. The foreign currency forward contracts are used to hedge the fluctuation in foreign currency exchange rates for pipeline demand charges paid in Canadian dollars.

In the normal course of business, NW Natural also enters into indexed-price physical forward natural gas commodity purchase contracts and options to meet the requirements of NGD customers. These contracts qualify for regulatory deferral accounting treatment.

NW Natural also enters into exchange contracts related to the third-party asset management of its gas portfolio, some of which are derivatives that do not qualify for hedge accounting or regulatory deferral, but are subject to NW Natural's regulatory sharing agreement. These derivatives are recognized in operating revenues, net of amounts shared with NGD customers.

Notional Amounts

The following table presents the absolute notional amounts related to open positions on NW Natural derivative instruments:

	June 30,				December 31,
In thousands	2021		2020		2020
Natural gas (in therms):
Financial	680,335		654,145		784,400
Physical	419,148		570,600		457,593
Foreign exchange	$	6,477	$	7,176	$	5,896

Purchased Gas Adjustment (PGA)

Derivatives entered into by NW Natural for the procurement or hedging of natural gas for future gas years generally receive regulatory deferral accounting treatment. In general, commodity hedging for the current gas year is completed prior to the start of the gas year, and hedge prices are reflected in the weighted-average cost of gas in the PGA filing. Rates and hedging approaches may vary between states due to different rate structures and mechanisms. Hedge contracts entered into after the start of the PGA period are subject to the PGA incentive sharing mechanism in Oregon. NW Natural entered the 2020-21 and 2019-20 gas years with forecasted sales volumes hedged at 53% and 52% in financial swap and option contracts, and 17% and 19% in physical gas supplies, respectively. Hedge contracts entered into prior to the PGA filing in September 2020 were included in the PGA for the 2020-21 gas year. Hedge contracts entered into after the PGA filing, and related to subsequent gas years, may be included in future PGA filings and qualify for regulatory deferral.

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Unrealized and Realized Gain/Loss

The following table reflects the income statement presentation for the unrealized gains and losses from NW Natural's derivative instruments, which also represents all derivative instruments at NW Holdings:

	Three Months Ended June 30,
	2021				2020
In thousands	Natural gas commodity		Foreign exchange		Natural gas commodity		Foreign exchange
Benefit (expense) to cost of gas	$	16,323	$	(45)	$	5,492	$	459
Operating revenues (expense)	—		—		754		—
Amounts deferred to regulatory accounts on balance sheet	(16,323)		45		(6,119)		(459)
Total gain (loss) in pre-tax earnings	$	—	$	—	$	127	$	—

	Six Months Ended June 30,
	2021				2020
In thousands	Natural gas commodity		Foreign exchange		Natural gas commodity		Foreign exchange
Benefit (expense) to cost of gas	$	36,805	$	32	$	149	$	(7)
Operating revenues (expense)	(27)		—		(1,679)		—
Amounts deferred to regulatory accounts on balance sheet	(36,782)		(32)		1,286		7
Total gain (loss) in pre-tax earnings	$	(4)	$	—	$	(244)	$	—

Unrealized Gain/Loss

Outstanding derivative instruments related to regulated NGD operations are deferred in accordance with regulatory accounting standards. The cost of foreign currency forward and natural gas derivative contracts are recognized immediately in the cost of gas; however, costs above or below the amount embedded in the current year PGA are subject to a regulatory deferral tariff and therefore, are recorded as a regulatory asset or liability.

Realized Gain/Loss

NW Natural realized net gains of $4.2 million and $9.3 million for the three and six months ended June 30, 2021 from the settlement of natural gas financial derivative contracts, whereas, net losses of $1.1 million and $3.2 million were realized for the three and six months ended June 30, 2020. Realized gains and losses offset the higher or lower cost of gas purchased, resulting in no incremental amounts to collect or refund to customers.

Credit Risk Management of Financial Derivatives Instruments

No collateral was posted with or by NW Natural counterparties as of June 30, 2021 or 2020. NW Natural attempts to minimize the potential exposure to collateral calls by diversifying counterparties to manage liquidity risk. Counterparties generally allow a certain credit limit threshold before requiring NW Natural to post collateral against loss positions. Given NW Natural's counterparty credit limits and portfolio diversification, it was not subject to collateral calls in 2021 or 2020. The collateral call exposure is set forth under credit support agreements, which generally contain credit limits. 

NW Natural could also be subject to collateral call exposure where it has agreed to provide adequate assurance, which is not specific as to the amount of credit limit allowed, but could potentially require additional collateral in the event of a material adverse change. If credit-risk related contingent features within these contracts were triggered as of June 30, 2021, assuming current gas prices and a credit rating downgrade to a speculative level, we would not be required to post collateral calls, including estimates for adequate assurance.

NW Natural's financial derivative instruments are subject to master netting arrangements; however, they are presented on a gross basis in the consolidated balance sheets. NW Natural and its counterparties have the ability to set-off obligations to each other under specified circumstances. Such circumstances may include a defaulting party, a credit change due to a merger affecting either party, or any other termination event.

NW Natural’s current commodity financial swap and option contracts outstanding reflect unrealized gains of $54.3 million and $5.3 million at June 30, 2021 and June 30, 2020, respectively. If netted by counterparty, NW Natural's physical and financial derivative position would result in an asset of $51.8 million and a liability of $1.6 million as of June 30, 2021, an asset of $6.7 million and a liability of $1.5 million as of June 30, 2020, and an asset of $14.1 million and a liability of $1.3 million as of December 31, 2020.

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NW Natural is exposed to derivative credit and liquidity risk primarily through securing fixed price natural gas commodity swaps with financial counterparties. NW Natural utilizes master netting arrangements through International Swaps and Derivatives Association contracts to minimize this risk along with collateral support agreements with counterparties based on their credit ratings. In certain cases, NW Natural requires guarantees or letters of credit from counterparties to meet its minimum credit requirement standards. See Note 16 in the 2020 Form 10-K for additional information.

Fair Value

In accordance with fair value accounting, NW Natural includes non-performance risk in calculating fair value adjustments. This includes a credit risk adjustment based on the credit spreads of NW Natural counterparties when in an unrealized gain position, or on NW Natural's own credit spread when in an unrealized loss position. The inputs in our valuation models include natural gas futures, volatility, credit default swap spreads and interest rates. Additionally, the assessment of non-performance risk is generally derived from the credit default swap market and from bond market credit spreads. The impact of the credit risk adjustments for all outstanding derivatives was immaterial to the fair value calculation at June 30, 2021. Using significant other observable or Level 2 inputs, the net fair value was an asset of $50.2 million, an asset of $5.2 million, and an asset of $12.8 million as of June 30, 2021 and 2020, and December 31, 2020, respectively. No Level 3 inputs were used in our derivative valuations during the six months ended June 30, 2021 and 2020. See Note 2 in the 2020 Form 10-K.

16. ENVIRONMENTAL MATTERS

NW Natural owns, or previously owned, properties that may require environmental remediation or action. The range of loss for environmental liabilities is estimated based on current remediation technology, enacted laws and regulations, industry experience gained at similar sites, and an assessment of the probable level of involvement and financial condition of other potentially responsible parties (PRPs). When amounts are prudently expended related to site remediation of those sites described herein, NW Natural has recovery mechanisms in place to collect 96.7% of remediation costs allocable to Oregon customers and 3.3% of costs allocable to Washington customers.

These sites are subject to the remediation process prescribed by the Environmental Protection Agency (EPA) and the Oregon Department of Environmental Quality (ODEQ). The process begins with a remedial investigation (RI) to determine the nature and extent of contamination and then a risk assessment (RA) to establish whether the contamination at the site poses unacceptable risks to humans and the environment. Next, a feasibility study (FS) or an engineering evaluation/cost analysis (EE/CA) evaluates various remedial alternatives. It is at this point in the process when NW Natural is able to estimate a range of remediation costs and record a reasonable potential remediation liability, or make an adjustment to the existing liability. From this study, the regulatory agency selects a remedy and issues a Record of Decision (ROD). After a ROD is issued, NW Natural would seek to negotiate a consent decree or consent judgment for designing and implementing the remedy. NW Natural would have the ability to further refine estimates of remediation liabilities at that time.

Remediation may include treatment of contaminated media such as sediment, soil and groundwater, removal and disposal of media, institutional controls such as legal restrictions on future property use, or natural recovery. Following construction of the remedy, the EPA and ODEQ also have requirements for ongoing maintenance, monitoring and other post-remediation care that may continue for many years. Where appropriate and reasonably known, NW Natural will provide for these costs in the remediation liabilities described below.

Due to the numerous uncertainties surrounding the course of environmental remediation and the preliminary nature of several site investigations, in some cases, NW Natural may not be able to reasonably estimate the high end of the range of possible loss. In those cases, the nature of the possible loss has been disclosed, as has the fact that the high end of the range cannot be reasonably estimated where a range of potential loss is available. Unless there is an estimate within the range of possible losses that is more likely than other cost estimates within that range, NW Natural records the liability at the low end of this range. It is likely changes in these estimates and ranges will occur throughout the remediation process for each of these sites due to the continued evaluation and clarification concerning responsibility, the complexity of environmental laws and regulations and the determination by regulators of remediation alternatives. In addition to remediation costs, NW Natural could also be subject to Natural Resource Damages (NRD) claims. NW Natural will assess the likelihood and probability of each claim and recognize a liability if deemed appropriate. Refer to "Other Portland Harbor" below.

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Environmental Sites

The following table summarizes information regarding liabilities related to environmental sites, which are recorded in other current liabilities and other noncurrent liabilities in NW Natural's balance sheet:

	Current Liabilities						Non-Current Liabilities
	June 30,				December 31,		June 30,				December 31,
In thousands	2021		2020		2020		2021		2020		2020
Portland Harbor site:
Gasco/Siltronic Sediments	$	6,658	$	10,431	$	7,596	$	41,652	$	41,945	$	43,725
Other Portland Harbor	2,195		2,434		1,942		6,588		6,228		7,020
Gasco/Siltronic Upland site	12,442		10,979		14,887		38,401		41,878		40,250
Front Street site	1,219		10,222		3,816		975		1,059		1,107
Oregon Steel Mills	—		—		—		179		179		179
Total	$	22,514	$	34,066	$	28,241	$	87,795	$	91,289	$	92,281

Portland Harbor Site

The Portland Harbor is an EPA listed Superfund site that is approximately 10 miles long on the Willamette River and is adjacent to NW Natural's Gasco uplands site. NW Natural is one of over one hundred PRPs, each jointly and severally liable, at the Superfund site. In January 2017, the EPA issued its Record of Decision, which selects the remedy for the clean-up of the Portland Harbor site (Portland Harbor ROD). The Portland Harbor ROD estimates the present value total cost at approximately $1.05 billion with an accuracy between -30% and +50% of actual costs.

NW Natural's potential liability is a portion of the costs of the remedy for the entire Portland Harbor Superfund site. The cost of that remedy is expected to be allocated among more than one hundred PRPs. NW Natural is participating in a non-binding allocation process with the other PRPs in an effort to resolve its potential liability. The Portland Harbor ROD does not provide any additional clarification around allocation of costs among PRPs; accordingly, NW Natural has not modified any of the recorded liabilities at this time as a result of the issuance of the Portland Harbor ROD.

NW Natural manages its liability related to the Superfund site as two distinct remediation projects: the Gasco/Siltronic Sediments and Other Portland Harbor projects.

GASCO/SILTRONIC SEDIMENTS. In 2009, NW Natural and Siltronic Corporation entered into a separate Administrative Order on Consent with the EPA to evaluate and design specific remedies for sediments adjacent to the Gasco uplands and Siltronic uplands sites. NW Natural submitted a draft EE/CA to the EPA in May 2012 to provide the estimated cost of potential remedial alternatives for this site. In March 2020, NW Natural and the EPA amended the Administrative Order on Consent to include additional remedial design activities downstream of the Gasco sediments site and in the navigation channel. Siltronic Corporation is not a party to the amended order. In the second quarter of 2021, NW Natural began preliminary design discussions with the EPA. These preliminary design discussions did not include a cost estimate for alternatives, none of the alternatives are more likely than others at this time, and NW Natural expects further design discussion and iteration with the EPA.

The estimated costs for the various sediment remedy alternatives in the draft EE/CA for the additional studies and design work needed before the cleanup can occur, and for regulatory oversight throughout the cleanup range from $48.3 million to $350 million. NW Natural has recorded a liability of $48.3 million for the Gasco sediment clean-up, which reflects the low end of the range. At this time, we believe sediments at the Gasco sediments site represent the largest portion of NW Natural's liability related to the Portland Harbor site discussed above.

OTHER PORTLAND HARBOR. While we believe liabilities associated with the Gasco/Siltronic sediments site represent NW Natural's largest exposure, there are other potential exposures associated with the Portland Harbor ROD, including NRD costs and harborwide remedial design and cleanup costs (including downstream petroleum contamination), for which allocations among the PRPs have not yet been determined. 

NW Natural and other parties have signed a cooperative agreement with the Portland Harbor Natural Resource Trustee council to participate in a phased NRD assessment to estimate liabilities to support an early restoration-based settlement of NRD claims. One member of this Trustee council, the Yakama Nation, withdrew from the council in 2009, and in 2017, filed suit against NW Natural and 29 other parties seeking remedial costs and NRD assessment costs associated with the Portland Harbor site, set forth in the complaint. The complaint seeks recovery of alleged costs totaling $0.3 million in connection with the selection of a remedial action for the Portland Harbor site as well as declaratory judgment for unspecified future remedial action costs and for costs to assess the injury, loss or destruction of natural resources resulting from the release of hazardous substances at and from the Portland Harbor site. The Yakama Nation has filed two amended complaints addressing certain pleading defects and dismissing the State of Oregon. On the motion of NW Natural and certain other defendants, the federal court has stayed the case pending the outcome of the non-binding allocation proceeding discussed above. NW Natural has recorded a liability for NRD claims which is at the low end of the range of the potential liability; the high end of the range cannot be reasonably estimated at this time. The NRD liability is not included in the aforementioned range of costs provided in the Portland Harbor ROD.

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Gasco Uplands Site

A predecessor of NW Natural, Portland Gas and Coke Company, owned a former gas manufacturing plant that was closed in 1958 (Gasco site) and is adjacent to the Portland Harbor site described above. The Gasco site has been under investigation by NW Natural for environmental contamination under the ODEQ Voluntary Cleanup Program (VCP). It is not included in the range of remedial costs for the Portland Harbor site noted above. The Gasco site is managed in two parts, the uplands portion and the groundwater source control action.

NW Natural submitted a revised Remedial Investigation Report for the uplands to ODEQ in May 2007. In March 2015, ODEQ approved Remedial Assessment (RA) for this site, enabling commencement of work on the FS in 2016. NW Natural has recognized a liability for the remediation of the uplands portion of the site which is at the low end of the range of potential liability; the high end of the range cannot be reasonably estimated at this time.

In October 2016, ODEQ and NW Natural agreed to amend their VCP agreement to incorporate a portion of the Siltronic property adjacent to the Gasco site formerly owned by Portland Gas & Coke between 1939 and 1960 into the Gasco RA and FS, excluding the uplands for Siltronic. Previously, NW Natural was conducting an investigation of manufactured gas plant constituents on the entire Siltronic uplands for ODEQ. Siltronic will be working with ODEQ directly on environmental impacts to the remainder of its property.

In September 2013, NW Natural completed construction of a groundwater source control system, including a water treatment station, at the Gasco site. NW Natural has estimated the cost associated with the ongoing operation of the system and has recognized a liability which is at the low end of the range of potential cost. NW Natural cannot estimate the high end of the range at this time due to the uncertainty associated with the duration of running the water treatment station, which is highly dependent on the remedy determined for both the upland portion as well as the final remedy for Gasco sediment exposure.

Other Sites

In addition to those sites above, NW Natural has environmental exposures at three other sites: Central Service Center, Front Street and Oregon Steel Mills. NW Natural may have exposure at other sites that have not been identified at this time. Due to the uncertainty of the design of remediation, regulation, timing of the remediation and in the case of the Oregon Steel Mills site, pending litigation, liabilities for each of these sites have been recognized at their respective low end of the range of potential liability; the high end of the range could not be reasonably estimated at this time.

FRONT STREET SITE. The Front Street site was the former location of a gas manufacturing plant NW Natural operated (the former Portland Gas Manufacturing site, or PGM). At ODEQ’s request, NW Natural conducted a sediment and source control investigation and provided findings to ODEQ. In December 2015, an FS on the former Portland Gas Manufacturing site was completed. 

In July 2017, ODEQ issued the PGM ROD. The ROD specifies the selected remedy, which requires a combination of dredging, capping, treatment, and natural recovery. In addition, the selected remedy also requires institutional controls and long-term inspection and maintenance. Construction of the remedy began in early July 2020 and was completed in October 2020. NW Natural has recognized an additional liability of $2.2 million for long term monitoring, regulatory and permitting issues, and post-construction work.

OREGON STEEL MILLS SITE. Refer to "Legal Proceedings" below.

Environmental Cost Deferral and Recovery

NW Natural has authorizations in Oregon and Washington to defer costs related to remediation of properties that are owned or were previously owned by NW Natural. In Oregon, a Site Remediation and Recovery Mechanism (SRRM) is currently in place to recover prudently incurred costs allocable to Oregon customers, subject to an earnings test. On October 21, 2019, the WUTC authorized an Environmental Cost Recovery Mechanism (ECRM) for recovery of prudently incurred costs allocable to Washington customers beginning November 1, 2019. See Note 18 in the 2020 Form 10-K for a description of SRRM and ECRM collection processes.

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The following table presents information regarding the total regulatory asset deferred:

	June 30,				December 31,
In thousands	2021		2020		2020
Deferred costs and interest (1)	$	50,604	$	42,098	$	44,516
Accrued site liabilities (2)	110,237		124,981		120,352
Insurance proceeds and interest	(69,730)		(81,146)		(69,253)
Total regulatory asset deferral(1)	$	91,111	$	85,933	$	95,615
Current regulatory assets(3)	5,688		4,176		4,992
Long-term regulatory assets(3)	85,423		81,757		90,623

(1)     Includes pre-review and post-review deferred costs, amounts currently in amortization, and interest, net of amounts collected from customers.

(2)    Excludes 3.3% of the Front Street site liability as the OPUC only allows recovery of 96.7% of costs for those sites allocable to Oregon, including those that historically served only Oregon customers. Amounts excluded from regulatory assets were $0.1 million at June 30, 2021, $0.4 million at June 30, 2020, and $0.2 million at December 31, 2020,

(3)    Environmental costs relate to specific sites approved for regulatory deferral by the OPUC and WUTC. In Oregon, NW Natural earns a carrying charge on cash amounts paid, whereas amounts accrued but not yet paid do not earn a carrying charge until expended. It also accrues a carrying charge on insurance proceeds for amounts owed to customers. In Washington, neither the cash paid nor insurance proceeds received accrue a carrying charge. Current environmental costs represent remediation costs management expects to collect from customers in the next 12 months. Amounts included in this estimate are still subject to a prudence and earnings test review by the OPUC and do not include the $5.0 million tariff rider. The amounts allocable to Oregon are recoverable through NGD rates, subject to an earnings test.

Environmental Earnings Test

To the extent NW Natural earns at or below its authorized Return on Equity (ROE) as defined by the SRRM, remediation expenses and interest in excess of the $5.0 million tariff rider and $5.0 million insurance proceeds are recoverable through the SRRM. To the extent NW Natural earns more than its authorized ROE in a year, it is required to cover environmental expenses and interest on expenses greater than the $10.0 million with those earnings that exceed its authorized ROE.

Legal Proceedings

NW Holdings is not currently party to any direct claims or litigation, though in the future it may be subject to claims and litigation arising in the ordinary course of business.

NW Natural is subject to claims and litigation arising in the ordinary course of business including the matters discussed above and ordinary course claims and litigation noted below. Although the final outcome of any of these legal proceedings cannot be predicted with certainty, including the matter described below, NW Natural and NW Holdings do not expect that the ultimate disposition of any of these matters will have a material effect on financial condition, results of operations or cash flows. See also Part II, Item 1, “Legal Proceedings".

Oregon Steel Mills Site

See Note 18 in the 2020 Form 10-K.

For additional information regarding other commitments and contingencies, see Note 17 in the 2020 Form 10-K.

17. DISCONTINUED OPERATIONS

NW Holdings

On June 20, 2018, NWN Gas Storage, then a wholly-owned subsidiary of NW Natural, entered into a Purchase and Sale Agreement (the Agreement) that provided for the sale by NWN Gas Storage of all of the membership interests in Gill Ranch. Gill Ranch owns a 75% interest in the natural gas storage facility located near Fresno, California known as the Gill Ranch Gas Storage Facility.

On December 4, 2020, NWN Gas Storage closed the sale of all of the membership interests in Gill Ranch and received payment of the initial cash purchase price of $13.5 million less the $1.0 million deposit previously paid. Furthermore, additional payments to NWN Gas Storage may be made subject to a maximum amount of $15.0 million in the aggregate (subject to a working capital adjustment) based on the economic performance of Gill Ranch for each full gas storage year (April 1 of one year through March 31 of the following year) occurring after the closing and the remaining portion of the 2020-2021 gas storage year and will continue until such time as the maximum amount has been paid. The fair value of this arrangement at the closing date was zero based on a discounted cash flow forecast. Subsequent changes in the fair value will be recorded in earnings. The completion of the sale resulted in an after-tax gain of $5.9 million for the year ended December 31, 2020.

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As a result of the disposition of the membership interests in Gill Ranch, there were no assets or liabilities classified as held for sale at June 30, 2021 or December 31, 2020 and there was no activity in the consolidated statement of comprehensive income for the three and six months ended June 30, 2021. The assets and liabilities of the discontinued operations classified as held for sale in the consolidated balance sheet at June 30, 2020 include the following:

	NW Holdings Discontinued Operations
In thousands	June 30, 2020
Assets:
Accounts receivable	$	1,621
Inventories	821
Other current assets	250
Property, plant, and equipment, net	13,328
Operating lease right of use asset	118
Other non-current assets	254
Total discontinued operations assets - current assets (1)	$	16,392
Liabilities:
Accounts payable	$	999
Other current liabilities	1,119
Operating lease liabilities	112
Other non-current liabilities	11,344
Total discontinued operations liabilities - current liabilities (1)	$	13,574

(1)     The total assets and liabilities of Gill Ranch were classified as current because it was probable that the sale would be completed within one year.

The following table presents the operating results of Gill Ranch and is presented net of tax on the consolidated statements of comprehensive income:

	NW Holdings Discontinued Operations
	Three Months Ended June 30,		Six Months Ended June 30,
In thousands, except per share data	2020		2020
Revenues	$	3,374	$	4,282
Expenses:
Operations and maintenance	2,604		4,184
General taxes	53		100
Depreciation and amortization	106		212
Other expenses and interest	228		459
Total expenses	2,991		4,955
Income (loss) from discontinued operations before income taxes	383		(673)
Income tax expense (benefit)	103		(175)
Income (loss) from discontinued operations, net of tax	$	280	$	(498)
Earnings (loss) from discontinued operations per share of common stock:
Basic	$	0.01	$	(0.01)
Diluted	$	0.01	$	(0.01)

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is management’s assessment of NW Holdings' and NW Natural's financial condition, including the principal factors that affect results of operations. The discussion refers to the consolidated results from continuing operations for the three and six months ended June 30, 2021 and 2020 of NW Holdings, the substantial majority of which consist of the operating results of NW Natural. When significant activity exists at NW Holdings that does not exist at NW Natural, additional disclosure has been provided. References in this discussion to "Notes" are to the Notes to Unaudited Consolidated Financial Statements in this report. A significant portion of the business results are seasonal in nature, and, as such, the results of operations for the three month period is not necessarily indicative of expected fiscal year results. Therefore, this discussion should be read in conjunction with NW Holdings' and NW Natural's 2020 Annual Report on Form 10-K, as applicable (2020 Form 10-K).

NW Natural's natural gas distribution activities are reported in the natural gas distribution (NGD) segment. The NGD segment includes our NW Natural local gas distribution business, NWN Gas Reserves, which is a wholly owned subsidiary of Energy Corp, the NGD-portion of NW Natural's Mist storage facility in Oregon, and NW Natural RNG Holding Company, LLC. Other activities aggregated and reported as other at NW Natural include the non-NGD storage activity at Mist as well as asset management services and the appliance retail center operations. Other activities aggregated and reported as other at NW Holdings include NWN Energy's equity investment in Trail West Holdings, LLC (TWH) through August 6, 2020; NNG Financial's investment in Kelso-Beaver Pipeline (KB Pipeline); and NWN Water, which through itself or its subsidiaries owns and continues to pursue investments in the water sector. See Note 4 for further discussion of our business segment and other, as well as our direct and indirect wholly-owned subsidiaries. See Note 13 for information on our TWH investment.

In addition, NW Holdings reported discontinued operations results related to the sale of Gill Ranch Storage, LLC (Gill Ranch). NW Natural Gas Storage, LLC (NWN Gas Storage), an indirect wholly-owned subsidiary of NW Holdings, entered into a Purchase and Sale Agreement during the second quarter of 2018 that provided for the sale of all membership interests in Gill Ranch. Gill Ranch owns a 75% interest in the natural gas storage facility located near Fresno, California known as the Gill Ranch Gas Storage Facility. The sale was completed on December 4, 2020. See Note 17 for information on discontinued operations.

NON-GAAP FINANCIAL MEASURES. In addition to presenting the results of operations and earnings amounts in total, certain financial measures are expressed in cents per share, which are non-GAAP financial measures. All references in this section to earnings per share (EPS) are on the basis of diluted shares. We use such non-GAAP financial measures to analyze our financial performance because we believe they provide useful information to our investors and creditors in evaluating our financial condition and results of operations. Our non-GAAP financial measures should not be considered a substitute for, or superior to, measures calculated in accordance with U.S. GAAP.

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EXECUTIVE SUMMARY

Our core mission is to provide safe, reliable and affordable essential utility services in an environmentally responsible way to better the lives of the public we serve. See "2021 Outlook" in the 2020 Form 10-K for more information. Current highlights include:

•Reported a net loss of $0.02 per share (diluted) for the second quarter of 2021, compared to a net loss of $0.16 per share (diluted) in the prior year;

•Reported net income of $1.92 per share (diluted) for the first six months of 2021, compared to net income of $1.40 per share (diluted) in the prior year;

•Reached a multi-party settlement in the Washington general rate case;

•Added over 12,000 meters during the past twelve months for a growth rate of 1.6% at June 30, 2021; and

•Continued executing our water and wastewater acquisition and investment strategy and providing clean, reliable water and wastewater service to approximately 64,000 people through 27,000 connections.

Key quarter-to-date financial highlights for NW Holdings include:

	Three Months Ended June 30,
	2021				2020				QTD
In thousands, except per share data	Amount		Per Share		Amount		Per Share		Change
Net loss from continuing operations	$	(724)	$	(0.02)	$	(5,132)	$	(0.17)	$	4,408
Income from discontinued operations, net of tax	—		—		280		0.01		(280)
Consolidated net loss	$	(724)	$	(0.02)	$	(4,852)	$	(0.16)	$	4,128
NGD margin	$	91,206			$	79,651			$	11,555

Key quarter-to-date financial highlights for NW Natural include:

	Three Months Ended June 30,
	2021		2020		QTD
In thousands	Amount		Amount		Change
Consolidated net income (loss)	$	589	$	(4,712)	$	5,301
NGD margin	$	91,206	$	79,651	$	11,555

THREE MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020.

Consolidated net income increased $5.3 million at NW Natural primarily due to the following factors:

•$11.6 million increase in NGD segment margin driven by the 2020 Oregon rate case and the recovery of commercial customer activity compared to the prior year; and

•$1.2 million decrease in interest expense primarily due to lower short-term debt balances; partially offset by

•$3.7 million increase in operations and maintenance expenses due to higher lease expense, professional service expenses, and information technology costs;

•$2.5 million increase in depreciation and amortization expense due to property, plant, and equipment additions as we continued to invest in our natural gas utility systems; and

•$1.7 million increase in income tax expense primarily due to an increase in pretax income.

Net loss from continuing operations decreased $4.4 million at NW Holdings primarily due to the following factors:

•$5.3 million increase in consolidated net income at NW Natural as discussed above; partially offset by

•$0.9 million decrease in other net income primarily reflecting higher holding company expenses.

Key year-to-date financial highlights for NW Holdings include:

	Six Months Ended June 30,
	2021				2020				YTD
In thousands, except per share data	Amount		Per Share		Amount		Per Share		Change
Net income from continuing operations	$	58,793	$	1.92	$	43,144	$	1.41	$	15,649
Loss from discontinued operations, net of tax	—		—		(498)		(0.01)		498
Consolidated net income	$	58,793	$	1.92	$	42,646	$	1.40	$	16,147

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Key year-to-date financial highlights for NW Natural include:

	Six Months Ended June 30,
	2021		2020		YTD
In thousands	Amount		Amount		Change
Consolidated net income	$	60,700	$	44,467	$	16,233
Natural gas distribution margin	$	263,846	$	233,795	$	30,051

SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020.

Consolidated net income increased $16.2 million at NW Natural primarily due to the following factors:

•$30.1 million increase in NGD segment margin driven by the 2020 Oregon rate case and residential customer growth; and

•$7.2 million increase in asset management revenue primarily due to the 2021 cold weather event discussed below; partially offset by

•$7.8 million increase in income tax expense due to an increase in pretax income and the Oregon Corporate Activity Tax;

•$6.7 million increase in operations and maintenance expenses due to higher lease expense, compensation and benefit costs, and professional service expenses;

•$5.5 million increase in depreciation expense due to property, plant, and equipment additions as we continued to invest in our natural gas utility systems; and

•$2.0 million increase in general taxes primarily due to higher assessed property values.

Net income from continuing operations increased $15.6 million at NW Holdings primarily due to the following factors:

•$16.2 million increase in consolidated net income at NW Natural as discussed above; partially offset by

•$0.6 million decrease in other net income primarily reflecting higher holding company expenses.

2021 COLD WEATHER EVENT. In February 2021, Portland, Oregon and the surrounding region, like much of the country, experienced a severe winter storm with several days of colder temperatures resulting in elevated natural gas demand and significantly higher spot prices. Additional market gas purchases and other expenses resulted in approximately $29 million of higher commodity costs, of which approximately $27 million was deferred to a regulatory asset for recovery in future rates. The result was approximately $2 million of lower natural gas utility margin in the first six months of 2021. The higher commodity costs were offset by approximately $39 million of asset management revenue, of which approximately $33 million was deferred to a regulatory liability for the benefit of customers.

COVID-19 AND CURRENT ECONOMIC CONDITIONS. The novel coronavirus (COVID-19), which was declared a pandemic by the World Health Organization in March 2020, has resulted in severe and widespread global, national, and local economic and societal disruptions. As a critical infrastructure energy company that provides an essential service to our customers, NW Natural has well-defined emergency response command structures and protocols. In response to the pandemic, NW Natural mobilized its incident command team and business continuity plans in early March 2020, with a focus on the safety of our 1,200 employees and the 2.5 million people, business partners and communities we serve. For employees whose role requires them to work in the field or onsite, we are following CDC, OSHA, and state specific requirements. Our water companies are following similar protocols.

The states we operate in have reopened with many businesses beginning to return to normal operating practices; however, the timing for recovery of businesses and local economies remains difficult to predict and dependent on the future impacts of the COVID-19 pandemic, resurgences or mutations of the virus, or efficacy of vaccines. We currently have the following expectations and beliefs:

•Both NW Natural and NW Natural Water expect their capital projects in 2021 to move forward as planned.

•NW Natural's customer growth rate is affected by both new meter connections and when existing customers close their accounts and disconnect their meters. Customer growth from construction and conversions remained strong during the first six months of 2021 and commercial customer counts remained steady. A slow economic recovery could result in a decline in new meter connections, which could adversely affect margin in 2021 and the following periods. In addition, we are closely monitoring our approximately 70,000 commercial and industrial natural gas meters, as a substantial decline in these meters could materially affect margin in 2021 and the following periods. We don't anticipate significant residential meter disconnections.

•NW Natural has seen lower utility margin from a reduction in overall sales volumes during the first six months of 2021 and 2020 attributed to COVID-19. While we are substantially through our peak heating season this spring, we may still see declines in volumes, depending on the resiliency of businesses in the communities in which we serve through the remainder of 2021. However, volumes do not translate directly to earnings as the majority of our NGD margin is not dependent on volumes.

•The state of Oregon reopened June 30, 2021 and the majority of our commercial and industrial customers have returned to normal business practices. In Oregon, residential customers began the process of resuming normal business practices on June 30, 2021 and Washington residential customers are expected to resume beginning September 30, 2021. The recognition of late and disconnection fee revenue may be delayed beyond our current expectations.

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•As the pandemic continued into the 2020-2021 winter heating season, certain customers were faced with seasonally higher natural gas usage and bills. This could have a financial strain on our customers and impact their ability to pay their bills in a timely manner thus potentially increasing our working capital needs.

•While we deferred to a regulatory asset certain COVID-related financial impacts as agreed upon with regulators, ultimate recovery of these costs and prudence review will be determined through separate proceedings and may be subject to modification as a result of those proceedings.

Given the evolving nature of the pandemic and resulting economic conditions, we are continually monitoring our business operations and the larger trends and developments to take additional measures we believe are warranted to continue providing safe and reliable service to our customers and communities while protecting our employees.

See the discussion in "Results of Operations" below for additional detail regarding all significant activity that occurred during the second quarter of 2021.

DIVIDENDS

Dividend highlights include:  

	Three Months Ended June 30,				Six Months Ended June 30,				QTD Change		YTD Change
Per common share	2021		2020		2021		2020
Dividends paid	$	0.4800	$	0.4775	$	0.9600	$	0.9550	$	0.0025	$	0.0050

In July 2021, the Board of Directors of NW Holdings declared a quarterly dividend on NW Holdings common stock of $0.4800 per share. The dividend is payable on August 13, 2021 to shareholders of record on July 30, 2021, reflecting an annual indicated dividend rate of $1.92 per share.

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RESULTS OF OPERATIONS

Regulatory Matters

For additional information, see Part II, Item 7 "Results of Operations—Regulatory Matters" in the 2020 Form 10-K.

Regulation and Rates 

NATURAL GAS DISTRIBUTION. NW Natural's natural gas distribution business is subject to regulation by the OPUC and WUTC with respect to, among other matters, rates and terms of service, systems of accounts, and issuances of securities by NW Natural. At June 30, 2021, approximately 88% of NGD customers were located in Oregon, with the remaining 12% in Washington. Earnings and cash flows from natural gas distribution operations are largely determined by rates set in general rate cases and other proceedings in Oregon and Washington. They are also affected by weather, the local economies in Oregon and Washington, the pace of customer growth in the residential, commercial, and industrial markets, and NW Natural's ability to remain price competitive, control expenses, and obtain reasonable and timely regulatory recovery of its natural gas distribution-related costs, including operating expenses and investment costs in plant and other regulatory assets. See "Most Recent Completed General Rate Cases" below.

MIST INTERSTATE GAS STORAGE. NW Natural's interstate storage activity at Mist is subject to regulation by the OPUC, WUTC, and the Federal Energy Regulatory Commission (FERC) with respect to, among other matters, rates and terms of service. The OPUC also regulates the intrastate storage services at Mist, while FERC regulates the interstate storage services at Mist. The FERC uses a maximum cost of service model which allows for gas storage prices to be set at or below the cost of service as approved by each agency in their last regulatory filing. The OPUC Schedule 80 rates are tied to the FERC rates, and are updated whenever NW Natural modifies FERC maximum rates.

OTHER. The wholly owned regulated water businesses of NWN Water, a wholly owned subsidiary of NW Holdings, are subject to regulation by the utility commissions in the states in which they are located, which currently include Oregon, Washington, Idaho, and Texas.

Most Recent Completed General Rate Cases  

OREGON. On October 16, 2020, the OPUC issued an order concluding NW Natural's general rate case filed in December 2019 (Order). The Order provided for a total revenue requirement increase of approximately $45 million over revenues from pre-existing rates. The revenue requirement is based on the following assumptions:

•Capital structure of 50% common equity and 50% long-term debt;

•Return on equity of 9.4%;

•Cost of capital of 6.965%; and

•Average rate base of $1.44 billion or an increase of $242.1 million since the last rate case.

Under the terms of the Order, NW Natural was authorized to begin to recover the expense associated with the Oregon Corporate Activity Tax (CAT) as a component of base rates. See "Corporate Activity Tax" below.

In NW Natural's previous Oregon rate case in March 2019, the OPUC ordered specific terms by which excess deferred income taxes (EDIT) associated with the Tax Cuts and Jobs Act (TCJA) would be provided to customers directly or applied for the benefit of customers. The Order in the most recent Oregon rate case directs NW Natural to include a true-up credit to customers of approximately $1.0 million as a temporary rate adjustment to be amortized over the 2020-21 PGA year.

In addition, the Order approves the application of NW Natural’s decoupling calculation for the months of November and May to the month of April. The decoupling mechanism is intended to encourage customers to conserve energy without adversely affecting earnings due to reductions in sales volumes.

From November 1, 2018 through October 31, 2020, the OPUC authorized rates to customers based on an ROE of 9.4%, an overall rate of return of 7.317%, and a capital structure of 50% common equity and 50% long-term debt.

WASHINGTON. Effective November 1, 2019, the WUTC authorized rates to customers based on an ROE of 9.4% and an overall rate of return of 7.161% with a capital structure of 49% common equity, 1% short-term debt, and 50% long-term debt. The WUTC also authorized the recovery of environmental remediation expenses allocable to Washington customers through an Environmental Cost Recovery Mechanism (ECRM) and directed NW Natural to provide federal tax reform benefits to customers. See "Rate Mechanisms - Environmental Cost Deferral and Recovery - Washington ECRM" below.

FERC. NW Natural is required under its Mist interstate storage certificate authority and rate approval orders to file every five years either a petition for rate approval or a cost and revenue study to change or justify maintaining the existing rates for its interstate storage services. On October 12, 2018, NW Natural filed a rate petition with FERC for revised cost-based maximum rates, which incorporated the new federal corporate income tax rate. The revised rates were effective beginning November 1, 2018.

NW Natural continuously evaluates the need for rate cases in its jurisdictions.

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Regulatory Proceeding Updates

2021 WASHINGTON RATE CASE. On December 18, 2020, NW Natural filed a request for a general rate increase with the WUTC. On July 27, 2021, NW Natural, Staff of the WUTC, Alliance of Western Energy Consumers, and The Energy Project, which comprise all of the parties to the rate case other than the Public Counsel Unit of the Washington State Office of the Attorney General, filed a settlement with the WUTC that addresses all issues in the rate case (Comprehensive Settlement). The Comprehensive Settlement, if approved by the WUTC, would resolve all disputed issues in the rate case. The Comprehensive Settlement is subject to review and approval of the WUTC, and Staff's recommendation to approve the Comprehensive Settlement is not binding on the WUTC itself. For new rates to be effective, the WUTC must issue an order, which may approve or deny the terms of the Comprehensive Settlement or be issued under the WUTC's own terms with respect to the elements of the rate case.

The Comprehensive Settlement provides for an annual revenue requirement increase over two years, consisting of a 6.4% or $5.0 million increase in the first year beginning November 1, 2021 (Year One), and up to a 3.5% or $3.0 million increase in the second year beginning November 1, 2022 (Year Two). The revenue requirement increase for Year Two includes the addition to rate base of capital projects expected to be placed in-service by November 1, 2022 and is subject to a review and adjustments according to actual costs incurred and any additional direct offsetting factors. Under the terms of the Comprehensive Settlement, NW Natural will provide customers with an estimated $2.3 million offset to rates spread over the two years via suspension of amortization of a regulatory asset associated with NW Natural’s energy efficiency programs and via application of proceeds from the sale of real property in Oregon, which is expected to reduce the Year One rate increase to approximately 5.1% or $4.0 million and the Year Two rate increase to approximately 3.4% or $2.8 million. This two-year rate plan and mitigating provisions strive to balance the need to recover long-planned investments that support continued safe and reliable service to customers with the need to maintain affordable rates, especially during the challenging times and economic environment brought on by the COVID-19 pandemic. The increase is based upon the following assumptions:

•Cost of capital of 6.814%; and

•Average rate base of $194.7 million, an increase of $20.9 million since the last rate case for capital expenditures already expended at the time of filing, with an additional expected $31.2 million increase in Year One, and an additional expected $21.4 million increase in Year Two, with the increases in Year One and Year Two relating to expected capital expenditures in those years.

The parties to the Comprehensive Settlement have agreed not to specify the underlying inputs to the cost of capital, including capital structure and return on equity.

Rate Mechanisms

During 2021 and 2020, NW Natural's key approved rates and recovery mechanisms for each service area included:

	Oregon		Washington
	2018 Rate Case	2020 Rate Case (effective 11/1/2020)	2019 Rate Case (effective 11/1/2019)
Authorized Rate Structure:
ROE	9.4%	9.4%	9.4%
ROR	7.3%	7.0%	7.2%
Debt/Equity Ratio	50%/50%	50%/50%	51%/49%
Key Regulatory Mechanisms:
Purchased Gas Adjustment (PGA)	X	X	X
Gas Cost Incentive Sharing	X	X
Decoupling	X	X
Weather Normalization (WARM)	X	X
Environmental Cost Recovery	X	X	X
Interstate Storage and Asset Management Sharing	X	X	X

PURCHASED GAS ADJUSTMENT. Rate changes are established for NW Natural each year under PGA mechanisms in Oregon and Washington to reflect changes in the expected cost of natural gas commodity purchases. The PGA filings include gas costs under spot purchases as well as contract supplies, gas cost hedges, gas costs from the withdrawal of storage inventories, the production of gas reserves, interstate pipeline demand costs, temporary rate adjustments, which amortize balances of deferred regulatory accounts, and the removal of temporary rate adjustments effective for the previous year.

Each year, NW Natural hedges gas prices on a portion of NW Natural's annual sales requirement based on normal weather, including both physical and financial hedges. NW Natural entered the 2020-21 gas year with its forecasted sales volumes hedged at 47% in financial swap and option contracts, including hedging of 46% in Oregon and 58% in Washington. The percentage of total forecasted sales volume hedged was approximately 60% for Oregon and approximately 69% for Washington.

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NW Natural is also hedged between 2% and 61% for annual requirements over the subsequent five gas years, which consists of between 2% and 60% in Oregon and between 0% and 69% in Washington. Hedge levels are subject to change based on actual load volumes, which depend to a certain extent on weather, economic conditions, and estimated gas reserve production. Also, gas storage inventory levels may increase or decrease with storage expansion, changes in storage contracts with third parties, variations in the heat content of the gas, and/or storage recall by NW Natural.

In September 2020, NW Natural filed its annual PGA and received OPUC and WUTC approval in October 2020. PGA rate changes were effective November 1, 2020. Rates and hedging approaches may vary between states due to different rate structures and mechanisms.

Under the current PGA mechanism in Oregon, there is an incentive sharing provision whereby NW Natural is required to select each year an 80% deferral or a 90% deferral of higher or lower actual gas costs compared to estimated PGA prices, such that the impact on NW Natural's current earnings from the incentive sharing is either 20% or 10% of the difference between actual and estimated gas costs, respectively. For the 2019-20 and 2020-21 gas years, NW Natural selected the 90% deferral option. Under the Washington PGA mechanism, NW Natural defers 100% of the higher or lower actual gas costs, and those gas cost differences are passed on to customers through the annual PGA rate adjustment.

EARNINGS TEST REVIEW. NW Natural is subject to an annual earnings review in Oregon to determine if the NGD business is earning above its authorized ROE threshold. If NGD business earnings exceed a specific ROE level, then 33% of the amount above that level is required to be deferred or refunded to customers. Under this provision, if NW Natural selects the 80% deferral gas cost option, then NW Natural retains all earnings up to 150 basis points above the currently authorized ROE. If NW Natural selects the 90% deferral option, then it retains all earnings up to 100 basis points above the currently authorized ROE. For the 2019-20 and 2020-21 gas years, NW Natural selected the 90% deferral option. The ROE threshold is subject to adjustment annually based on movements in long-term interest rates. For calendar year 2020, the ROE threshold was 10.40%. NW Natural filed the 2020 earnings test in April 2021 indicating no customer refund adjustment. NW Natural does not expect a customer refund adjustment for 2021 based on results.

GAS RESERVES. In 2011, the OPUC approved the Encana gas reserves transaction to provide long-term gas price protection for NGD business customers and determined costs under the agreement would be recovered on an ongoing basis through the annual PGA mechanism. Gas produced from NW Natural's interests is sold at then prevailing market prices, and revenues from such sales, net of associated operating and production costs and amortization, are included in cost of gas. The cost of gas, including a carrying cost for the rate base investment made under the original agreement, is included in NW Natural's annual Oregon PGA filing, which allows NW Natural to recover these costs through customer rates. The net investment under the original agreement earns a rate of return.

In 2014, NW Natural amended the original gas reserves agreement in response to Encana's sale of its interest in the Jonah field located in Wyoming to Jonah Energy. Under the amended agreement with Jonah Energy, NW Natural has the option to invest in additional wells on a well-by-well basis with drilling costs and resulting gas volumes shared at the amended proportionate working interest for each well in which NW Natural invests. Volumes produced from the additional wells drilled after the amended agreement are included in NW Natural's Oregon PGA at a fixed rate of $0.4725 per therm. NW Natural has not participated in additional wells since 2014.

DECOUPLING. In Oregon, NW Natural has a decoupling mechanism. Decoupling is intended to break the link between earnings and the quantity of gas consumed by customers, removing any financial incentive to discourage customers’ efforts to conserve energy. The Oregon decoupling baseline usage per customer was reset in the 2020 Oregon general rate case. The Order in the 2020 Oregon general rate case also approved of extending NW Natural’s decoupling calculation to the month of April. This mechanism employs a use-per-customer decoupling calculation, which adjusts margin revenues to account for the difference between actual and expected customer volumes. The margin adjustment resulting from differences between actual and expected volumes under the decoupling component is recorded to a deferral account, which is included in the annual PGA filing.

WARM. In Oregon, NW Natural has an approved weather normalization mechanism, which is applied to residential and small commercial customer bills. This mechanism is designed to help stabilize the collection of fixed costs by adjusting residential and small commercial customer billings based on temperature variances from average weather, with rate decreases when the weather is colder than average and rate increases when the weather is warmer than average. The mechanism is applied to bills from December through mid-May of each heating season. The mechanism adjusts the margin component of customers’ rates to reflect average weather, which uses the 25-year average temperature for each day of the billing period. Daily average temperatures and 25-year average temperatures are based on a set point temperature of 59 degrees Fahrenheit for residential customers and 58 degrees Fahrenheit for commercial customers. The collections of any unbilled WARM amounts due to tariff caps and floors are deferred and earn a carrying charge until collected, or returned, in the PGA the following year. Residential and small commercial customers in Oregon are allowed to opt out of the weather normalization mechanism, and as of June 30, 2021, 8% of total eligible customers had opted out. NW Natural does not have a weather normalization mechanism approved for Washington customers, which account for about 12% of total customers. See "Business Segment—Natural Gas Distribution" below.

INDUSTRIAL TARIFFS. The OPUC and WUTC have approved tariffs covering NGD service to major industrial customers, which are intended to give NW Natural certainty in the level of gas supplies needed to serve this customer group. The approved terms

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include, among other things, an annual election period, special pricing provisions for out-of-cycle changes, and a requirement that industrial customers complete the term of their service election under NW Natural's annual PGA tariff.

ENVIRONMENTAL COST DEFERRAL AND RECOVERY. NW Natural has authorizations in Oregon and Washington to defer costs related to remediation of properties that are owned or were previously owned by NW Natural. In Oregon, a Site Remediation and Recovery Mechanism (SRRM) is currently in place to recover prudently incurred costs allocable to Oregon customers, subject to an earnings test. Effective beginning November 1, 2019, the WUTC authorized an Environmental Cost Recovery Mechanism (ECRM) for recovery of prudently incurred costs allocable to Washington customers.

Oregon SRRM

Under the Oregon SRRM collection process there are three types of deferred environmental remediation expense:

•Pre-review - This class of costs represents remediation spend that has not yet been deemed prudent by the OPUC. Carrying costs on these remediation expenses are recorded at NW Natural's authorized cost of capital. NW Natural anticipates the prudence review for annual costs and approval of the earnings test prescribed by the OPUC to occur by the third quarter of the following year.

•Post-review - This class of costs represents remediation spend that has been deemed prudent and allowed after applying the earnings test, but is not yet included in amortization. NW Natural earns a carrying cost on these amounts at a rate equal to the five-year treasury rate plus 100 basis points.

•Amortization - This class of costs represents amounts included in current customer rates for collection and is calculated as one-fifth of the post-review deferred balance. NW Natural earns a carrying cost equal to the amortization rate determined annually by the OPUC, which approximates a short-term borrowing rate. NW Natural included $4.2 million and $5.1 million of deferred remediation expense approved by the OPUC for collection during the 2020-21 and 2019-20 PGA years, respectively.

In addition, the SRRM also provides for the annual collection of $5.0 million from Oregon customers through a tariff rider. As it collects amounts from customers, NW Natural recognizes these collections as revenue net of any earnings test adjustments and separately amortizes an equal and offsetting amount of the deferred regulatory asset balance through the environmental remediation operating expense line shown separately in the operating expenses section of the Consolidated Statements of Comprehensive Income. For additional information, see Note 18 in the 2020 Form 10-K.

The SRRM earnings test is an annual review of adjusted NGD ROE compared to authorized NGD ROE. To apply the earnings test NW Natural must first determine what if any costs are subject to the test through the following calculation:

Annual spend

Less: $5.0 million base rate rider

          Prior year carry-over(1)

          $5.0 million insurance + interest on insurance

Total deferred annual spend subject to earnings test

Less: over-earnings adjustment, if any

Add: deferred interest on annual spend(2)

Total amount transferred to post-review

(1)     Prior year carry-over results when the prior year amount transferred to post-review is negative. The negative amount is carried over to offset annual spend in the following year.

(2)     Deferred interest is added to annual spend to the extent the spend is recoverable.

To the extent the NGD business earns at or below its authorized ROE as defined in the SRRM, the total amount transferred to post-review is recoverable through the SRRM. To the extent more than authorized ROE is earned in a year, the amount transferred to post-review would be reduced by those earnings that exceed its authorized ROE.

NW Natural concluded there was no earnings test adjustment for 2020 based on the environmental earnings test that was submitted in April 2021.

Washington ECRM

The ECRM established by the WUTC order effective November 1, 2019 permits NW Natural’s recovery of environmental remediation expenses allocable to Washington customers. These expenses represent 3.32% of costs associated with remediation of sites that historically served both Oregon and Washington customers. The order allows for recovery of past deferred and future prudently incurred remediation costs allocable to Washington through application of insurance proceeds and collections from customers. Prudently incurred costs that were deferred from the initial deferral authorization in February 2011 through June 2019 are to be fully offset with insurance proceeds, with any remaining insurance proceeds to be amortized over a 10.5 year period. On an annual basis NW Natural will file for a prudence determination and a request to recover remediation expenditures in excess of insurance amortizations in the following year's customer rates. After insurance proceeds are fully amortized, if in a particular year the request to collect deferred amounts exceeds one percent of Washington normalized revenues, then the excess will be collected over three years with interest.

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INTERSTATE STORAGE AND ASSET MANAGEMENT SHARING. On an annual basis, NW Natural credits amounts to Oregon and Washington customers as part of a regulatory incentive sharing mechanism related to net revenues earned from Mist gas storage and asset management activities. Previously, amounts were credited to Oregon customers in June. Starting in 2021, Oregon customers received this credit in February per the 2020 Oregon rate case order. Credits are given to customers in Washington as reductions in rates through the annual PGA filing in November.

During the first quarter of 2021, NW Natural refunded an interstate storage and asset management sharing credit of approximately $9.1 million to Oregon customers, which was primarily reflected in Oregon customers' February bills. Bill credits to Oregon and Washington customers in 2020 were approximately $17.0 million and $0.7 million, respectively.

Regulatory Proceeding Updates

During 2021, NW Natural was involved in the regulatory activities discussed below. For additional information, see Part II, Item 7 "Results of Operations—Regulatory Matters" in the 2020 Form 10-K.

COVID-19 PROCESS AND DEFERRAL DOCKETS. During 2020, our regulated utilities, other utilities, stakeholders, and public utility commissions worked together to determine the best way to continue protecting utility customers during and after the pandemic. In September 2020, the OPUC issued an order authorizing OPUC staff to execute a term sheet with NW Natural and other parties to the proceeding, which includes provisions for lifting moratoriums on disconnections for nonpayment and late fees; extending timeframes for repayments and deferred payment plans; establishing timelines for reinstitution of service disconnection and reconnection fees; and allowing for deferred accounting of COVID-19 related costs. The term sheet also directed NW Natural to work with the parties to provide bill payment assistance, petition the Oregon legislature for bill payment assistance funding, explore the applicability of decoupling charges for a period of time, and participate in an investigation and discussion surrounding low income customers and social and environmental justice. The stipulation incorporating the term sheet was approved by the OPUC in November 2020. A term sheet was approved by the WUTC in October 2020 that provides similar guidance on key items such as the timing of lifting moratoriums on disconnections, resuming the collection process, and bill assistance and payment plans.

Additionally, both Oregon and Washington approved our applications in 2020 to defer certain COVID-19 related costs.

Costs that may be recoverable include, but are not limited to, the following: personal protective equipment, cleaning supplies and services, bad debt expense, financing costs to secure liquidity, and certain lost revenue, net of offsetting direct expense reductions associated with COVID-19. As of June 30, 2021, we estimate that approximately $8.1 million of the financial effects related to COVID-19 could be recoverable and deferred to a regulatory asset approximately $5.8 million for incurred costs. In addition, we expect to recognize revenue in a future period for an additional $2.3 million related to forgone late fee revenue.

The financial effects of COVID-19 in the the prior year were recorded as an expense in the consolidated statements of comprehensive income until the third quarter, when they were deferred to a regulatory asset. Therefore, the consolidated statements of comprehensive income for the first six months of 2020 includes $1.1 million of operations and maintenance expenses and $1.3 million of interest expense, net that did not recur in the current year.

The following table outlines some of the key items approved by the respective Commissions:

	Oregon		Washington
Reinstituting Disconnections for Nonpayment:
Residential	June 30, 2021		September 30, 2021
Small Commercial	December 1, 2020		September 30, 2021
Large Commercial/Industrial	November 3, 2020		October 20, 2020
Resuming Residential Reconnection Fee Charges	October 1, 2022	*	March 29, 2022
Reinstituting Late Fees for Nonpayment:
Residential	October 1, 2022	*	March 29, 2022
Small Commercial	December 1, 2020		March 29, 2022
Large Commercial/Industrial	November 3, 2020		October 20, 2020
Extended Time Payment Arrangements:
Residential	Up to 24 months		Up to 18 months
Small Commercial	Up to 6 months		Up to 12 months
Arrearage Forgiveness Program	1% of Retail Revenues		1% of Retail Revenues

* Jurisdiction retains discretion to re-evaluate date based on ongoing pandemic and economic conditions.

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RENEWABLE NATURAL GAS. On June 19, 2019, the Oregon legislature passed Senate Bill 98 (SB98), which enables natural gas utilities to procure or develop renewable natural gas (RNG) on behalf of their Oregon customers. RNG is produced from organic materials like food, agricultural and forestry waste, wastewater, or landfills. Methane is captured from these organic materials as they decompose and is conditioned to pipeline quality, so it can be added into the existing natural gas system, reducing net greenhouse gas emissions. The bill was signed into law by the governor in July 2019, and subsequently, the OPUC opened a docket in August 2019 regarding the rules for the bill. After working with parties, the OPUC adopted final rules in July 2020.

SB98 and the rules outline the following parameters for the RNG program including: setting voluntary goals for adding as much as 30% renewable natural gas into the state’s pipeline system by 2050; enabling gas utilities to invest in and own the cleaning and conditioning equipment required to bring raw biogas and landfill gas up to pipeline quality, as well as the facilities to connect to the local gas distribution system; and allowing up to 5% of a utility’s revenue requirement to be used to cover the incremental cost or investments in renewable natural gas infrastructure.

Further, the new law supports all forms of renewable natural gas including renewable hydrogen, which is made from excess wind, solar and hydro power. Renewable hydrogen can be used for industrial use or blended into the natural gas pipeline system.

In its first RNG project under SB98, NW Natural began a partnership with BioCarbN, a developer and operator of sustainable infrastructure projects, to convert methane into RNG. Under this partnership, NW Natural has the ability to invest up to an estimated $38 million in four separate RNG development projects that will access biogas derived from water treatment at Tyson Foods' processing plants, subject to approval by all parties. In December 2020, NW Natural exercised its option for the first development project in Nebraska, initiating investment in an estimated $8 million project, which is expected to begin producing RNG in early 2022.

CORPORATE ACTIVITY TAX. In 2019, the State of Oregon enacted a Corporate Activity Tax (CAT) that is applicable to all businesses with annual Oregon gross revenue in excess of $1 million. The CAT is in addition to the state's corporate income tax and imposes a 0.57% tax on certain Oregon gross receipts less a reduction for a portion of cost of goods sold or labor. The CAT legislation became effective September 29, 2019 and applies to calendar years beginning January 1, 2020. Under the terms of the Order in NW Natural's 2020 Oregon general rate case, NW Natural is authorized to begin to recover the expense associated with the CAT as a component of base rates. NW Natural is also directed to adjust the amount recovered for the CAT in each annual PGA to reflect changes in gross revenue and cost of goods sold that occur as a result of the PGA.

The Order also provides for certain adjustments if there are legislative, rulemaking, judicial, or policy decisions that would cause the calculation methodology used by NW Natural for the CAT to vary in a fundamental way. Additionally, the CAT deferred from January 2020 through June 2020 will be added to and amortized over the 2020-21 PGA gas year, and the CAT amounts deferred from July 2020 through the effective date of the rate case will be amortized over the 2021-22 PGA year.

WATER UTILITIES. In the first six months of 2021, NW Holdings, through its water subsidiaries, continued to acquire water utilities. While COVID-19 has restricted certain activities, we continue to pursue water acquisitions and expect to return to normal business development activities as the pandemic eases and travel and commerce return to previous levels. For our acquired water utilities, we continue to assess the need for general rate cases, and in 2021, we filed a general rate case for one of our water utilities to support infrastructure investments for safety and reliability.

OREGON EXECUTIVE ORDER. On March 10, 2020, the governor of Oregon issued an executive order (EO) establishing GHG emissions reduction goals of at least 45% below 1990 emission levels by 2035 and at least 80% below 1990 emission levels by 2050 and directed state agencies and commissions to facilitate such GHG emission goals targeting a variety of sources and industries. Although the EO does not specifically direct actions of natural gas distribution businesses, the OPUC is directed to prioritize proceedings and activities that advance decarbonization in the utility sector, mitigate energy burden experienced by utility customers and ensure system reliability and resource adequacy. The EO also directs other agencies to cap and reduce GHG emissions from transportation fuels and all other liquid and gaseous fuels, including natural gas, adopt building energy efficiency goals for new building construction, reduce methane gas emissions from landfills and food waste, and submit a proposal for adoption of state goals for carbon sequestration and storage by Oregon’s forest, wetlands and agricultural lands.

NW Natural is actively engaged with Oregon state regulatory entities and holds a seat on the Oregon Department of Environmental Quality (ODEQ) rules advisory committee, which was considering the cap and reduce rules known as the Climate Protection Program (CPP). As of July 2021, the rules advisory committee meetings for the CPP have concluded. NW Natural is anticipating that a draft of the CPP rules will be released for public comment in August 2021. Final rules are expected to be considered for adoption by the Environmental Quality Commission in December 2021 and become effective in 2022.

NW Natural is also engaged in an OPUC Fact-Finding (“Fact-Finding Docket”), which was opened in response to the EO. The OPUC’s purpose of the Fact-Finding Docket is to analyze the potential natural gas utility bill impacts that may result from limiting GHG emissions of regulated natural gas utilities under the ODEQ’s CPP and to identify appropriate regulatory tools to mitigate potential customer impacts. Per OPUC Staff’s statement, the ultimate goal of the Fact-Finding Docket will be to inform future policy decisions and other key analyses to be considered in 2022, after the CPP is in place. In December, OPUC Staff will present a fact-finding report to the OPUC with recommendations for further OPUC engagement in 2022.

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INTEGRATED RESOURCE PLAN (IRP). NW Natural generally files a full IRP biennially for Oregon and Washington with the OPUC and WUTC, respectively. NW Natural jointly filed its 2018 IRP for both Oregon and Washington in August 2018, and received both a letter of compliance from the WUTC and acknowledgment by the OPUC in February 2019. The 2018 IRP included analysis of different scenarios, examining several potential future states and the corresponding least cost, least risk resource acquisition strategies. In addition to these strategies, the 2018 IRP published an emissions forecast for each of these potential futures. NW Natural filed an update to the 2018 IRP in March 2021.

The development of an IRP filing is an extensive and complex process that engages multiple stakeholders in an effort to build a robust and commonly understood analysis. The final product is intended to provide a long-term outlook of the supply-side and demand-side resource requirements for reliable and low cost natural gas service. The IRP examines and analyzes uncertainties in the planning process, including potential changes in governmental and regulatory policies. As a result of the EO issued by the governor of Oregon, new regulations and requirements are currently being developed in the state of Oregon, which have the potential to impact long-term resource decisions. In order to reflect the outcomes of the EO proceedings, the time to file NW Natural's next full IRP was extended to July 2022 as approved by the OPUC and WUTC.

Business Segment - Natural Gas Distribution (NGD)

NGD margin results are primarily affected by customer growth, revenues from rate-base additions, and, to a certain extent, by changes in delivered volumes due to weather and customers’ gas usage patterns. In Oregon, NW Natural has a conservation tariff (also called the decoupling mechanism), which adjusts margin up or down each month through a deferred regulatory accounting adjustment designed to offset changes resulting from increases or decreases in average use by residential and commercial customers. NW Natural also has a weather normalization tariff in Oregon, WARM, which adjusts customer bills up or down to offset changes in margin resulting from above- or below-average temperatures during the winter heating season. Both mechanisms are designed to reduce, but not eliminate, the volatility of customer bills and natural gas distribution earnings. For additional information, see Part II, Item 7 "Results of Operations—Regulatory Matters—Rate Mechanisms" in NW Natural's 2020 Form 10-K. In addition to NW Natural's local gas distribution business, the NGD segment also includes the portion of the Mist underground storage facility used to serve NGD customers, the North Mist gas storage expansion, NWN Gas Reserves, which is a wholly owned subsidiary of Energy Corp., and NW Natural RNG Holding Company, LLC.

The NGD business is primarily seasonal in nature due to higher gas usage by residential and commercial customers during the cold winter heating months. Other categories of customers experience seasonality in their usage but to a lesser extent. Seasonality affects the comparability of the results of operations of the NGD business across quarters but not across years.

NGD segment highlights include:  

	Three Months Ended June 30,				Six Months Ended June 30,				QTD Change		YTD Change
In thousands, except EPS data	2021		2020		2021		2020
NGD net income (loss)	$	(1,381)	$	(6,347)	$	52,544	$	41,596	$	4,966	$	10,948
Diluted EPS - NGD segment	$	(0.05)	$	(0.21)	$	1.71	$	1.36	$	0.16	$	0.35
Gas sold and delivered (in therms)	213,714		207,213		644,834		628,130		6,501		16,704
NGD margin(1)	$	91,206	$	79,651	$	263,846	$	233,795	$	11,555	$	30,051

(1) See Natural Gas Distribution Margin Table below for additional detail.

THREE MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. The primary factors contributing to the $5.0 million, or $0.16 per share, increase in NGD net income were as follows:

•$11.6 million increase in NGD margin due to:

•$9.5 million increase due to new customer rates, primarily from the 2020 Oregon rate case that went into effect on November 1, 2020, and customer growth;

•$1.8 million increase driven by the effects of applying the Oregon decoupling calculation to April 2021 as approved in our 2020 general rate case, and the recovery of commercial customer activity as compared to the prior year; and

•$0.3 million increase in late fees, primarily due to the resumption of late fees and reconnect fees for certain commercial and industrial customers during the second quarter of 2021.

In addition to the increase in margin, NGD net income for 2021 reflects:

•$3.6 million increase in other NGD operating and maintenance expenses due primarily to higher lease and professional service expenses;

•$2.5 million increase in depreciation expense due to NGD plant additions as we continued to invest in our gas utility system; and

•$1.5 million higher income tax expense reflecting higher pretax income; partially offset by

•$1.1 million decrease in interest expense driven by lower interest on commercial paper borrowings.

For the three months ended June 30, 2021, total NGD volumes sold and delivered increased 3% over the same period in 2020 primarily due to the recovery of commercial customer activity as compared to the prior year.

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SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. The primary factors contributing to the $10.9 million, or $0.35 per share, increase in NGD net income were as follows:

•$30.1 million increase in NGD margin due to:

•$30.8 million increase due to new customer rates, primarily from the 2020 Oregon rate case that went into effect on November 1, 2020, and customer growth; and

•$2.6 million increase due in part to colder weather, the effects of applying the Oregon decoupling calculation to April 2021 as approved in our 2020 general rate case, and the recovery of commercial customer activity as compared to the prior year; partially offset by

•$2.8 million decrease driven by additional market gas purchases and other expenses during the 2021 cold weather event. The event resulted in approximately $29 million of higher commodity costs in the first quarter of 2021, of which approximately $27 million was deferred to a regulatory asset for recovery in future rates.

In addition to the increase in margin, NGD net income for 2021 reflects:

•$6.4 million increase in other NGD operating and maintenance expenses due primarily to higher lease and professional service expenses;

•$6.1 million higher income tax expense reflecting higher pretax income and Oregon CAT;

•$5.5 million increase in depreciation expense due to NGD plant additions as we continued to invest in our gas utility system; and

•$2.0 million increase in general taxes due to higher assessed property values; partially offset by

•$1.3 million higher interest income on regulatory assets within other income (expense), net.

For the six months ended June 30, 2021, total NGD volumes sold and delivered increased 3% over the same period in 2020 primarily due to 12% warmer than average weather in the first six months of 2021 compared to 15% warmer than average weather in the prior period.

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NATURAL GAS DISTRIBUTION MARGIN TABLE. The following table summarizes the composition of NGD gas volumes, revenues, and cost of sales:

	Three Months Ended June 30,						Six Months Ended June 30,						Favorable/ (Unfavorable)
In thousands, except degree day and customer data	2021			2020			2021			2020			QTD Change			YTD Change
NGD volumes (therms)
Residential and commercial sales	102,469			99,815			400,291			386,687			2,654			13,604
Industrial sales and transportation	111,245			107,398			244,543			241,443			3,847			3,100
Total NGD volumes sold and delivered	213,714			207,213			644,834			628,130			6,501			16,704
Operating Revenues
Residential and commercial sales	$	120,360		$	109,399		$	398,944		$	364,803		$	10,961		$	34,141
Industrial sales and transportation	14,093			12,667			31,472			29,861			1,426			1,611
Other distribution revenues	396			5			986			968			391			18
Other regulated services	4,765			4,921			9,550			9,847			(156)			(297)
Total operating revenues	139,614			126,992			440,952			405,479			12,622			35,473
Less: Cost of gas	41,249			41,265			153,515			149,860			16			(3,655)
Less: Environmental remediation expense	1,509			1,622			5,286			5,627			113			341
Less: Revenue taxes	5,650			4,454			18,305			16,197			(1,196)			(2,108)
NGD margin	$	91,206		$	79,651		$	263,846		$	233,795		$	11,555		$	30,051
Margin(1)
Residential and commercial sales	$	78,900		$	67,855		$	239,672		$	206,999		$	11,045		$	32,673
Industrial sales and transportation	7,407			7,021			16,161			15,603			386			558
Gain (loss) from gas cost incentive sharing	(223)			(105)			(2,486)			343			(118)			(2,829)
Other margin	357			(38)			952			1,006			395			(54)
Other regulated services	4,765			4,918			9,547			9,844			(153)			(297)
NGD Margin	$	91,206		$	79,651		$	263,846		$	233,795		$	11,555		$	30,051
Degree days(2)
Average(3)	305			308			1,631			1,650			(3)			(19)
Actual	182			189			1,443			1,404			(4)		%	3		%
Percent warmer than average weather	(40)		%	(39)		%	(12)		%	(15)		%

	As of June 30,
	2021	2020	Change	Growth
NGD Meters - end of period:
Residential meters	710,543	697,861	12,682	1.8%
Commercial meters	68,756	69,451	(695)	(1.0)%
Industrial meters	980	992	(12)	(1.2)%
Total number of meters	780,279	768,304	11,975	1.6%

(1)    Amounts reported as margin for each category of meters are operating revenues, which are net of revenue taxes, less cost of gas and environmental remediation expense, subject to earnings test considerations, as applicable.

(2)    Heating degree days are units of measure reflecting temperature-sensitive consumption of natural gas, calculated by subtracting the average of a day's high and low temperatures from 59 degrees Fahrenheit.

(3)    Average weather represents the 25-year average of heating degree days. Beginning November 1, 2020, average weather is calculated over the period June 1, 1994 through May 31, 2019, as determined in NW Natural’s 2020 Oregon general rate case. From November 1, 2018 through October 31, 2020, average weather was calculated over the period May 31, 1992 through May 30, 2017, as determined in NW Natural's 2018 Oregon general rate case.

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Residential and Commercial Sales

Residential and commercial sales highlights include:

	Three Months Ended June 30,				Six Months Ended June 30,				QTD Change		YTD Change
In thousands	2021		2020		2021		2020
Volumes (therms)
Residential sales	61,346		65,126		255,837		248,035		(3,780)		7,802
Commercial sales	41,123		34,689		144,454		138,652		6,434		5,802
Total volumes	102,469		99,815		400,291		386,687		2,654		13,604
Operating revenues
Residential sales	$	82,310	$	76,836	$	278,112	$	253,781	$	5,474	$	24,331
Commercial sales	38,050		32,563		120,832		111,022		5,487		9,810
Total operating revenues	$	120,360	$	109,399	$	398,944	$	364,803	$	10,961	$	34,141
NGD margin
Residential:
Sales	$	48,558	$	46,688	$	166,163	$	148,063	$	1,870	$	18,100
Alternative revenue	8,368		2,682		8,646		3,225		5,686		5,421
Total residential NGD margin	56,926		49,370		174,809		151,288		7,556		23,521
Commercial:
Sales	19,259		15,802		61,973		54,043		3,457		7,930
Alternative revenue	2,715		2,683		2,890		1,668		32		1,222
Total commercial NGD margin	21,974		18,485		64,863		55,711		3,489		9,152
Total NGD margin	$	78,900	$	67,855	$	239,672	$	206,999	$	11,045	$	32,673

THREE MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Residential and commercial margin increased $11.0 million compared to the prior period. The increase was primarily driven by new customer rates in Oregon that took effect on November 1, 2020 and improvements in commercial usage as COVID-19 restrictions and closures began being lifted.

SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Residential and commercial margin increased $32.7 million compared to the prior period. The increase was primarily driven by new customer rates in Oregon that took effect on November 1, 2020 and 1.8% growth in residential meters.

Industrial Sales and Transportation

Industrial sales and transportation highlights include:

	Three Months Ended June 30,				Six Months Ended June 30,				QTD Change		YTD Change
In thousands	2021		2020		2021		2020
Volumes (therms)
Firm and interruptible sales	20,002		17,638		46,245		42,440		2,364		3,805
Firm and interruptible transportation	91,243		89,760		198,298		199,003		1,483		(705)
Total volumes - sales and transportation	111,245		107,398		244,543		241,443		3,847		3,100
NGD margin
Firm and interruptible sales	$	2,741	$	2,506	$	6,298	$	5,823	$	235	$	475
Firm and interruptible transportation	4,666		4,515		9,863		9,780		151		83
Total margin - sales and transportation	$	7,407	$	7,021	$	16,161	$	15,603	$	386	$	558

THREE MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Industrial sales and transportation margin increased by $0.4 million compared to the prior period primarily driven by new rates in Oregon that took effect on November 1, 2020. Volumes increased by 3.8 million therms, or 4%, due primarily to higher usage from multiple industrial customers.

SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Industrial sales and transportation margin increased by $0.6 million compared to the prior period primarily driven by new rates in Oregon that took effect on November 1, 2020. Volumes increased by 3.1 million therms, or 1%, due primarily to higher usage from multiple industrial customers.

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Cost of Gas

Cost of gas highlights include:

	Three Months Ended June 30,				Six Months Ended June 30,				QTD Change		YTD Change
In thousands	2021		2020		2021		2020
Cost of gas	$	41,249	$	41,265	$	153,515	$	149,860	$	(16)	$	3,655
Volumes sold (therms)(1)	122,471		117,453		446,536		429,127		5,018		17,409
Average cost of gas (cents per therm)	$	0.34	$	0.35	$	0.34	$	0.35	$	(0.01)	$	(0.01)
Gain (loss) from gas cost incentive sharing(2)	$	(223)	$	(105)	$	(2,486)	$	343	$	(118)	$	(2,829)

(1)This calculation excludes volumes delivered to industrial transportation customers.

(2)    For additional information regarding NW Natural's gas cost incentive sharing mechanism, see Part II, Item 7 "Results of Operations—Regulatory Matters—Rate Mechanisms—Gas Reserves" in NW Natural's 2020 Form 10-K.

THREE MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Cost of gas was flat compared to the prior period, primarily due to a slight decrease in the average cost of gas offset by an increase in volumes sold.

SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Cost of gas increased $3.7 million, or 2%, primarily due to a $2.8 million higher loss from cost of gas incentive sharing, driven by costs related to the 2021 cold weather event that were not deferred for future recovery. The event resulted in approximately $29 million of higher commodity costs, of which approximately $27 million was deferred to a regulatory asset. The remaining increase in cost of gas is primarily the result of a 4% increase in volumes sold driven by customer growth and by comparatively cooler weather in 2021 as compared to 2020.

Other Regulated Services Margin

Other regulated services margin highlights include:

	Three Months Ended June 30,				Six Months Ended June 30,				QTD Change		YTD Change
In thousands	2021		2020		2021		2020
North Mist storage services	$	4,715	$	4,867	$	9,431	$	9,733	$	(152)	$	(302)
Other services	50		51		116		111		(1)		5
Total other regulated services	$	4,765	$	4,918	$	9,547	$	9,844	$	(153)	$	(297)

THREE MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Other regulated services margin decreased $0.2 million compared to the prior period as the North Mist expansion facility did not experience any significant fluctuations in storage service revenue. See Note 6 for information regarding North Mist expansion lease accounting.

SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Other regulated services margin decreased $0.3 million compared to the prior period as the North Mist expansion facility did not experience any significant fluctuations in storage service revenue.

Other

Other activities aggregated and reported as other at NW Natural include the non-NGD storage activity at Mist as well as asset management services and the appliance retail center operations. Other activities aggregated and reported as other at NW Holdings include NWN Energy's equity investment in Trail West Holding, LLC (TWH) through August 6, 2020; NNG Financial's investment in Kelso-Beaver Pipeline (KB Pipeline); and NWN Water, which owns and continues to pursue investments in the water sector. See Note 4 for further discussion of our business segment and other, as well as our direct and indirect wholly-owned subsidiaries. See Note 13 for information on our TWH investment.

The following table presents the results of activities aggregated and reported as other for both NW Holdings and NW Natural:

	Three Months Ended June 30,				Six Months Ended June 30,				QTD Change		YTD Change
In thousands, except EPS data	2021		2020		2021		2020
NW Natural other - net income	$	1,970	$	1,635	$	8,156	$	2,871	$	335	$	5,285
Other NW Holdings activity	(1,313)		(420)		(1,907)		(1,323)		(893)		(584)
NW Holdings other - net income	$	657	$	1,215	$	6,249	$	1,548	$	(558)	$	4,701
Diluted EPS - NW Holdings - other	$	0.03	$	0.04	$	0.21	$	0.05	$	(0.01)	$	0.16

THREE MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Other net income decreased $0.6 million at NW Holdings and increased $0.3 million at NW Natural. The increase at NW Natural was primarily due to an increase in appliance center net income. The decrease at NW Holdings was driven by higher expenses at the holding company, partially offset by higher net income at NW Natural.

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SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Other net income increased $4.7 million at NW Holdings and $5.3 million at NW Natural. The increase at NW Natural was primarily due to $6.7 million of higher asset management revenue related to the 2021 cold weather event, partially offset by $1.8 million of income tax expense associated with the higher revenue. The increase at NW Holdings was driven by the increase at NW Natural, partially offset by higher expenses at the holding company.

Consolidated Operations

Operations and Maintenance

Operations and maintenance highlights include:

	Three Months Ended June 30,				Six Months Ended June 30,				QTD		YTD
In thousands	2021		2020		2021		2020		Change		Change
NW Natural	$	44,939	$	41,198	$	94,126	$	87,454	$	3,741	$	6,672
Other NW Holdings operations and maintenance	5,108		2,785		8,112		5,450		2,323		2,662
NW Holdings	$	50,047	$	43,983	$	102,238	$	92,904	$	6,064	$	9,334

THREE MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Operations and maintenance expense increased $6.1 million at NW Holdings and $3.7 million at NW Natural. The increase at NW Natural was driven by the following:

•$1.3 million increase in professional service and information technology expenses;

•$1.2 million increase in lease expense related to a new headquarters and operations center; and

•$0.6 million increase related to higher compensation and benefit costs.

The $2.3 million increase in other NW Holdings operations and maintenance expense primarily reflects higher holding company expenses and operating expenses from water and wastewater subsidiaries.

SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Operations and maintenance expense increased $9.3 million at NW Holdings and $6.7 million at NW Natural. The increase at NW Natural was driven by the following:

•$2.4 million increase in professional service and information technology expenses;

•$2.2 million increase in lease expense related to a new headquarters and operations center; and

•$2.1 million increase related to higher compensation and benefit costs.

The $2.7 million increase in other NW Holdings operations and maintenance expense primarily reflects higher holding company expenses and operating expenses from water and wastewater subsidiaries.

Depreciation and Amortization

Depreciation and amortization highlights include:

	Three Months Ended June 30,				Six Months Ended June 30,				QTD		YTD
In thousands	2021		2020		2021		2020		Change		Change
NW Natural	$	27,530	$	24,986	$	54,699	$	49,176	$	2,544	$	5,523
Other NW Holdings depreciation and amortization	614		850		1,542		1,335		(236)		207
NW Holdings	$	28,144	$	25,836	$	56,241	$	50,511	$	2,308	$	5,730

THREE MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Depreciation and amortization expense increased $2.3 million and $2.5 million at NW Holdings and NW Natural, respectively, primarily due to additional capital investments in the distribution system, Mist storage, various operations and facilities, and information technology systems. We continue to invest in our natural gas and water utility systems.

SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Depreciation and amortization expense increased $5.7 million and $5.5 million at NW Holdings and NW Natural, respectively, primarily due to additional capital investments in the distribution system, Mist storage, various operations and facilities, and information technology systems. We continue to invest in our natural gas and water utility systems.

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Other Income (Expense), Net

Other income (expense), net highlights include:

	Three Months Ended June 30,				Six Months Ended June 30,				QTD		YTD
In thousands	2021		2020		2021		2020		Change		Change
NW Natural other income (expense), net	$	(2,566)	$	(3,179)	$	(6,231)	$	(6,742)	$	613	$	511
Other NW Holdings activity	(31)		139		92		127		(170)		(35)
NW Holdings other income (expense), net	$	(2,597)	$	(3,040)	$	(6,139)	$	(6,615)	$	443	$	476

THREE MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Other income (expense), net increased $0.4 million and $0.6 million at NW Holdings and NW Natural, respectively, as it includes higher interest income on regulatory assets in the current quarter. Other income (expense), net primarily consists of regulatory interest, pension and other postretirement non-service costs, gains from company-owned life insurance, and donations.

SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Other income (expense), net increased $0.5 million at both NW Holdings and NW Natural, primarily due to higher interest income on regulatory assets.

Interest Expense, Net 

Interest expense, net highlights include:

	Three Months Ended June 30,				Six Months Ended June 30,				QTD		YTD
In thousands	2021		2020		2021		2020		Change		Change
NW Natural	$	10,696	$	11,851	$	21,486	$	21,712	$	(1,155)	$	(226)
Other NW Holdings interest expense, net	332		855		668		1,462		(523)		(794)
NW Holdings	$	11,028	$	12,706	$	22,154	$	23,174	$	(1,678)	$	(1,020)

THREE MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Interest expense, net decreased $1.7 million and $1.2 million at NW Holdings and NW Natural, respectively. The decrease at NW Natural is primarily due to $1.5 million of lower interest on commercial paper borrowings partially offset by $0.4 million lower AFUDC debt interest income. The decrease at NW Holdings includes the decrease at NW Natural and lower interest on the credit agreement at NW Holdings.

SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Interest expense, net decreased $1.0 million and $0.2 million at NW Holdings and NW Natural, respectively. The decrease at NW Natural is primarily due to $2.0 million of lower interest on commercial paper borrowings, partially offset by $0.9 million of higher interest on long-term debt and $1.0 million lower AFUDC debt interest income. The decrease at NW Holdings includes the decrease at NW Natural and lower interest on the credit agreement at NW Holdings.

Income Tax Expense 

Income tax expense highlights include:

	Three Months Ended June 30,				Six Months Ended June 30,				QTD		YTD
In thousands	2021		2020		2021		2020		Change		Change
NW Natural income tax expense (benefit)	$	288	$	(1,419)	$	20,840	$	12,999	$	1,707	$	7,841
NW Holdings income tax expense (benefit)	$	(277)	$	(1,672)	$	20,244	$	12,455	$	1,395	$	7,789

THREE MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Income tax expense increased $1.7 million at NW Natural and $1.4 million at NW Holdings, respectively. The increase in income tax expense is primarily due to an increase in pre-tax income.

SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Income tax expense increased $7.8 million at both NW Natural and NW Holdings. The increase in income tax expense is primarily due to an increase in pre-tax income and Oregon Corporate Activity Tax, partially offset by the ongoing amortization of TCJA benefits.

Discontinued Operations

On June 20, 2018, NWN Gas Storage, a wholly owned subsidiary of NW Holdings, entered into a Purchase and Sale Agreement (the Agreement) that provides for the sale by NWN Gas Storage of all of its membership interests in Gill Ranch. Gill Ranch owns a 75% interest in the natural gas storage facility located near Fresno, California known as the Gill Ranch Gas Storage Facility.

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On December 4, 2020, NWN Gas Storage closed the sale of all the memberships interests in Gill Ranch and received payment of the initial cash purchase price of $13.5 million less the $1.0 million deposit previously paid. Furthermore, additional payments to NWN Gas Storage may be made subject to a maximum amount of $15.0 million in the aggregate (subject to a working capital adjustment) based on the economic performance of Gill Ranch each full gas storage year (April 1 of one year through March 31 of the following year) occurring after the closing and the remaining portion of the 2020-2021 gas storage year and will continue until such time as the maximum amount has been paid. The fair value of this arrangement at the closing date was zero based on a discounted cash flow forecast. Subsequent changes in the fair value will be recorded in earnings. The completion of the sale resulted in an after-tax gain of $5.9 million for the year ended December 31, 2020.

The results of Gill Ranch Storage have been determined to be discontinued operations until the date of sale and are presented separately, net of tax, from the results of continuing operations of NW Holdings for all periods presented. See Note 17 for more information on the Agreement and the results of our discontinued operations.

FINANCIAL CONDITION

Capital Structure

NW Holdings' long-term goal is to maintain a strong and balanced consolidated capital structure. NW Natural targets a regulatory capital structure of 50% common equity and 50% long-term debt, which is consistent with approved regulatory allocations in Oregon, which has an allocation of 50% common equity and 50% long-term debt without recognition of short-term debt, and Washington, which has an allocation of 50% long-term debt, 1% short-term debt, and 49% common equity.

When additional capital is required, debt or equity securities are issued depending on both the target capital structure and market conditions. These sources of capital are also used to fund long-term debt retirements and short-term commercial paper maturities. See "Liquidity and Capital Resources" below and Note 8. Achieving our target capital structure and maintaining sufficient liquidity to meet operating requirements is necessary to maintain attractive credit ratings and provide access to the capital markets at reasonable costs.

NW Holdings' consolidated capital structure was as follows:

	June 30,				December 31,
	2021		2020		2020
Common equity	48.6	%	48.1	%	48.2	%
Long-term debt (including current maturities)	51.4		51.9		51.8
Total	100.0	%	100.0	%	100.0	%

NW Natural's consolidated capital structure was as follows:

	June 30,				December 31,
	2021		2020		2020
Common equity	48.6	%	47.8	%	47.7	%
Long-term debt (including current maturities)	51.4		52.2		52.3
Total	100.0	%	100.0	%	100.0	%

Including short-term debt balances, as of June 30, 2021 and 2020, and December 31, 2020, NW Holdings' consolidated capital structure included common equity of 43.2%, 42.7% and 41.4%; long-term debt of 42.8%, 44.3% and 40.0%; and short-term debt including current maturities of long-term debt of 14.0%, 13.0% and 18.6%, respectively. As of June 30, 2021 and 2020, and December 31, 2020, NW Natural's consolidated capital structure included common equity of 43.8%, 44.0%, and 42.1%; long-term debt of 43.2%, 48.0% and 43.2%; and short-term debt including current maturities of long-term debt of 13.0%, 8.0%, and 14.7%, respectively.

Liquidity and Capital Resources

At June 30, 2021 and 2020, NW Holdings had approximately $20.1 million and $137.1 million, and NW Natural had approximately $11.5 million and $120.3 million of cash and cash equivalents, respectively. As the COVID-19 pandemic developed in March 2020, markets displayed significant volatility. In response to that volatility and possible implications for the availability of access to the capital markets, NW Natural and NW Holdings undertook a number of measures to increase cash on hand to ensure ample liquidity. In order to maintain sufficient liquidity during periods when capital markets are volatile, NW Holdings and NW Natural may elect to maintain higher cash balances and add short-term borrowing capacity. NW Holdings and NW Natural may also pre-fund their respective capital expenditures when long-term fixed rate environments are attractive. NW Holdings and NW Natural expect to have ample liquidity in the form of cash on hand and from operations and available credit capacity under credit facilities to support funding needs.

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NW Holdings

For NW Holdings, short-term liquidity is primarily provided by cash balances, dividends from its operating subsidiaries, in particular NW Natural, available cash from a multi-year credit facility, and short-term credit facilities. NW Holdings also has a universal shelf registration statement filed with the SEC for the issuance of debt and equity securities. NW Holding's long-term debt, if any, and equity issuances are primarily used to provide equity contributions to NW Holdings’ operating subsidiaries for operating and capital expenditures and other corporate purposes. Over the next three years, we estimate NW Holdings' incremental capital needs to be in the range of $400 million to $500 million to support NW Natural and NW Natural Water's operating and capital expenditure programs. NW Holdings' issuance of securities is not subject to regulation by state public utility commissions, but the dividends from NW Natural to NW Holdings are subject to regulatory ring-fencing provisions. NW Holdings guarantees the debt of its wholly-owned subsidiary, NWN Water. See "Long-Term Debt" below for more information regarding NWN Water debt.

As part of the ring-fencing conditions agreed upon with the OPUC and WUTC in connection with the holding company reorganization, NW Natural may not pay dividends or make distributions to NW Holdings if NW Natural’s credit ratings and common equity ratio, defined as the ratio of equity to long-term debt, fall below specified levels. If NW Natural’s long-term secured credit ratings are below A- for S&P and A3 for Moody’s, dividends may be issued so long as NW Natural’s common equity ratio is 45% or more. If NW Natural’s long term secured credit ratings are below BBB for S&P and Baa2 for Moody’s, dividends may be issued so long as NW Natural’s common equity ratio is 46% or more. Dividends may not be issued if NW Natural’s long-term secured credit ratings are BB+ or below for S&P or Ba1 or below for Moody’s, or if NW Natural’s common equity ratio is below 44%, where the ratio is measured using common equity and long-term debt excluding imputed debt or debt-like lease obligations. In each case, common equity ratios are determined based on a preceding or projected 13-month average. In addition, there are certain OPUC notice requirements for dividends in excess of 5% of NW Natural’s retained earnings.

Additionally, if NW Natural’s common equity (excluding goodwill and equity associated with non-regulated assets), on a preceding or projected 13-month average basis, is less than 46% of NW Natural’s capital structure not including short-term debt, NW Natural is required to notify the OPUC, and if the common equity ratio falls below 44%, file a plan with the OPUC to restore its equity ratio to 44%. This condition is designed to ensure NW Natural continues to be adequately capitalized under the holding company structure. Under the WUTC order, the average common equity ratio must not exceed 56%.

Based on several factors, including current cash reserves, committed credit facilities, its ability to receive dividends from its operating subsidiaries, in particular NW Natural, and an expected ability to issue long-term debt and equity securities in the capital markets, NW Holdings believes its liquidity is sufficient to meet anticipated near-term cash requirements, including all contractual obligations, investing, and financing activities as discussed in "Cash Flows" below.

At June 30, 2021, NW Natural satisfied the ring-fencing provisions described above.

NW HOLDINGS DIVIDENDS. Quarterly dividends have been paid on common stock each year since NW Holdings’ predecessor’s stock was first issued to the public in 1951. Annual common stock dividend payments per share, adjusted for stock splits, have increased each year since 1956. The declarations and amount of future dividends to shareholders will depend upon earnings, cash flows, financial condition, NW Natural’s ability to pay dividends to NW Holdings and other factors. The amount and timing of dividends payable on common stock is at the sole discretion of the NW Holdings Board of Directors.

Natural Gas Distribution Segment

For the NGD business segment, short-term borrowing requirements typically peak during colder winter months when the NGD business borrows money to cover the lag between natural gas purchases and bill collections from customers. Short-term liquidity for the NGD business is primarily provided by cash balances, internal cash flow from operations, proceeds from the sale of commercial paper notes, as well as available cash from multi-year credit facilities, short-term credit facilities, company-owned life insurance policies, the sale of long-term debt, and equity contributions from NW Holdings. NW Natural's long-term debt and contributions from NW Holdings are primarily used to finance NGD capital expenditures, refinance maturing debt, and provide temporary funding for other general corporate purposes of the NGD business. 

Based on its current debt ratings (see "Credit Ratings" below), NW Natural has been able to issue commercial paper and long-term debt at attractive rates and generally has not needed to borrow or issue letters of credit from its back-up credit facility. In the event NW Natural is not able to issue new debt due to adverse market conditions or other reasons, NW Natural expects that near-term liquidity needs can be met using internal cash flows, issuing commercial paper, receiving equity contributions from NW Holdings, or, for the NGD segment, drawing upon a committed credit facility. NW Natural also has a universal shelf registration statement filed with the SEC for the issuance of secured and unsecured debt securities.

In the event senior unsecured long-term debt ratings are downgraded, or outstanding derivative positions exceed a certain credit threshold, counterparties under derivative contracts could require NW Natural to post cash, a letter of credit, or other forms of collateral, which could expose NW Natural to additional cash requirements and may trigger increases in short-term borrowings while in a net loss position. NW Natural was not required to post collateral at June 30, 2021. If the credit risk-related contingent features underlying these contracts were triggered on June 30, 2021, assuming NW Natural's long-term debt ratings dropped to non-investment grade levels, we would not be required to post collateral with counterparties, including estimates for adequate assurance. See "Credit Ratings" below and Note 15.

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Other items that may have a significant impact on NW Natural's liquidity and capital resources include pension contribution requirements and environmental expenditures. For additional information, see Part II, Item 7 "Financial Condition" in the 2020 Form 10-K.

SHORT-TERM DEBT. The primary source of short-term liquidity for NW Holdings is cash balances, dividends from its operating subsidiaries, in particular NW Natural, available cash from a multi-year credit facility, and short-term credit facilities it may enter into from time to time.

The primary source of short-term liquidity for NW Natural is from the sale of commercial paper, available cash from a multi-year credit facility, and short-term credit facilities. NW Holdings and NW Natural have separate bank facilities, and NW Natural has a commercial paper program. In addition to issuing commercial paper or bank loans to meet working capital requirements, including seasonal requirements to finance gas purchases and accounts receivable, short-term debt may also be used to temporarily fund capital requirements. For NW Natural, commercial paper and bank loans are periodically refinanced through the sale of long-term debt or equity contributions from NW Holdings. Commercial paper, when outstanding, is sold through two commercial banks under an issuing and paying agency agreement and is supported by one or more unsecured revolving credit facilities. See “Credit Agreements” below.

In June 2021, NW Natural entered into a $100.0 million 364-Day Term Loan Credit Agreement (Term Loan) and borrowed the full amount. All principal and unpaid interest under the Term Loan is due and payable in June 2022. The Term Loan requires NW Natural to maintain a consolidated indebtedness to total capitalization ratio of 70% or less. Failure to comply with this covenant would entitle the lenders to terminate their lending commitments and accelerate the maturity of all amounts outstanding. NW Natural was in compliance with this covenant at June 30, 2021, with a consolidated indebtedness to total capitalization ratio of 56.2%.

At June 30, 2021 and 2020, NW Holdings had short-term debt outstanding of $240.0 million and $233.0 million, respectively. At June 30, 2021 and 2020, NW Natural had short-term debt outstanding of $198.0 million and $153.0 million, respectively. NW Holdings' short-term debt at June 30, 2021 consisted of $42.0 million in revolving credit agreement loans at NW Holdings, $98.0 million of commercial paper outstanding at NW Natural, and the aforementioned $100.0 million Term Loan. The weighted average interest rate on the revolving credit agreement at June 30, 2021 was 1.1% at NW Holdings. The weighted average interest rate of commercial paper and the Term Loan outstanding at June 30, 2021 was 0.2% and 0.6%, respectively, at NW Natural.

Credit Agreements

NW Holdings

NW Holdings has a $100 million credit agreement, with a feature that allows it to request increases in the total commitment amount up to a maximum of $150 million. The maturity date of the agreement is October 2, 2023, with available extensions of commitments for two additional one-year periods, subject to lender approval.

All lenders under the agreement are major financial institutions with committed balances and investment grade credit ratings as of June 30, 2021 as follows:

In millions
Lender rating, by category	Loan Commitment
AA/Aa	$	100
Total	$	100

Based on credit market conditions, it is possible one or more lending commitments could be unavailable to NW Holdings if the lender defaulted due to lack of funds or insolvency; however, NW Holdings does not believe this risk to be imminent due to the lenders' strong investment-grade credit ratings. At June 30, 2021, June 30, 2020 and December 31, 2020, $42.0 million, $80.0 million and $73.0 million were drawn under this credit facility, respectively.

The NW Holdings credit agreement permits the issuance of letters of credit in an aggregate amount of up to $40 million. The principal amount of borrowings under the credit agreement is due and payable on the maturity date. The credit agreement requires NW Holdings to maintain a consolidated indebtedness to total capitalization ratio of 70% or less. Failure to comply with this covenant would entitle the lenders to terminate their lending commitments and accelerate the maturity of all amounts outstanding. NW Holdings was in compliance with this covenant at June 30, 2021 and 2020, with consolidated indebtedness to total capitalization ratios of 56.8% and 57.3%, respectively.

The agreement also requires NW Holdings to maintain debt ratings (which are defined by a formula using NW Natural's credit ratings in the event NW Holdings does not have a credit rating) with Standard & Poor's (S&P) and Moody's Investors Service, Inc. (Moody’s) and notify the lenders of any change in its senior unsecured debt ratings or senior secured debt ratings, as applicable, by such rating agencies. A change in NW Holdings' debt ratings by S&P or Moody’s is not an event of default, nor is the maintenance of a specific minimum level of debt rating a condition of drawing upon the credit agreement. Rather, interest rates on any loans outstanding under the credit agreements are tied to debt ratings and therefore, a change in the debt rating

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would increase or decrease the cost of any loans under the credit agreements when ratings are changed. NW Holdings does not currently maintain ratings with S&P or Moody's.

NW Natural

NW Natural has a $300 million credit agreement, with a feature that allows it to request increases in the total commitment amount up to a maximum of $450 million. The maturity date of the agreement is October 2, 2023, with an available extension of commitments for two additional one-year periods, subject to lender approval.

All lenders under the agreement are major financial institutions with committed balances and investment grade credit ratings as of June 30, 2021 as follows:

In millions
Lender rating, by category	Loan Commitment
AA/Aa	$	300
Total	$	300

Based on credit market conditions, it is possible one or more lending commitments could be unavailable to NW Natural if the lender defaulted due to lack of funds or insolvency; however, NW Natural does not believe this risk to be imminent due to the lenders' strong investment-grade credit ratings. NW Natural did not have any outstanding balances drawn under this credit facility at June 30, 2021, June 30, 2020 and December 31, 2020.

The NW Natural credit agreement permits the issuance of letters of credit in an aggregate amount of up to $60 million. The principal amount of borrowings under the credit agreement is due and payable on the maturity date. The credit agreement requires NW Natural to maintain a consolidated indebtedness to total capitalization ratio of 70% or less. Failure to comply with this covenant would entitle the lenders to terminate their lending commitments and accelerate the maturity of all amounts outstanding. NW Natural was in compliance with this covenant at June 30, 2021 and 2020, with consolidated indebtedness to total capitalization ratios of 56.2% and 56.0%, respectively.

The agreement also requires NW Natural to maintain credit ratings with S&P and Moody’s and notify the lenders of any change in NW Natural's senior unsecured debt ratings or senior secured debt ratings, as applicable, by such rating agencies. A change in NW Natural's debt ratings by S&P or Moody’s is not an event of default, nor is the maintenance of a specific minimum level of debt rating a condition of drawing upon the credit agreement. Rather, interest rates on any loans outstanding under the agreement are tied to debt ratings and therefore, a change in the debt rating would increase or decrease the cost of any loans under the credit agreement when ratings are changed. See "Credit Ratings" below.

Credit Ratings

NW Holdings does not currently maintain ratings with S&P or Moody's. NW Natural's credit ratings are a factor of liquidity, potentially affecting access to the capital markets including the commercial paper market. NW Natural's credit ratings also have an impact on the cost of funds and the need to post collateral under derivative contracts. The following table summarizes NW Natural's current credit ratings:

	S&P	Moody's
Commercial paper (short-term debt)	A-1	P-2
Senior secured (long-term debt)	AA-	A2
Senior unsecured (long-term debt)	n/a	Baa1
Corporate credit rating	A+	n/a
Ratings outlook	Stable	Stable

The above credit ratings and ratings outlook are dependent upon a number of factors, both qualitative and quantitative, and are subject to change at any time. The disclosure of or reference to these credit ratings is not a recommendation to buy, sell or hold NW Holdings or NW Natural securities. Each rating should be evaluated independently of any other rating.

As part of the ring-fencing conditions agreed upon with the OPUC and WUTC in connection with the holding company reorganization, NW Holdings and NW Natural are required to maintain separate credit ratings, long-term debt ratings, and preferred stock ratings, if any.

Long-Term Debt

In June 2019, NW Natural Water, a wholly-owned subsidiary of NW Holdings, entered into a two-year term loan agreement for $35.0 million. The loan was repaid in June 2021 upon its maturity date.

In June 2021, NW Natural Water entered into a five-year term loan credit agreement for $55.0 million and borrowed the full amount. The loan carried an interest rate of 0.9% at June 30, 2021, which is based upon the one-month LIBOR rate plus a spread. The loan is guaranteed by NW Holdings and requires NW Holdings to maintain a consolidated indebtedness to total

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capitalization ratio of 70% or less. Failure to comply with this covenant would entitle the lenders to terminate their lending commitments and accelerate the maturity of all amounts outstanding. NW Holdings was in compliance with this covenant at June 30, 2021, with a consolidated indebtedness to total capitalization ratio of 56.8%.

At June 30, 2021, NW Holdings and NW Natural had long-term debt outstanding of $975.8 million and $917.4 million, respectively, which included $7.4 million and $7.3 million of unamortized debt issuance costs at NW Holdings and NW Natural, respectively. NW Natural's long-term debt consists of first mortgage bonds (FMBs) with maturity dates ranging from 2021 through 2050, interest rates ranging from 2.8% to 9.1%, and a weighted average interest rate of 4.6%.

NW Natural did not retire long-term debt during the six months ended June 30, 2021. Over the next twelve months, $10.0 million of FMBs with an interest rate of 9.1% will mature in August 2021 and $50.0 million of FMBs with an interest rate of 3.2% will mature in September 2021.

See Part II, Item 7, "Financial Condition—Contractual Obligations" in the 2020 Form 10-K for long-term debt maturing over the next five years.

Bankruptcy Ring-fencing Restrictions

As part of the ring-fencing conditions agreed upon with the OPUC and WUTC in connection with the holding company reorganization, NW Natural is required to have one director who is independent from NW Natural management and from NW Holdings and to issue one share of NW Natural preferred stock to an independent third party. NW Natural was in compliance with both of these ring-fencing provisions as of June 30, 2021. NW Natural may file a voluntary petition for bankruptcy only if approved unanimously by the Board of Directors of NW Natural, including the independent director, and by the holder of the preferred share.

Cash Flows

Operating Activities

Changes in operating cash flows are primarily affected by net income or loss, changes in working capital requirements, and other cash and non-cash adjustments to operating results.

Operating activity highlights include:

	Six Months Ended June 30,
In thousands	2021		2020		YTD Change
NW Natural cash provided by operating activities	$	189,945	$	162,294	$	27,651
NW Holdings cash provided by operating activities	$	194,281	$	162,049	$	32,232

SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. The significant factors contributing to the $32.2 million increase in cash flows provided by operating activities at NW Holdings, were as follows:

•$48.5 million increase in the regulatory incentive sharing mechanism related to revenues earned from Mist gas storage and asset management activities primarily related to the 2021 cold weather event; and

•$16.1 million increase in net income; partially offset by

•$27.1 million increase in net deferred gas costs as the actual costs during the 2020-2021 winter season were 27% above the PGA estimates due to the 2021 cold weather event as opposed to gas costs in the 2019-2020 winter season that were 4% below estimates embedded in the PGA.

During the six months ended June 30, 2021, NW Natural contributed $9.6 million to the NGD segment's qualified defined benefit pension plan compared to $8.5 million for the same period in 2020. The American Rescue Plan, which was signed into law on March 11, 2021, includes a provision for pension relief that extends the amortization period for required contributions from 7 to 15 years and provides for the stabilization of interest rates used to calculate future required contributions. As a result, NW Natural does not expect to make any further plan contributions during the remainder of 2021. The amount and timing of future contributions will depend on market interest rates and investment returns on the plans' assets. For additional information, see Note 9.

NW Holdings and NW Natural have lease and purchase commitments relating to their operating activities that are financed with cash flows from operations. For additional information, see Part II, Item 7 "Financial Condition—Contractual Obligations" and Note 17 in the 2020 Form 10-K.

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Investing Activities

Investing activity highlights include:

	Six Months Ended June 30,
In thousands	2021		2020		YTD Change
NW Natural cash used in investing activities	$	(122,887)	$	(117,572)	$	(5,315)
NW Holdings cash used in investing activities	$	(127,883)	$	(160,419)	$	32,536

SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Cash used in investing activities decreased $32.5 million at NW Holdings and increased $5.3 million at NW Natural. NW Holdings' decrease in cash used in investing activities was primarily due to $37.9 million of cash used for water and waste water acquisitions, net of cash acquired, during the six months ended June 30, 2020. The increase at NW Natural is primarily due to an increase in capital expenditures of $6.9 million.

NW Natural capital expenditures in 2021 are anticipated to be in the range of $280 million to $320 million and for the five-year period from 2021 to 2025 are expected to range from $1.0 billion to $1.2 billion. NW Natural Water is expected to invest approximately $15 million in 2021 related to maintenance capital expenditures for water and wastewater utilities currently owned or under a purchase and sale agreement, and for the five-year period from 2021 to 2025, capital expenditures are expected to be approximately $40 million to $50 million. Investments in our infrastructure during and after 2021 will depend largely on additional regulations, growth, and expansion opportunities. Required funds for the investments are expected to be internally generated and/or financed with long-term debt or equity, as appropriate.

Financing Activities

Financing activity highlights include:

	Six Months Ended June 30,
In thousands	2021		2020		YTD Change
NW Natural cash (used in) provided by financing activities	$	(63,083)	$	72,146	$	(135,229)
Repayments of commercial paper, maturities greater than 90 days	(195,025)		—		(195,025)
NW Natural change in short-term debt & proceeds from term loan	161,500		27,900		133,600
NW Natural change in long-term debt	—		75,000		(75,000)
NW Holdings cash (used in) provided by financing activities	$	(73,542)	$	128,282	$	(201,824)
Repayments of commercial paper, maturities greater than 90 days	(195,025)		—		$	(195,025)
NW Holdings change in short-term debt & proceeds from term loan	130,500		83,900		46,600
NW Holdings change in long-term debt	20,000		75,000		(55,000)

SIX MONTHS ENDED JUNE 30, 2021 COMPARED TO JUNE 30, 2020. Cash provided by financing activities decreased $201.8 million and $135.2 million at NW Holdings and NW Natural, respectively. The decrease in cash provided by financing activities at NW Natural was driven by $61.4 million in lower borrowings of short-term debt instruments to increase liquidity as a precaution in response to the unfolding of the COVID-19 pandemic during March 2020 and an increase of $75.0 million in long-term debt during the six months ended June 30, 2020.

In addition to the decrease at NW Natural, the decrease in cash provided by financing activities at NW Holdings was primarily due to the repayment of the $35.0 million two-year loan agreement at NW Natural Water and lower borrowings on NW Holdings' credit facility during the six months ended June 30, 2021, partially offset by the proceeds from the $55.0 million five-year term loan credit agreement at NW Natural Water.

Contingent Liabilities

Loss contingencies are recorded as liabilities when it is probable that a liability has been incurred and the amount of the loss is reasonably estimable in accordance with accounting standards for contingencies. See “Application of Critical Accounting Policies and Estimates” in the 2020 Form 10-K. At June 30, 2021, NW Natural's total estimated liability related to environmental sites is $110.3 million. See "Results of Operations—Regulatory Matters—Rate Mechanisms—Environmental Costs" in the 2020 Form 10-K and Note 16.

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APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

In preparing financial statements in accordance with U.S. GAAP, management exercises judgment to assess the potential outcomes and related accounting impacts in the selection and application of accounting principles, including making estimates and assumptions that affect reported amounts of assets, liabilities, revenues, expenses, and related disclosures in the financial statements. Management considers critical accounting policies to be those which are most important to the representation of financial condition and results of operations and which require management’s most difficult and subjective or complex judgments, including accounting estimates that could result in materially different amounts if reported under different conditions or used different assumptions. Our most critical estimates and judgments for both NW Holdings and NW Natural include accounting for:

•regulatory accounting;

•revenue recognition;

•derivative instruments and hedging activities;

•pensions and postretirement benefits;

•income taxes;

•environmental contingencies; and

•impairment of long-lived assets and goodwill.

There have been no material changes to the information provided in the 2020 Form 10-K with respect to the application of critical accounting policies and estimates. See Part II, Item 7, "Application of Critical Accounting Policies and Estimates," in the 2020 Form 10-K.

Management has discussed its current estimates and judgments used in the application of critical accounting policies with the Audit Committees of the Boards of NW Holdings and NW Natural. Within the context of critical accounting policies and estimates, management is not aware of any reasonably likely events or circumstances that would result in materially different amounts being reported. For a description of recent accounting pronouncements that could have an impact on financial condition, results of operations or cash flows, see Note 2.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

NW Holdings and NW Natural are exposed to various forms of market risk including commodity supply risk, commodity price risk, interest rate risk, foreign currency risk, credit risk and weather risk. This section describes NW Holdings' and NW Natural's exposure to these risks, as applicable. Management monitors and manages these financial exposures as an integral part of NW Holdings' and NW Natural's overall risk management program. No material changes have occurred related to disclosures about market risk for the six months ended June 30, 2021. For additional information, see Part II, Item 1A, “Risk Factors” in this report and Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” in the 2020 Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

NW Holdings and NW Natural management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, completed an evaluation of the effectiveness of the design and operation of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer of each registrant have concluded that, as of the end of the period covered by this report, disclosure controls and procedures were effective to ensure that information required to be disclosed by each such registrant and included in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission (SEC) rules and forms and that such information is accumulated and communicated to management of each registrant, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control Over Financial Reporting

NW Holdings and NW Natural management are responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).

There have been no changes in NW Natural's or NW Holdings' internal control over financial reporting that occurred during the quarter ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting for NW Holdings and NW Natural. The statements contained in Exhibit 31.1, Exhibit 31.2, Exhibit 31.3, and Exhibit 31.4 should be considered in light of, and read together with, the information set forth in this Item 4(b). 

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Other than the proceedings disclosed in Note 16 and those proceedings disclosed and incorporated by reference in Part I, Item 3, “Legal Proceedings” in the 2020 Form 10-K, we have only nonmaterial litigation, or litigation that occurs in the ordinary course of our business.

ITEM 1A. RISK FACTORS

There were no material changes from the risk factors discussed in Part I, Item 1A, "Risk Factors” in the 2020 Form 10-K. In addition to the other information set forth in this report, you should carefully consider those risk factors, which could materially affect our business, financial condition, or results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information about purchases of NW Holdings' equity securities that are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, during the quarter ended June 30, 2021:

Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2)	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(2)
Balance forward				2,124,528	$	16,732,648
04/01/21-04/30/21	—	$	—	—	—
05/01/21-05/31/21	1,732	53.70		—	—
06/01/21-06/30/21	—	—		—	—
Total	1,732	$	53.70	2,124,528	$	16,732,648

(1)During the quarter ended June 30, 2021, no shares of common stock were purchased on the open market to meet the requirements of NW Holdings' Dividend Reinvestment and Direct Stock Purchase Plan. However, 1,732 shares of NW Holdings common stock were purchased on the open market to meet the requirements of share-based compensation programs. During the quarter ended June 30, 2021, no shares of NW Holdings common stock were accepted as payment for stock option exercises pursuant to the NW Natural Restated Stock Option Plan.

(2)During the quarter ended June 30, 2021, no shares of NW Holdings common stock were repurchased pursuant to the Board-approved share repurchase program. In May 2019, we received NW Holdings Board approval to extend the repurchase program through May 2022. For more information on this program, refer to Note 5 in the 2020 Form 10-K.

ITEM 6. EXHIBITS

See the Exhibit Index below, which is incorporated by reference herein. 

64

NORTHWEST NATURAL GAS COMPANY

NORTHWEST NATURAL HOLDING COMPANY

 Exhibit Index to Quarterly Report on Form 10-Q

For the Quarter Ended June 30, 2021

Exhibit Index
Exhibit Number	Document
*3.1	Amended and Restated Bylaws of Northwest Natural Holding Company (incorporated by reference to Exhibit 3.1 to the Form 8-K dated June 3, 2021, File No. 1-38681).
3.2	Amended and Restated Bylaws of Northwest Natural Gas Company.
*4.1	Credit Agreement, dated as of June 10, 2021, among Northwest Natural Gas Company and the lenders party thereto, with U.S. Bank National Association as administrative agent. (incorporated by reference to Exhibit 4.1 to the Form 8-K dated June 14, 2021, File No. 1-15973).
*4.2	Credit Agreement, dated as of June 10, 2021, among NW Natural Water Company, LLC, Northwest Natural Holding Company, and the lenders party thereto, with Bank of America, N.A., as administrative agent. (incorporated by reference to Exhibit 4.2 to the Form 8-K dated June 14, 2021, File No. 1-38681).
31.1	Certification of Principal Executive Officer of Northwest Natural Gas Company Pursuant to Rule 13a-14(a)/15-d-14(a), Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer of Northwest Natural Gas Company Pursuant to Rule 13a-14(a)/15-d-14(a), Section 302 of the Sarbanes-Oxley Act of 2002.
31.3	Certification of Principal Executive Officer of Northwest Natural Holding Company Pursuant to Rule 13a-14(a)/15-d-14(a), Section 302 of the Sarbanes-Oxley Act of 2002.
31.4	Certification of Principal Financial Officer of Northwest Natural Holding Company Pursuant to Rule 13a-14(a)/15-d-14(a), Section 302 of the Sarbanes-Oxley Act of 2002.
**32.1	Certification of Principal Executive Officer and Principal Financial Officer of Northwest Natural Gas Company Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**32.2	Certification of Principal Executive Officer and Principal Financial Officer of Northwest Natural Holding Company Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) Consolidated Statements of Income; (ii) Consolidated Balance Sheets; (iii) Consolidated Statements of Cash Flows; and (iv) Related notes. The instance document does not appear in the interactive data file because XBRL tags are embedded within the Inline XBRL document.
104	The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, formatted in Inline XBRL.

* Incorporated by reference as indicated.

** Pursuant to Item 601(b)(32)(ii) of Regulation S-K, this certification is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

65

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature for each undersigned company shall be deemed to relate only to matters having reference to such company and its subsidiaries.

NORTHWEST NATURAL GAS COMPANY

(Registrant)

Dated:	August 5, 2021
		/s/ Brody J. Wilson
		Brody J. Wilson
		Principal Accounting Officer Vice President, Treasurer, Chief Accounting Officer and Controller

NORTHWEST NATURAL HOLDING COMPANY

(Registrant)

Dated:	August 5, 2021
		/s/ Brody J. Wilson
		Brody J. Wilson
		Principal Accounting Officer Vice President, Treasurer, Chief Accounting Officer and Controller

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EX-3.2

EXHIBIT 3.2

AMENDED AND RESTATED BYLAWS

OF

NORTHWEST NATURAL GAS COMPANY

ARTICLE I.

OFFICES

Section 1. Office. The principal office of the company shall be located in the City of Portland, Oregon. The company also may have offices at such other places both within and without the State of Oregon as the board of directors from time to time may determine.

Section 2. Registered Office. The registered office of the company required by law to be maintained in the state shall be at the same location as the principal office unless otherwise designated by resolution of the board of directors.

ARTICLE II.

MEETINGS OF SHAREHOLDERS

Section 1. Annual Meeting. The annual meeting of shareholders of the company for the election of directors and for the transaction of other business shall be held at the company’s office in the City of Portland, Oregon, or such other place in that City or solely or partially by means of remote communication in accordance with Oregon law, as shall be determined by the board of directors, on the fourth Thursday of May in each year, unless such day shall be a legal holiday, in which event such meeting shall be held on the next business day. If such meeting shall not be held on such day in any year, it shall be held within 60 days thereafter on such day as shall be fixed by the board of directors and be specified in the notice of the meeting. Every such meeting shall be held at the hour of two o’clock p.m., or at such other hour as shall be fixed by the board and specified in such notice.

Section 2. Special Meetings. Special meetings of the shareholders of the company may be called by (i) the board of directors or (ii) the secretary of the company, following his or her receipt of one or more written demands to call a special meeting of the shareholders (a “Special Meeting Request Notice”), in accordance with and subject to this Section 2, from shareholders of record as of the record date fixed in accordance with this Section 2 who hold not less than one-tenth of all shares entitled to vote at the meeting (the “Requisite Percentage”). No shareholder may submit a Special Meeting Request Notice demanding that the secretary of the company call a special meeting of shareholders pursuant to this Section 2 unless such shareholder has first submitted a request in writing that the board of directors fix a record date (a “Demand Record Date”) for the purpose of determining the shareholders entitled to demand that the secretary of the company call such special meeting, which request for a Demand Record Date shall be delivered to, or mailed and received by, the secretary of the company at the principal executive offices of the company. Within 10 days after receipt of a request to fix a Demand Record Date from any shareholder of record, the board of directors may adopt a resolution fixing a Demand Record Date for the purpose of determining the shareholders entitled to demand that the secretary of the company call a special meeting, which date shall not precede the date upon which the resolution fixing the Demand Record Date is adopted by the board of directors and which date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the board of directors. If no resolution fixing a Demand Record Date has been adopted by the board of directors within the 10 day period after the date on which such a request to fix a Demand Record Date was received, the Demand Record Date in respect thereof shall be deemed to be the 20th day after the date on which such a request was received. After receipt of a Special Meeting Request Notice signed by a shareholder or shareholders collectively holding the Requisite Percentage in compliance with this Section 2, the board of directors shall duly call, and determine the place, date and time of, a special meeting of shareholders for the purpose or purposes and to conduct the business specified in the Special Meeting Request Notice. The board of directors shall provide written notice of such special meeting to the shareholders in accordance with Article II, Section 3 of these bylaws. Each special meeting shall be held for such purposes, at such place in the City of Portland, Oregon or solely or partially

by means of remote communication in accordance with Oregon law, and at such time as shall be specified in the notice thereof. The record date for notice and voting for such a special meeting shall be fixed in accordance with Article II, Section 4 of these bylaws. A shareholder may revoke a Special Meeting Request Notice by written revocation delivered to the secretary at any time prior to the related special meeting. If any such revocation(s) are received by the secretary after the secretary’s receipt of Special Meeting Request Notices from the Requisite Percentage of shareholders, and as a result of such revocation(s) there no longer are unrevoked Special Meeting Request Notices from the Requisite Percentage of shareholders, then the board of directors shall have the discretion to determine whether or not to proceed with such special meeting. Shareholders who nominate persons for election to the board of directors at a special meeting must also comply with the requirements set forth in Article II, Section 10 of these bylaws.

Section 3. Notice. Written or printed notice stating the place, day and hour of the meeting, and, in case of a meeting to be held by remote communication, the means of remote communications authorized by the board of directors for participation in such meeting, and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than 10 nor more than 50 days before the date of the meeting, either personally or by mail, by or at the direction of the board of directors or the persons calling the meeting, to each shareholder of record entitled to vote at such meeting.

Section 4. Fixing Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board of directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than 50 days and, in the case of a meeting of shareholders, not less than 10 days prior to the date on which the particular action requiring such determination of shareholders is to be taken. If no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the board declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof. Notwithstanding anything in this Section 4 to the contrary, a Demand Record Date shall be fixed in accordance with Article II, Section 2 of these bylaws.

Section 5. Record of Shareholders. The officer or agent having charge of the transfer books for shares of the company shall make, no later than two business days after notice of each meeting of shareholders is given, a complete record of the shareholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order with the address of and the number of shares held by each, which record, for a period beginning two business days after notice of such meeting is given and continuing through the meeting, shall be kept on file at the registered office of the company; provided that, if the meeting is to be held solely by means of remote communications, such record may instead be kept on file on a reasonably accessible electronic network at the election of the company. Such record shall be subject to inspection by any shareholder at any time during usual business hours. Such record also shall be produced and kept open at the time and place (if any) of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original transfer books for shares shall be prima facie evidence as to who are the shareholders entitled to examine such record or transfer books or to vote at any meeting of the shareholders.

Section 6. Quorum. A majority of the shares of the company entitled to vote, represented in person, by means of remote communication at a meeting held partially or completely by remote communication, or by proxy, shall constitute a quorum at all meetings of shareholders. If a quorum is present, in person, by means of remote communication, or by proxy, the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, unless the vote of a greater number, or voting by classes, is required by law or the Restated Articles of Incorporation.

If a quorum shall not be represented at any meeting of shareholders, the shareholders represented may adjourn the meeting from time to time without further notice. At such adjourned meeting, at which a quorum shall be present or

represented, any business may be transacted which might have been transacted at the meeting as originally noticed. The shareholders represented at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum.

Section 7. Voting. Each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders, except to the extent that the voting rights of the shares of any class or classes are limited or denied by law or the Restated Articles of Incorporation. At each election of directors holders of shares of common stock have the right to cumulative voting as provided for in the Restated Articles of Incorporation. A shareholder may vote either in person, by means of remote communication at a meeting held partially or completely by remote communication, or by proxy. A shareholder may authorize a person or persons to act for the shareholder as proxy in any manner permitted by law. An authorization of a proxy is effective when received by the secretary of the company or other officer or agent authorized to tabulate votes.

Section 8. Conduct of Meetings. Every meeting of shareholders shall be presided over by the chair of the board, in his or her absence, by the vice-chair of the Board if that position be filled, in his or her absence, by the president, in their absence by a vice president or, if none be present, by a chair appointed by the shareholders present at the meeting. The minutes of such meeting shall be recorded by the secretary or an assistant secretary but, if neither be present, by a secretary appointed for that purpose by the chair of the meeting. The board of directors may adopt by resolution such rules and regulations for the conduct of meetings of shareholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the board of directors, the chair of any meeting of shareholders shall have the exclusive right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chair, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the board of directors or prescribed by the chair of the meeting, may include, without limitation, the following: (a) the establishment of an agenda or order of business for the meeting; (b) rules and procedures for maintaining order at the meeting and the safety of those present; (c) limitations on attendance at or participation in the meeting to shareholders of record of the company, their duly authorized and constituted proxies or such other persons as the chair of the meeting shall determine; (d) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (e) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the board of directors or the chair of the meeting, meetings of shareholders shall not be required to be held in accordance with the rules of parliamentary procedure.

Section 9. Proper Business for Meetings. (a) No business, including nominations of persons for election to the board of directors, shall be conducted at any meeting of shareholders that has not been properly brought before the meeting. To be properly brought before a special meeting of shareholders, business must be specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors or the persons calling the meeting. To be properly brought before an annual meeting of shareholders, business must be either (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (ii) otherwise brought before the meeting by or at the direction of the board of directors or the chair of the board, or (iii) otherwise properly brought before the meeting by a shareholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the secretary of the company. To be timely, a shareholder’s notice must be delivered to the secretary at the principal executive office of the company not less than 90 days prior to the first anniversary of the previous year’s annual meeting of shareholders; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed (other than as a result of adjournment) by more than 30 days from the anniversary of the previous year’s annual meeting, notice by a shareholder to be timely must be delivered not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made (the “Proposal Notice Deadline”). For purposes of this section, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the company with the Securities and Exchange Commission; (b) A shareholder’s notice to the secretary (a “Proposal Notice”) shall set forth (i) one or more matters appropriate for shareholder action that the shareholder proposes to bring before the meeting, (ii) a brief description of the matters desired to be brought before the meeting and the reasons for conducting such business at the meeting, (iii) the name and record address of the shareholder,

(iv) the class and number of shares of the company that the shareholder owns or is entitled to vote and (v) any material interest of the shareholder in such matters; and (c) The chair of the meeting shall have the power and duty (i) to determine whether any proposed business was properly brought before the meeting in accordance with the procedures set forth in this Section 9, and (ii) if the chair determines that any proposed business was not brought before the meeting in compliance with this Section 9, to declare that such proposed business shall not be transacted. A shareholder shall update and supplement its Proposal Notice as necessary, from time to time, so that the information provided or required to be provided in such Proposal Notice pursuant to this Section 9 shall be true, correct and complete in all respects not only prior to the Proposal Notice Deadline but also at all times thereafter and prior to the meeting, and such update and supplement shall be received by the secretary of the company not later than the earlier of (i) five business days following the occurrence of any event, development or occurrence that would cause the information provided in the Proposal Notice to be not true, correct and complete in all respects, or (ii) ten business days prior to the publicly disclosed date of the meeting at which such proposed business contained therein is to be considered; provided, however, that should any such event, development or occurrence take place within ten business days prior to such meeting, such update and supplement shall be received by the secretary of the company not later than one business day following any such event, development or occurrence. For the avoidance of doubt, the updates required pursuant to the previous sentence do not cause a Proposal Notice that was not true, correct and complete in all respects and in compliance with this Section 9 when first delivered to the company prior to the Proposal Notice Deadline to thereafter be in proper form in accordance with this Section 9.

Section 10. Nomination of Director Candidates. (a) As provided by the Restated Articles of Incorporation, no person, except those persons nominated by the board, shall be eligible for election as a director at any annual or special meeting of shareholders unless a written request that his or her name be placed in nomination shall be received from a shareholder of record entitled to vote at such election by the secretary of the company not later than the latter of (i) the 30th day prior to the date fixed for the meeting, or (ii) the 10th day after the mailing of notice of that meeting, together with the written consent of the nominee to serve as a director (the “Nomination Notice Deadline”); (b) The chair of the meeting shall have the power and duty (i) to determine whether any proposed nominee was properly brought before the meeting in accordance with the procedures set forth in this Section 10, and (ii) if the chair determines that any proposed nominee was not brought before the meeting in compliance with this Section 10, to declare that the nomination of such proposed nominee shall not be considered; (c) To be properly brought before the meeting, the written request that such nominee be placed in nomination (a “Nominating Notice”) must contain (i) the name and record address of the shareholder, (ii) the class and number of shares of the company that the shareholder owns or is entitled to vote, and (iii) as to each person the shareholder proposes to nominate for election or re-election as a director, all information relating to the person that is required to be disclosed in solicitations of proxies for the election of directors in a contested election of directors, or that is otherwise required, in each case pursuant to Section 14 under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder; (d) Compliance with this Section 10 shall be the exclusive means for a shareholder to nominate director candidates. A shareholder shall update and supplement its Nominating Notice as necessary, from time to time, so that the information provided or required to be provided in such notice pursuant to this Section 10 shall be true, correct and complete in all respects not only prior to the Nomination Notice Deadline but also at all times thereafter and prior to the meeting, and such update and supplement shall be received by the secretary of the company not later than the earlier of (i) five business days following the occurrence of any event, development or occurrence that would cause the information provided in the Nominating Notice to be not true, correct and complete in all respects, or (ii) ten business days prior to the publicly disclosed date of the meeting at which such nominations contained therein are to be considered; provided, however, that should any such event, development or occurrence take place within ten business days prior to such meeting, such update and supplement shall be received by the secretary of the company not later than one business day following any such event, development or occurrence. For the avoidance of doubt, the updates required pursuant to the previous sentence do not cause a Nominating Notice that was not true, correct and complete in all respects and in compliance with this Section 10 when first delivered to the company prior to the Nomination Notice Deadline to thereafter be in proper form in accordance with this Section 10.

Section 11. Participation at Meetings by Remote Communication. Shareholders and proxy holders that are not physically present for a meeting of shareholders may participate in the meeting, be deemed present in person, and vote if the board of directors authorizes participation by remote communication. Participation by remote

communication is subject to guidelines and procedures that the board of directors adopts. Before the board of directors may authorize shareholders or proxy holders to participate by remote communication in a meeting of shareholders, the company shall implement measures to (a) verify that a person that is participating in the meeting by remote communication is a shareholder or a proxy holder; and (b) ensure that a shareholder or proxy holder may participate by remote communication in an effective manner. The company shall maintain a record of the vote or other action of a shareholder or proxy holder that participates in a meeting of shareholders by remote communication.

ARTICLE III.

BOARD OF DIRECTORS

Section 1. Directors. The business and affairs of the company shall be managed by its board of directors. The number of members of the board, their classification and terms of office, and the manner of their election and removal shall be determined as provided by the Restated Articles of Incorporation. Directors need not be residents of the State of Oregon or shareholders of the company. Unless otherwise determined by the board of directors, no person who has reached the age of 75 years shall be eligible to be elected a director.

Section 2. Chair and Vice-Chair of the Board. The board of directors may elect one of its members as chair of the board. The chair of the board, if that position be filled, shall preside at all meetings of the shareholders and the board of directors and shall have such other duties and responsibilities as may be prescribed by the board of directors. The board of directors may elect one of its members as vice-chair of the board. In the absence of the chair of the board, the vice-chair of the board, if that position be filled, shall preside at all meetings of the shareholders and the board of directors and shall have such other duties and responsibilities as may be prescribed by the board of directors. If the board of directors elects a vice-chair of the board, the board of directors shall specify in the resolution electing the vice-chair of the board the date on which the vice-chair of the board shall become chair of the board. If there shall be no chair of the board, or in his or her absence or disability, the vice-chair of the Board shall exercise the duties and responsibilities of that position. If there shall be no chair or vice-chair of the board, or in their absence or disability, unless otherwise determined by resolution of the board of directors, the chair of the governance committee shall exercise the duties and responsibilities of the chair of the board. In the absence of the chair of the governance committee and specific resolution of the board of directors, an independent board member designated by the chair of the board shall exercise the duties and responsibilities of that position. In the event that none of the chair of the board, the vice-chair of the board, nor the chair of the board’s governance committee are present, and the chair of the board has not otherwise designated an independent board member to preside at the meeting and the board of directors has not otherwise specified a chair by resolution, the board, by vote of the majority of the board members present at the meeting, whether or not a quorum, shall appoint a non-management independent director to preside at the meeting.

Section 3. Compensation. Directors shall receive such reasonable compensation for their services as may be fixed from time to time by resolution of the board of directors, and shall be reimbursed for their expenses properly incurred in the performance of their duties as directors. No such payment shall preclude any director from serving the company in any other capacity and receiving such reasonable compensation for such services as may be fixed by resolution of the board.

ARTICLE IV.

MEETINGS OF THE BOARD OF DIRECTORS

Section 1. Regular Meetings. Regular meetings of the board of directors shall be held in the company’s offices at two o’clock p.m., Pacific Time, on the fourth Thursday of February, May, July and September, and on the third Thursday of December, or on such other date or at such other hour and place as shall be specified in the notice of meeting. The date, time and place for holding regular meetings of the board of directors may be changed upon the giving of notice to all directors by or at the request of the chair of the board or the president. The board may provide

by resolution the time and place either within or without the State of Oregon for holding of meetings or may omit the holding of any meeting without other notice than such resolution.

Section 2. Special Meetings. Special meetings of the board of directors may be called by or at the request of the chair of the board, the chair of the governance committee, the president or any two directors. The person or persons authorized to call special meetings of the board may fix any place, either within or without the State of Oregon, as the place for holding any special meeting of the board called by them. Notice of the time and place of special meetings shall be given to each director at least one day in advance by the secretary or other officer performing his or her duties.

Section 3. Waiver of Notice. Any director may waive notice of any meeting. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Except as otherwise provided by law or the Restated Articles of Incorporation, neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors need be specified in the notice or waiver of notice of such meeting.

Section 4. Quorum. A majority of the number of directors at any time fixed by resolution adopted by the affirmative vote of a majority of the entire board of directors shall constitute a quorum for the transaction of business. If a quorum shall not be present at any meeting of directors, the directors present may adjourn the meeting from time to time without further notice until a quorum shall be present.

Section 5. Manner of Participation and Acting. The board of directors or any committee thereof may permit any or all directors to participate in a regular or special meeting by, or conduct the meeting through, use of any means of communication by which all directors participating may simultaneously hear each other during the meeting. All directors participating in a meeting of the board of directors or any committee thereof by this means shall be deemed to be present in person at the meeting. Except as otherwise provided by law or the Restated Articles of Incorporation, the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors.

Section 6. Action Without a Meeting. Any action required or permitted to be taken at a meeting of the board of directors may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors entitled to vote with respect to the subject matter thereof.

ARTICLE V.

COMMITTEES OF THE BOARD

Section 1. Governance Committee. The board of directors at any time, by resolution adopted by a majority of the board of directors, may appoint a governance committee composed of three or more independent directors. The board shall designate one member of the committee as chair. The chair of the board shall be a member of the governance committee, provided, however, that the chair of the board may in his or her sole discretion designate in his or her place, the vice-chair of the board as a member of the governance committee. The committee shall have and may exercise all of the authority of the board of directors in the management of the company, except with respect to matters upon which by law only the board of directors may act. The committee’s responsibilities shall include serving as the nominating committee of the board; making recommendations to the board on board and board committee composition and structure, including recommendations with respect to committee and committee chairmanship assignments; and conducting periodic board self-assessments, peer reviews of individual directors and evaluations of committee effectiveness. The committee shall also perform such other functions as the board by resolution from time to time may direct.

Section 2. Audit Committee. The board of directors at any time, by resolution adopted by a majority of the board of directors, may appoint an audit committee composed of three or more independent directors. The board shall designate one member of the committee as chair. The duties of the committee shall be to discuss and review with the

company’s independent auditors the annual audit of the company, including the scope of the audit, and report the results of this review to the board; to meet with the independent auditors at such other times as the committee shall deem to be advisable; and to perform such other functions as the board by resolution from time to time may direct.

Section 3. Organization and Executive Compensation Committee. The board of directors at any time, by resolution adopted by a majority of the board of directors, may appoint an organization and executive compensation committee composed of three or more independent directors. The board shall designate one member of the committee as chair. The duties of the committee shall be to discuss and review the management of the affairs of the company relating to its organization and to executive personnel and their compensation, and to perform such other functions as the board by resolution from time to time may direct.

Section 4. Finance Committee. The board of directors at any time, by resolution adopted by a majority of the board of directors, may appoint a finance committee composed of three or more directors, a majority of whom shall not be officers or retired officers of the company. The board shall designate one member of the committee who is not an officer or retired officer of the company as chair. The duties of the committee shall be to discuss and review the management of the affairs of the company relating to financing, including the development of financial planning goals and financial policy, and to perform such other functions as the board by resolution from time to time may direct.

Section 5. Public Affairs and Environmental Policy Committee. The board of directors at any time, by resolution adopted by a majority of the board of directors, may appoint from among its members a public affairs and environmental policy committee composed of three or more directors, a majority of whom shall not be officers or retired officers of the company. The board shall designate one member of the committee who is not an officer of the company as chair. The duties of the committee shall be (i) to consider, review and monitor significant matters of public interest and societal trends, and the company’s community affairs, charitable contributions, diversity and equal employment opportunity compliance programs, and (ii) to monitor significant environmental issues affecting the company and to recommend to the board appropriate environmental policies. The committee shall also perform such other functions as the board by resolution from time to time may direct.

Section 6. Other Committees. The board of directors at any time, by resolution adopted by a majority of the board of directors, may appoint from among its members such other committees and the chairs thereof as it may deem to be advisable. Each such committee shall have such powers and authority as are set forth in the resolutions pertaining thereto from time to time adopted by the board.

Section 7. Changes of Size and Function. Subject to the provisions of law, the board of directors shall have the power at any time to increase or decrease the number of members of any committee, to fill vacancies thereon, to change any members thereof and to change the functions and terminate the existence thereof.

Section 8. Conduct of Meetings. Each committee shall conduct its meetings in accordance with the applicable provisions of these bylaws relating to the conduct of meetings of the board of directors. Each committee shall adopt such further rules and regulations regarding its conduct, keep such minutes and other records and appoint such subcommittees and assistants as it shall deem to be appropriate.

Section 9. Compensation. Persons serving on any committee shall receive such reasonable compensation for their services on such committee as may be fixed by resolution of the board of directors, provided that no person shall receive compensation for his or her services on any committee while serving as an officer of the company.

ARTICLE VI.

NOTICES

Section 1. Form and Manner. Whenever, under the provisions of law or the Restated Articles of Incorporation, notice is required to be given to any director or shareholder, unless otherwise specified, it shall be given in writing by mail addressed to such director or shareholder at his or her address as it appears on the stock transfer books or

other records of the company, with postage thereon prepaid, and such notice shall be deemed to be delivered when deposited in the United States Mail. Notice to directors also may be given by telephone, via email, or in any other manner which is reasonably calculated to give adequate notice.

Section 2. Waiver. Whenever any notice whatever is required to be given under the provisions of law, the Restated Articles of Incorporation or these bylaws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.

ARTICLE VII.

OFFICERS

Section 1. Election. The board of directors, at its first meeting following the annual meeting of shareholders each year, shall elect a president and a secretary. At such meeting, or at any other time it shall deem appropriate, the board may elect one or more vice presidents and a treasurer. The board also may elect or appoint such other officers and agents as it may deem necessary. Any two or more offices may be held by the same person, except the offices of president and secretary.

Section 2. Compensation. The officers of the company shall receive such reasonable compensation for their services as from time to time may be fixed by resolution of the board of directors.

Section 3. Term. The term of office of all officers shall commence upon their election or appointment and shall continue until the first meeting of the board of directors following the annual meeting of shareholders and thereafter until their successors shall be elected or until their resignation or removal. A vacancy occurring in any office of the company for whatever reason may be filled by the board.

Section 4. Removal. Any officer or agent elected or appointed by the board of directors may be removed by the board whenever in its judgment the best interests of the company will be served thereby but such removal shall be without prejudice to the contract rights, if any, of the officer or agent so removed.

Section 5. President. Unless otherwise determined by the board of directors, the president shall be the chief executive officer of the company and, subject to the control of the board of directors, shall be responsible for the general administration and operation of the company. He shall have such other duties and responsibilities as may pertain to such office or be prescribed by the board of directors. In the absence or disability of the president, an officer designated by the board shall exercise the duties and responsibilities of the president.

In the event the offices of chief executive officer and president are not held by the same person, the chief executive officer shall exercise the duties and responsibilities of the president described in these bylaws.

Section 6. Vice Presidents. Each vice president shall have such duties and responsibilities as may be prescribed by the board of directors and the president. The board or the president may confer a special title upon a vice president.

Section 7. Secretary. The secretary shall record and keep the minutes of the shareholders in one or more books provided for that purpose; see that all notices are duly given in accordance with the provisions of these bylaws or as required by law; and perform such other duties as may be prescribed by the board or the president. The secretary shall have custody of the corporate seal of the company and shall affix the seal to any instrument requiring it and attest the same by his or her signature.

The assistant secretaries shall have such duties as may be prescribed from time to time by the board, the president or the secretary. In the absence or disability of the secretary, his or her duties shall be performed by an assistant secretary.

Section 8. Treasurer. The treasurer shall have charge and custody and be responsible for all funds and securities of the company; deposit all moneys and other valuable effects in the name and to the credit of the company in such

depositories as may be designated by the board of directors; and disburse the funds of the company as may be authorized by the board and take proper vouchers for such disbursements. The treasurer shall have such other duties as may be prescribed from time to time by the board or the president. In the absence or disability of the treasurer, his or her duties shall be performed by an assistant treasurer.

ARTICLE VIII.

CONTRACTS, LOANS, CHECKS AND DEPOSITS

Section 1. Contracts. The board of directors by resolution may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the company, and such authority may be general or confined to specific instances.

Section 2. Loans. No loans shall be contracted on behalf of the company and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the board of directors. Such authority may be general or confined to specific instances.

Section 3. Checks and Drafts. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the company shall be signed by such officer or officers, agent or agents of the company and in such manner as shall from time to time be determined by resolution of the board of directors.

Section 4. Deposits. All funds of the company not otherwise employed shall be deposited from time to time to the credit of the company in such banks, trust companies or other depositories as the board of directors or officers of the company designated by the board may select, or be invested as authorized by the board.

ARTICLE IX.

CERTIFICATES FOR SHARES AND THEIR TRANSFER

Section 1. Certificates for Shares. The shares of the company shall be represented by certificates; provided, however, the board of directors may provide by resolution or resolutions that some or all of any or all classes or series of the company’s shares shall be uncertificated shares. When shares are not represented by certificates then within a reasonable time after the issuance or transfer of such shares, the company shall send or cause to be sent to the shareholder to whom such shares have been issued or transferred a written statement of the information required by the laws of the State of Oregon to be on certificates.

Certificates representing shares of the company shall be issued only for whole numbers of shares and shall be in such form as the board of directors may, from time to time, prescribe in accordance with the laws of the State of Oregon. Such certificates shall be signed by the president or a vice president and by the secretary or an assistant secretary and sealed with the corporate seal or a facsimile thereof. The signatures of such officers upon a certificate may be facsimiles thereof. In case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the company as the board may authorize.

Section 2. Transfer. Shares of stock of the company shall be transferable on the books of the company by the holder of record thereof, or by his or her legal representative who shall furnish proper evidence of authority to transfer, or by his or her attorney thereunto authorized by duly executed power of attorney, and on surrender for cancellation of the certificates, if any, for such shares. The board of directors may appoint one or more transfer agents and registrars of stock of the company.

Section 3. Owner of Record. The company shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.

ARTICLE X.

INDEMNIFICATION AND INSURANCE

Section 1. Indemnification. The company shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director, officer, employee or agent of the company, or is or was serving at the request of the company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other enterprise or any employee benefit plan, against expenses (including attorney’s fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the defense or settlement of such action, suit or proceeding to the fullest extent permissible under the Oregon Business Corporation Act or the indemnification provisions of any successor Act. The foregoing rights of indemnification shall not be exclusive of any other rights to which any such person so indemnified may be entitled, under any agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office; shall continue as to a person who has ceased to be a director, officer, employee or agent; and shall inure to the benefit of the heirs, executors and administrators of such a person.

Section 2. Insurance. The company may purchase and maintain insurance (and pay the entire premium therefor) on behalf of any person who is or was a director, officer, employee or agent of the company, or is or was serving at the request of the company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity or arising out of his or her status as such, whether or not the company would have the power to indemnify him or her against such liability under the provisions of the Oregon Business Corporation Act or any successor Act; and on behalf of any person who is or was a fiduciary under the Employee Retirement Income Security Act of 1974 with regard to an employee benefit plan of the company against any liability asserted against him or her and incurred by him or her in his or her fiduciary capacity.

ARTICLE XI.

SEAL

The corporate seal of the company shall be circular in form and shall bear an inscription containing the name of the company, the year of its organization, the state of its incorporation and the words “Corporate Seal.”

ARTICLE XII.

AMENDMENTS

These bylaws, or any of them, may be altered, amended or repealed, or new bylaws adopted, by resolution of a majority of the board of directors, subject to repeal or change by action of the shareholders.

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, David H. Anderson, certify that:

1.           I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2021 of Northwest Natural Gas Company;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:    August 5, 2021

/s/ David H. Anderson

David H. Anderson

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Frank H. Burkhartsmeyer, certify that:

1.           I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2021 of Northwest Natural Gas Company;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:    August 5, 2021

/s/ Frank H. Burkhartsmeyer

Frank H. Burkhartsmeyer

Senior Vice President and Chief Financial Officer

EX-31.3

EXHIBIT 31.3

CERTIFICATION

I, David H. Anderson, certify that:

1.           I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2021 of Northwest Natural Holding Company;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:    August 5, 2021

/s/ David H. Anderson

David H. Anderson

President and Chief Executive Officer

EX-31.4

EXHIBIT 31.4

CERTIFICATION

I, Frank H. Burkhartsmeyer, certify that:

1.           I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2021 of Northwest Natural Holding Company;

2.           Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.           Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.           The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.           The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:    August 5, 2021

/s/ Frank H. Burkhartsmeyer

Frank H. Burkhartsmeyer

Senior Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

NORTHWEST NATURAL GAS COMPANY

Certificate Pursuant to Section 906

of Sarbanes – Oxley Act of 2002

Each of the undersigned, DAVID H. ANDERSON, Chief Executive Officer, and FRANK H. BURKHARTSMEYER, the Chief Financial Officer, of NORTHWEST NATURAL GAS COMPANY (the Company), DOES HEREBY CERTIFY that:

1.    The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 (the Report) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.    Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

IN WITNESS WHEREOF, each of the undersigned has caused this instrument to be executed this 5th day of August 2021.

/s/ David H. Anderson

David H. Anderson

President and Chief Executive Officer

/s/ Frank H. Burkhartsmeyer

Frank H. Burkhartsmeyer

Senior Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Northwest Natural Gas Company and will be retained by Northwest Natural Gas Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

NORTHWEST NATURAL HOLDING COMPANY

Certificate Pursuant to Section 906

of Sarbanes – Oxley Act of 2002

Each of the undersigned, DAVID H. ANDERSON, Chief Executive Officer, and FRANK H. BURKHARTSMEYER, the Chief Financial Officer, of NORTHWEST NATURAL HOLDING COMPANY (the Company), DOES HEREBY CERTIFY that:

1.    The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 (the Report) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.    Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

IN WITNESS WHEREOF, each of the undersigned has caused this instrument to be executed this 5th day of August 2021.

/s/ David H. Anderson

David H. Anderson

President and Chief Executive Officer

/s/ Frank H. Burkhartsmeyer

Frank H. Burkhartsmeyer

Senior Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Northwest Natural Holding Company and will be retained by Northwest Natural Holding Company and furnished to the Securities and Exchange Commission or its staff upon request.

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2021	Jul. 23, 2021
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2021
Entity File Number	1-38681
Entity Registrant Name	NORTHWEST NATURAL HOLDING COMPANY
Entity Incorporation, State or Country Code	OR
Entity Tax Identification Number	82-4710680
Entity Address, Address Line One	250 SW Taylor Street
Entity Address, City or Town	Portland
Entity Address, State or Province	OR
Entity Address, Postal Zip Code	97204
City Area Code	(503)
Local Phone Number	226-4211
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	Common Stock
Trading Symbol	NWN
Security Exchange Name	NYSE
Entity Common Stock, Shares Outstanding		30,672,722
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Central Index Key	0001733998
Northwest Natural Gas Company [Member]
Document Information [Line Items]
Document Type	10-Q
Document Period End Date	Jun. 30, 2021
Entity File Number	1-15973
Entity Registrant Name	NORTHWEST NATURAL GAS COMPANY
Entity Incorporation, State or Country Code	OR
Entity Tax Identification Number	93-0256722
Entity Address, Address Line One	250 SW Taylor Street
Entity Address, City or Town	Portland
Entity Address, State or Province	OR
Entity Address, Postal Zip Code	97204
City Area Code	(503)
Local Phone Number	226-4211
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Central Index Key	0000073020

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Consolidated Statements of Comprehensive Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Operating revenues [Abstract]
Operating revenues	$ 148,917	$ 134,971	$ 464,863	$ 420,122
Operating expenses:
Cost of gas	41,193	41,210	153,403	149,748
Operations and maintenance	50,047	43,983	102,238	92,904
Environmental remediation	1,509	1,622	5,286	5,627
General taxes	8,914	8,373	20,283	18,268
Revenue taxes	5,671	4,454	18,335	16,197
Depreciation and amortization	28,144	25,836	56,241	50,511
Other operating expenses	815	551	1,747	1,479
Total operating expenses	136,293	126,029	357,533	334,734
Income from operations	12,624	8,942	107,330	85,388
Other income (expense), net	(2,597)	(3,040)	(6,139)	(6,615)
Interest expense, net	11,028	12,706	22,154	23,174
Income (loss) before income taxes	(1,001)	(6,804)	79,037	55,599
Income tax expense (benefit)	(277)	(1,672)	20,244	12,455
Net income (loss) from continuing operations	(724)	(5,132)	58,793	43,144
Income (loss) from discontinued operations, net of tax	0	280	0	(498)
Net income (loss)	(724)	(4,852)	58,793	42,646
Other comprehensive income:
Amortization of non-qualified employee benefit plan liability, net of taxes	221	160	442	320
Comprehensive income (loss)	(503)	(4,692)	59,235	42,966
Supplemental Income Statement Elements [Abstract]
Amortization of non-qualified employee benefit plan liability, tax	$ 80	$ 58	$ 160	$ 116
Average common shares outstanding:
Basic (in shares)	30,664	30,537	30,639	30,514
Diluted (in shares)	30,664	30,537	30,671	30,559
Earnings from continuing operations per share of common stock:
Basic (in dollars per share)	$ (0.02)	$ (0.17)	$ 1.92	$ 1.41
Diluted (in dollars per share)	(0.02)	(0.17)	1.92	1.41
Loss from discontinued operations per share of common stock:
Basic (in dollars per share)	0	0.01	0	(0.01)
Diluted (in dollars per share)	0	0.01	0	(0.01)
Earnings (loss) per share of common stock:
Basic (in dollars per share)	(0.02)	(0.16)	1.92	1.40
Diluted (in dollars per share)	$ (0.02)	$ (0.16)	$ 1.92	$ 1.40
Northwest Natural Gas Company [Member]
Operating revenues [Abstract]
Operating revenues	$ 144,579	$ 131,157	$ 456,929	$ 413,686
Operating expenses:
Cost of gas	41,249	41,265	153,515	149,860
Operations and maintenance	44,939	41,198	94,126	87,454
Environmental remediation	1,509	1,622	5,286	5,627
General taxes	8,783	8,211	20,042	18,010
Revenue taxes	5,650	4,454	18,305	16,197
Depreciation and amortization	27,530	24,986	54,699	49,176
Other operating expenses	780	522	1,699	1,442
Total operating expenses	130,440	122,258	347,672	327,766
Income from operations	14,139	8,899	109,257	85,920
Other income (expense), net	(2,566)	(3,179)	(6,231)	(6,742)
Interest expense, net	10,696	11,851	21,486	21,712
Income (loss) before income taxes	877	(6,131)	81,540	57,466
Income tax expense (benefit)	288	(1,419)	20,840	12,999
Net income (loss)	589	(4,712)	60,700	44,467
Other comprehensive income:
Amortization of non-qualified employee benefit plan liability, net of taxes	221	160	442	320
Comprehensive income (loss)	810	(4,552)	61,142	44,787
Supplemental Income Statement Elements [Abstract]
Amortization of non-qualified employee benefit plan liability, tax	$ 80	$ 58	$ 160	$ 116

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Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020
Current assets:
Cash and cash equivalents	$ 20,084	$ 30,168	$ 137,057
Accounts receivable	60,713	88,083	35,196
Accrued unbilled revenue	13,592	57,949	15,393
Allowance for uncollectible accounts	(3,283)	(3,219)	(1,592)
Regulatory assets	60,672	31,745	30,021
Derivative instruments	46,168	13,678	5,996
Inventories	39,024	42,691	44,009
Gas reserves	8,444	11,409	13,646
Income Taxes Receivable, Current	6,000	6,000	0
Other current assets	22,427	44,741	20,318
Discontinued operations current assets	0	0	16,392
Total current assets	273,841	323,245	316,436
Non-current assets:
Property, plant, and equipment	3,849,792	3,734,039	3,608,902
Less: Accumulated depreciation	1,093,863	1,079,269	1,062,299
Property, Plant and Equipment, Net	2,755,929	2,654,770	2,546,603
Gas reserves	29,852	34,484	41,459
Regulatory assets	330,710	348,927	324,358
Derivative instruments	7,912	6,135	3,958
Other investments	47,725	49,259	62,130
Operating lease right of use asset, net	76,294	77,446	78,566
Assets under sales-type leases	141,408	143,759	146,208
Goodwill	69,313	69,225	70,183
Other non-current assets	50,516	49,129	51,446
Total non-current assets	3,509,659	3,433,134	3,324,911
Total assets	3,783,500	3,756,379	3,641,347
Current liabilities:
Short-term debt	240,000	304,525	233,000
Current maturities of long-term debt	60,274	95,344	35,209
Accounts payable	97,854	97,966	79,903
Taxes accrued	15,143	13,812	18,535
Interest accrued	7,425	7,441	7,234
Regulatory liabilities	103,210	50,362	41,126
Derivative instruments	3,393	4,198	3,067
Operating lease liabilities	1,228	1,105	931
Other current liabilities	43,946	52,330	54,323
Discontinued operations current liabilities	0	0	13,574
Total current liabilities	572,473	627,083	486,902
Long-term debt	915,501	860,081	918,887
Deferred credits and other non-current liabilities:
Deferred tax liabilities	325,600	319,292	297,995
Regulatory liabilities	645,046	639,663	632,400
Pension and other postretirement benefit liabilities	203,854	217,287	218,493
Derivative instruments	453	2,852	1,658
Operating lease liabilities	80,088	80,621	80,159
Other non-current liabilities	117,659	120,767	120,852
Total deferred credits and other non-current liabilities	1,372,700	1,380,482	1,351,557
Commitments and contingencies (Note 16)
Equity:
Common stock	$ 569,785	$ 565,112	$ 562,766
Shares Authorized (in shares)	100,000,000	100,000,000	100,000,000
Shares outstanding (in shares)	30,672,000	30,589,000	30,546,000
Shares issued (in shares)	30,672,000	30,589,000	30,546,000
Par Value (in dollars per share)	$ 0	$ 0	$ 0
Retained earnings	$ 365,501	$ 336,523	$ 331,648
Accumulated other comprehensive loss	(12,460)	(12,902)	(10,413)
Total equity	922,826	888,733	884,001
Total liabilities and equity	3,783,500	3,756,379	3,641,347
Northwest Natural Gas Company [Member]
Current assets:
Cash and cash equivalents	11,488	10,453	120,284
Accounts receivable	51,849	80,035	33,985
Accrued unbilled revenue	13,474	57,890	15,236
Receivables from affiliates	301	660	563
Allowance for uncollectible accounts	(3,239)	(3,107)	(1,591)
Regulatory assets	60,672	31,745	30,021
Derivative instruments	46,168	13,678	5,996
Inventories	38,549	42,325	43,619
Gas reserves	8,444	11,409	13,646
Other current assets	22,186	37,909	20,287
Total current assets	249,892	282,997	282,046
Non-current assets:
Property, plant, and equipment	3,794,870	3,683,776	3,564,707
Less: Accumulated depreciation	1,088,743	1,075,446	1,059,760
Property, Plant and Equipment, Net	2,706,127	2,608,330	2,504,947
Gas reserves	29,852	34,484	41,459
Regulatory assets	330,670	348,887	324,320
Derivative instruments	7,912	6,135	3,958
Other investments	47,695	49,242	48,673
Operating lease right of use asset, net	76,211	77,328	78,464
Assets under sales-type leases	141,408	143,759	146,208
Other non-current assets	49,665	48,174	50,629
Total non-current assets	3,389,540	3,316,339	3,198,658
Total assets	3,639,432	3,599,336	3,480,704
Current liabilities:
Short-term debt	198,000	231,525	153,000
Current maturities of long-term debt	59,987	59,955	0
Accounts payable	95,109	95,170	77,993
Payables to affiliates	22,869	13,820	18,450
Taxes accrued	10,072	13,724	7,376
Interest accrued	7,373	7,338	7,156
Regulatory liabilities	103,210	50,362	41,126
Derivative instruments	3,393	4,198	3,067
Operating lease liabilities	1,193	1,054	868
Other current liabilities	43,389	51,907	52,939
Total current liabilities	544,595	529,053	361,975
Long-term debt	857,422	857,265	917,012
Deferred credits and other non-current liabilities:
Deferred tax liabilities	323,522	318,034	309,977
Regulatory liabilities	644,177	638,793	631,531
Pension and other postretirement benefit liabilities	203,854	217,287	218,493
Derivative instruments	453	2,852	1,658
Operating lease liabilities	80,043	80,559	80,120
Other non-current liabilities	116,975	120,309	120,569
Total deferred credits and other non-current liabilities	1,369,024	1,377,834	1,362,348
Equity:
Common stock	319,506	319,506	319,557
Retained earnings	561,345	528,580	530,225
Accumulated other comprehensive loss	(12,460)	(12,902)	(10,413)
Total equity	868,391	835,184	839,369
Total liabilities and equity	$ 3,639,432	$ 3,599,336	$ 3,480,704

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Consolidated Statement of Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock Including APIC [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Northwest Natural Gas Company [Member]	Northwest Natural Gas Company [Member] Common Stock Including APIC [Member]	Northwest Natural Gas Company [Member] Retained Earnings [Member]	Northwest Natural Gas Company [Member] Accumulated Other Comprehensive Income (Loss) [Member]
Beginning Balance at Dec. 31, 2019	$ 865,999	$ 558,282	$ 318,450	$ (10,733)	$ 822,196		$ 513,372	$ (10,733)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	42,646		42,646		44,467		44,467
Dividends on common stock			(29,448)				(27,614)
Other comprehensive income	42,966			320	44,787			320
Stock-based compensation		3,626
Shares issued pursuant to equity based plans		858
Ending Balance at Jun. 30, 2020	$ 884,001	562,766	331,648	(10,413)	839,369	$ 319,557	530,225	(10,413)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends per share of common stock	$ 0.9550
Beginning Balance at Mar. 31, 2020	$ 901,741	561,264	351,050	(10,573)	857,739		548,755	(10,573)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	(4,852)		(4,852)		(4,712)		(4,712)
Dividends on common stock			(14,550)				(13,818)
Other comprehensive income	(4,692)			160	(4,552)			160
Stock-based compensation		254
Shares issued pursuant to equity based plans		1,248
Ending Balance at Jun. 30, 2020	$ 884,001	562,766	331,648	(10,413)	839,369	319,557	530,225	(10,413)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends per share of common stock	$ 0.4775
Beginning Balance at Dec. 31, 2020	$ 888,733	565,112	336,523	(12,902)	835,184		528,580	(12,902)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	58,793		58,793		60,700		60,700
Dividends on common stock			(29,815)				(27,935)
Other comprehensive income	59,235			442	61,142			442
Stock-based compensation		2,446
Shares issued pursuant to equity based plans		2,227
Ending Balance at Jun. 30, 2021	$ 922,826	569,785	365,501	(12,460)	868,391	319,506	561,345	(12,460)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends per share of common stock	$ 0.9600
Beginning Balance at Mar. 31, 2021	$ 936,324	568,066	380,939	(12,681)	881,565		574,740	(12,681)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	(724)		(724)		589		589
Dividends on common stock			(14,714)				(13,984)
Other comprehensive income	(503)			221	810			221
Stock-based compensation		416
Shares issued pursuant to equity based plans		1,303
Ending Balance at Jun. 30, 2021	$ 922,826	$ 569,785	$ 365,501	$ (12,460)	$ 868,391	$ 319,506	$ 561,345	$ (12,460)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Dividends per share of common stock	$ 0.4800

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Consolidated Statement of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Operating activities:
Net income	$ 58,793	$ 42,646
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization	56,241	50,511
Regulatory amortization of gas reserves	7,597	8,567
Deferred income taxes	1,048	(2,004)
Qualified defined benefit pension plan expense	7,874	8,892
Contributions to qualified defined benefit pension plans	(9,590)	(8,470)
Deferred environmental expenditures, net	(9,625)	(9,897)
Amortization of environmental remediation	5,286	5,627
Other	1,610	(5,931)
Changes in assets and liabilities:
Receivables, net	73,133	73,954
Inventories	3,666	(52)
Income and other taxes	21,467	20,966
Accounts payable	(17,239)	(18,919)
Deferred gas costs	(26,962)	115
Asset optimization revenue sharing	36,872	(11,657)
Decoupling mechanism	(6,860)	4,281
Other, net	(9,030)	3,967
Discontinued operations	0	(547)
Cash provided by operating activities	194,281	162,049
Investing activities:
Capital expenditures	(130,108)	(122,282)
Acquisitions, net of cash acquired	(55)	(37,940)
Leasehold improvement expenditures	(163)	(7,519)
Proceeds from the sale of assets	2,234	7,905
Other	209	263
Discontinued operations	0	(846)
Cash used in investing activities	(127,883)	(160,419)
Financing activities:
Proceeds from common stock issued	0	68
Long-term debt issued	55,000	150,000
Long-term debt retired	(35,000)	(75,000)
Proceeds from term loan due within one year	100,000	150,000
Repayments of commercial paper, maturities greater than 90 days	(195,025)	0
Proceeds from (Repayments of) Short-term Debt	30,500	(66,100)
Cash dividend payments on common stock	(27,842)	(27,679)
Other	(1,175)	(3,007)
Net Cash Provided by (Used in) Financing Activities	(73,542)	128,282
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	28,310	142,548
Increase in cash and cash equivalents	(7,144)	129,912
Supplemental disclosure of cash flow information:
Interest paid, net of capitalization	21,971	23,156
Income taxes paid, net of refunds	7,405	544
Northwest Natural Gas Company [Member]
Operating activities:
Net income	60,700	44,467
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization	54,699	49,176
Regulatory amortization of gas reserves	7,597	8,567
Deferred income taxes	201	(2,766)
Qualified defined benefit pension plan expense	7,874	8,892
Contributions to qualified defined benefit pension plans	(9,590)	(8,470)
Deferred environmental expenditures, net	(9,625)	(9,897)
Amortization of environmental remediation	5,286	5,627
Other	481	(6,746)
Changes in assets and liabilities:
Receivables, net	74,354	74,625
Inventories	3,775	249
Income and other taxes	19,440	22,038
Accounts payable	(19,936)	(22,186)
Deferred gas costs	(26,962)	115
Asset optimization revenue sharing	36,872	(11,657)
Decoupling mechanism	(6,860)	4,281
Other, net	(8,361)	5,979
Cash provided by operating activities	189,945	162,294
Investing activities:
Capital expenditures	(125,167)	(118,227)
Leasehold improvement expenditures	(163)	(7,519)
Proceeds from the sale of assets	2,234	7,905
Other	209	269
Cash used in investing activities	(122,887)	(117,572)
Financing activities:
Long-term debt issued	0	150,000
Long-term debt retired	0	(75,000)
Proceeds from term loan due within one year	100,000	150,000
Repayments of commercial paper, maturities greater than 90 days	(195,025)	0
Proceeds from (Repayments of) Short-term Debt	61,500	(122,100)
Cash dividend payments on common stock	(27,935)	(27,614)
Other	(1,623)	(3,140)
Net Cash Provided by (Used in) Financing Activities	(63,083)	72,146
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	19,714	125,775
Increase in cash and cash equivalents	3,975	116,868
Supplemental disclosure of cash flow information:
Interest paid, net of capitalization	21,285	21,794
Income taxes paid, net of refunds	$ 10,910	$ 950

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Organization and Principles of Consolidation

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Principles of Consolidation

ORGANIZATION AND PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements represent the respective, consolidated financial results of NW Holdings and NW Natural and all respective companies that each registrant directly or indirectly controls, either through majority ownership or otherwise. This is a combined report of NW Holdings and NW Natural, which includes separate consolidated financial statements for each registrant.

NW Natural's regulated natural gas distribution activities are reported in the natural gas distribution (NGD) segment. The NGD segment is NW Natural's core operating business and serves residential, commercial, and industrial customers in Oregon and southwest Washington. The NGD segment is the only reportable segment for NW Holdings and NW Natural. All other activities, water businesses, and other investments are aggregated and reported as other at their respective registrant.

Investments in corporate joint ventures and partnerships that NW Holdings does not directly or indirectly control, and for which it is not the primary beneficiary, include NNG Financial's investment in Kelso-Beaver Pipeline, which is accounted for under the equity method, and NWN Energy's investment in Trail West Holdings, LLC (TWH), which was accounted for under the equity method through August 6, 2020. See Note 13 for activity related to TWH. NW Holdings and its direct and indirect subsidiaries are collectively referred to herein as NW Holdings, and NW Natural and its direct and indirect subsidiaries are collectively referred to herein as NW Natural. The consolidated financial statements of NW Holdings and NW Natural are presented after elimination of all intercompany balances and transactions.

Information presented in these interim consolidated financial statements is unaudited, but includes all material adjustments management considers necessary for a fair statement of the results for each period reported including normal recurring accruals. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in NW Holdings' and NW Natural's combined 2020 Annual Report on Form 10-K (2020 Form 10-K). A significant part of NW Holdings' and NW Natural's business is of a seasonal nature; therefore, NW Holdings and NW Natural results of operations for interim periods are not necessarily indicative of full year results. Seasonality affects the comparability of the results of other operations across quarters but not across years.

In June 2018, NWN Gas Storage, a wholly-owned subsidiary of NW Natural at the time and now a wholly-owned subsidiary of NW Holdings, entered into a Purchase and Sale Agreement that provides for the sale of all of the membership interests in its wholly-owned subsidiary, Gill Ranch. We concluded that the sale of Gill Ranch qualified as assets and liabilities held for sale and discontinued operations. As such, the results of Gill Ranch were presented as a discontinued operation for NW Holdings for all periods presented on the consolidated statements of comprehensive income and cash flows, and the assets and liabilities associated with Gill Ranch have been classified as discontinued operations assets and liabilities on the NW Holdings consolidated balance sheet. The sale closed on December 4, 2020. See Note 17 for additional information.

Notes to the consolidated financial statements reflect the activity of continuing operations for both NW Holdings and NW Natural for all periods presented, unless otherwise noted.

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Significant Accounting Policies

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Significant Accounting Policies

SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies are described in Note 2 of the 2020 Form 10-K. There were no material changes to those accounting policies during the six months ended June 30, 2021 other than those set forth in this Note 2. The following are current updates to certain critical accounting policy estimates and new accounting standards.

Industry Regulation  

In applying regulatory accounting principles, NW Holdings and NW Natural capitalize or defer certain costs and revenues as regulatory assets and liabilities pursuant to orders of the Oregon Public Utilities Commission (OPUC), Washington Utilities and Transportation Commission (WUTC), Idaho Public Utilities Commission (IPUC) or Public Utility Commission of Texas (PUCT), which provide for the recovery of revenues or expenses from, or refunds to, utility customers in future periods, including a return or a carrying charge in certain cases.

Amounts deferred as regulatory assets and liabilities for NW Holdings and NW Natural were as follows:

	Regulatory Assets
	June 30,				December 31,
In thousands	2021		2020		2020
NW Natural:
Current:
Unrealized loss on derivatives(1)	$	3,393	$	2,956	$	4,198
Gas costs	29,486		6,046		1,979
Environmental costs(2)	5,688		4,176		4,992
Decoupling(3)	1,011		85		361
Pension balancing(4)	7,131		7,131		7,131
Income taxes	2,345		2,208		3,484
Other(5)	11,618		7,419		9,600
Total current	$	60,672	$	30,021	$	31,745
Non-current:
Unrealized loss on derivatives(1)	$	453	$	1,658	$	2,852
Pension balancing(4)	40,342		45,315		43,383
Income taxes	13,903		17,608		15,368
Pension and other postretirement benefit liabilities	160,385		164,091		170,812
Environmental costs(2)	85,423		81,757		90,623
Gas costs	5,742		94		3,925
Decoupling(3)	198		—		1,031
Other(5)	24,224		13,797		20,893
Total non-current	$	330,670	$	324,320	$	348,887
Other (NW Holdings)	40		38		40
Total non-current - NW Holdings	$	330,710	$	324,358	$	348,927

	Regulatory Liabilities
	June 30,				December 31,
In thousands	2021		2020		2020
NW Natural:
Current:
Gas costs	$	1,519	$	3,767	$	1,118
Unrealized gain on derivatives(1)	46,168		5,950		13,674
Decoupling(3)	5,821		11,498		11,793
Income taxes	8,217		7,098		8,217
Asset optimization revenue sharing	39,348		7,116		10,298
Other(5)	2,137		5,697		5,262
Total current	$	103,210	$	41,126	$	50,362
Non-current:
Gas costs	$	101	$	538	$	314
Unrealized gain on derivatives(1)	7,912		3,958		6,135
Decoupling(3)	652		2,108		1,723
Income taxes(6)	182,977		193,414		189,587
Accrued asset removal costs(7)	439,685		414,719		427,960
Other(5)	12,850		16,794		13,074
Total non-current - NW Natural	$	644,177	$	631,531	$	638,793
Other (NW Holdings)	869		869		870
Total non-current - NW Holdings	$	645,046	$	632,400	$	639,663

(1)Unrealized gains or losses on derivatives are non-cash items and therefore do not earn a rate of return or a carrying charge. These amounts are recoverable through NGD rates as part of the annual Purchased Gas Adjustment (PGA) mechanism when realized at settlement.

(2)Refer to footnote (3) of the Deferred Regulatory Asset table in Note 16 for a description of environmental costs.

(3)This deferral represents the margin adjustment resulting from differences between actual and expected volumes. 

(4)Balance represents deferred net periodic benefit costs as approved by the OPUC.

(5)Balances consist of deferrals and amortizations under approved regulatory mechanisms and typically earn a rate of return or carrying charge.

(6)Balance represents excess deferred income tax benefits subject to regulatory flow-through.

(7)Estimated costs of removal on certain regulated properties are collected through rates.

We believe all costs incurred and deferred at June 30, 2021 are prudent. All regulatory assets and liabilities are reviewed annually for recoverability, or more often if circumstances warrant. If we should determine that all or a portion of these regulatory assets or liabilities no longer meet the criteria for continued application of regulatory accounting, then NW Holdings and NW Natural would be required to write-off the net unrecoverable balances in the period such determination is made.

Supplemental Cash Flow Information

Restricted cash is primarily comprised of funds from public purpose charges for programs that assist low-income customers with bill payments or energy efficiency. Prior period amounts have been reclassified to conform prior period information to the current presentation.

The following table provides a reconciliation of the cash, cash equivalents and restricted cash balances at NW Holdings as of June 30, 2021 and 2020 and December 31, 2020:

	June 30,				December 31,
In thousands	2021		2020		2020
Cash and cash equivalents	$	20,084	$	137,057	$	30,168
Restricted cash included in other current assets	8,226		5,491		5,286
Cash, cash equivalents and restricted cash	$	28,310	$	142,548	$	35,454

The following table provides a reconciliation of the cash, cash equivalents and restricted cash balances at NW Natural as of June 30, 2021 and 2020 and December 31, 2020:

	June 30,				December 31,
In thousands	2021		2020		2020
Cash and cash equivalents	$	11,488	$	120,284	$	10,453
Restricted cash included in other current assets	8,226		5,491		5,286
Cash, cash equivalents and restricted cash	$	19,714	$	125,775	$	15,739

Accounts Receivable and Allowance for Uncollectible Accounts

Accounts receivable consist primarily of amounts due for natural gas sales and transportation services to NGD customers, plus amounts due for gas storage services. NW Holdings and NW Natural establish allowances for uncollectible accounts (allowance) for trade receivables, including accrued unbilled revenue, based on the aging of receivables, collection experience of past due account balances including payment plans, and historical trends of write-offs as a percent of revenues. A specific allowance is established and recorded for large individual customer receivables when amounts are identified as unlikely to be partially or fully recovered. Inactive accounts are written-off against the allowance after they are 120 days past due or when deemed uncollectible. Differences between the estimated allowance and actual write-offs will occur based on a number of factors, including changes in economic conditions, customer creditworthiness, and natural gas prices. The allowance for uncollectible accounts is adjusted quarterly, as necessary, based on information currently available.

Allowance for Trade Receivables

Accounts receivable consist primarily of amounts due for natural gas sales and transportation services to NGD customers and amounts due for gas storage services. The payment term of these receivables is generally 15 days. For these short-term receivables, it is not expected that forecasted economic conditions would significantly affect the loss estimates under stable economic conditions. For extreme situations like a financial crisis, natural disaster, and the economic slowdown caused by the COVID-19 pandemic, we enhance our review and analysis.

After considering the significant exposure to quarantine-related job losses in Oregon and Washington state, NW Holdings and NW Natural expanded our standard review procedures for our allowance for uncollectible accounts calculation, including analyzing the significant indications of unemployment rate and comparing to historic economic data during the 2007-2009 time period when the country experienced an economic recession. We then considered other qualitative information including recent customer interactions related to payment plans and credit issues, statistics from our website related to credit inquiries, and economic stimulus provided by the federal government which could have a beneficial impact on residential and commercial customers' abilities to ultimately make payment on their accounts. Our provision calculation for residential accounts is estimated based on the factors noted above including a review of percentage of accounts with no payment received for 90 or more days. In addition, for the residential allowance calculation we also consider the funds applied or granted to customers through the special COVID arrearage forgiveness programs in Oregon and Washington. For commercial accounts, we have resumed normal collection processes and our provision is based on historical write-off trends and current information on delinquent accounts. For industrial accounts, we continue to analyze those accounts on an account-by-account basis with specific reserves taken as necessary.

The following table presents the activity related to the NW Holdings provision for uncollectible accounts by pool, substantially all of which is related to NW Natural's accounts receivable:

	As of						As of
	December 31, 2020		Six Months Ended June 30, 2021				June 30, 2021
In thousands	Beginning Balance		Provision recorded, net of adjustments		Write-offs recognized, net of recoveries		Ending Balance(1)
Allowance for uncollectible accounts:
Residential	$	2,153	$	1,294	$	(637)	$	2,810
Commercial	704		(233)		(265)		206
Industrial	142		(68)		5		79
Accrued unbilled and other	220		22		(54)		188
Total	$	3,219	$	1,015	$	(951)	$	3,283

(1) Includes $2.9 million that was deferred to a regulatory asset for costs associated with COVID-19 that are recoverable in future rates.

Allowance for Net Investments in Sales-Type Leases

NW Natural currently holds two net investments in sales-type leases, with substantially all of the net investment balance related to the North Mist natural gas storage agreement with Portland General Electric (PGE) which is billed under an OPUC-approved rate schedule. See Note 6 for more information on the North Mist lease. Due to the nature of this service, PGE may recover the costs of the lease through general rate cases. Therefore, we expect the risk of loss due to the credit of this lessee to be remote. As such, no allowance for uncollectability was recorded for our sales-type lease receivables. NW Natural will continue monitoring the credit health of the lessees and the overall economic environment, including the economic factors closely tied to the financial health of our current and future lessees.

COVID-19 Impact

During 2020, our regulated utilities received approval in their respective jurisdictions to defer certain financial impacts associated with COVID-19 such as bad debt expense, financing costs to secure liquidity, lost revenues related to late fees, and other COVID-19 related costs, net of offsetting direct expense reductions associated with COVID-19. As of June 30, 2021, we deferred to a regulatory asset approximately $5.8 million for incurred costs associated with COVID-19 that we believe are recoverable.

New Accounting Standards

We consider the applicability and impact of all accounting standards updates (ASUs) issued by the Financial Accounting Standards Board (FASB). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on NW Holdings' or NW Natural's consolidated financial position or results of operations.

Recently Adopted Accounting Pronouncements

INCOME TAXES. On December 18, 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." The purpose of the amendment is to reduce cost and complexity related to accounting for income taxes by removing certain exceptions to the general principles and improving consistent application for other areas in Topic 740. The amendments in this ASU were effective beginning January 1, 2021. The amended presentation and disclosure guidance was applied retrospectively. The adoption did not materially affect the financial statements and disclosures of NW Holdings or NW Natural.

REFERENCE RATE REFORM. On March 12, 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The purpose of the amendment is to provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

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Earnings Per Share

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

Basic earnings per share are computed using NW Holdings' net income and the weighted average number of common shares outstanding for each period presented. Diluted earnings per share are computed in the same manner, except using the weighted average number of common shares outstanding plus the effects of the assumed exercise of stock options and the payment of estimated stock awards from other stock-based compensation plans that are outstanding at the end of each period presented. Anti-dilutive stock awards are excluded from the calculation of diluted earnings per common share.

NW Holdings' diluted earnings or loss per share are calculated as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands, except per share data	2021		2020		2021		2020
Net income (loss) from continuing operations	$	(724)	$	(5,132)	$	58,793	$	43,144
Income (loss) from discontinued operations, net of tax	—		280		—		(498)
Net income (loss)	$	(724)	$	(4,852)	$	58,793	$	42,646
Average common shares outstanding - basic	30,664		30,537		30,639		30,514
Additional shares for stock-based compensation plans (See Note 7)	—		—		32		45
Average common shares outstanding - diluted	30,664		30,537		30,671		30,559
Earnings (loss) from continuing operations per share of common stock:
Basic	$	(0.02)	$	(0.17)	$	1.92	$	1.41
Diluted	$	(0.02)	$	(0.17)	$	1.92	$	1.41
Earnings (loss) from discontinued operations per share of common stock:
Basic	$	—	$	0.01	$	—	$	(0.01)
Diluted	$	—	$	0.01	$	—	$	(0.01)
Earnings (loss) per share of common stock:
Basic	$	(0.02)	$	(0.16)	$	1.92	$	1.40
Diluted	$	(0.02)	$	(0.16)	$	1.92	$	1.40
Additional information:
Anti-dilutive shares	48		41		7		—

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Segment Information

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

We primarily operate in one reportable business segment, which is NW Natural's local gas distribution business and is referred to as the NGD segment. NW Natural and NW Holdings also have investments and business activities not specifically related to the NGD, which are aggregated and reported as other and described below for each entity.

Natural Gas Distribution

NW Natural's local gas distribution segment is a regulated utility principally engaged in the purchase, sale, and delivery of natural gas and related services to customers in Oregon and southwest Washington. In addition to NW Natural's local gas distribution business, the NGD segment also includes the portion of the Mist underground storage facility used to serve NGD customers, the North Mist gas storage expansion, NWN Gas Reserves, which is a wholly-owned subsidiary of Energy Corp, and NW Natural RNG Holding Company, LLC, a holding company established to invest in the development and procurement of renewable natural gas.

NW Natural

NW Natural's activities in Other include Interstate Storage Services and third-party asset management service for NW Natural’s contracted interstate pipeline and storage capacity, appliance retail center operations, and corporate operating and non-operating revenues and expenses that cannot be allocated to NGD operations.

Earnings from third party asset management include earnings from the management of upstream interstate pipeline and storage capacity when not needed to serve NGD customers. Under the Oregon sharing mechanism, NW Natural retains 80% of the pre-tax income from these services when the costs of the capacity were not included in NGD rates, or 10% of the pre-tax income when the costs have been included in these rates. The remaining 20% and 90%, respectively, are recorded in a deferred regulatory account for prospective NGD customer billing credits.

NW Holdings

NW Holdings' activities in Other include all remaining activities not associated with NW Natural, specifically: NWN Water, which consolidates the water and wastewater utility operations and is pursuing other investments in the water sector through itself and wholly-owned subsidiaries; NWN Gas Storage, a wholly-owned subsidiary of NWN Energy; NWN Energy's equity investment in TWH through August 6, 2020; and other pipeline assets in NNG Financial. For more information on the sale of TWH, see Note 13. Other also includes corporate revenues and expenses that cannot be allocated to other operations, including certain business development activities.

Segment Information Summary

Inter-segment transactions were immaterial for the periods presented. The following table presents summary financial information concerning the reportable segment and other of continuing operations. See Note 17 for information regarding discontinued operations for NW Holdings.

	Three Months Ended June 30,
In thousands	NGD		Other (NW Natural)		NW Natural		Other (NW Holdings)		NW Holdings
2021
Operating revenues	$	139,614	$	4,965	$	144,579	$	4,338	$	148,917
Depreciation and amortization	27,273		257		27,530		614		28,144
Income (loss) from operations	11,331		2,808		14,139		(1,515)		12,624
Net income (loss) from continuing operations	(1,381)		1,970		589		(1,313)		(724)
Capital expenditures	60,376		693		61,069		3,337		64,406
2020
Operating revenues	$	126,992	$	4,165	$	131,157	$	3,814	$	134,971
Depreciation and amortization	24,738		248		24,986		850		25,836
Income (loss) from operations	6,434		2,465		8,899		43		8,942
Net income (loss) from continuing operations	(6,347)		1,635		(4,712)		(420)		(5,132)
Capital expenditures	61,472		521		61,993		2,843		64,836

	Six Months Ended June 30,
In thousands	NGD		Other (NW Natural)		NW Natural		Other (NW Holdings)		NW Holdings
2021
Operating revenues	$	440,952	$	15,977	$	456,929	$	7,934	$	464,863
Depreciation and amortization	54,186		513		54,699		1,542		56,241
Income (loss) from operations	97,818		11,439		109,257		(1,927)		107,330
Net income (loss) from continuing operations	52,544		8,156		60,700		(1,907)		58,793
Capital expenditures	124,368		799		125,167		4,941		130,108
Total assets at June 30, 2021	3,587,966		51,466		3,639,432		144,068		3,783,500
2020
Operating revenues	$	405,479	$	8,207	$	413,686	$	6,436	$	420,122
Depreciation and amortization	48,684		492		49,176		1,335		50,511
Income (loss) from operations	81,692		4,228		85,920		(532)		85,388
Net income (loss) from continuing operations	41,596		2,871		44,467		(1,323)		43,144
Capital expenditures	117,629		598		118,227		4,055		122,282
Total assets at June 30, 2020(1)	3,470,306		10,398		3,480,704		144,251		3,624,955
Total assets at December 31, 2020	3,549,868		49,468		3,599,336		157,043		3,756,379

(1)     Total assets for NW Holdings exclude assets related to discontinued operations of $16.4 million as of June 30, 2020.

Natural Gas Distribution Margin

NGD margin is a financial measure used by the Chief Operating Decision Maker (CODM), consisting of NGD operating revenues, reduced by the associated cost of gas, environmental remediation expense, and revenue taxes. The cost of gas purchased for NGD customers is generally a pass-through cost in the amount of revenues billed to regulated NGD customers. Environmental remediation expense represents collections received from customers through the environmental recovery mechanism in Oregon as well as adjustments for the environmental earnings test when applicable. This is offset by environmental remediation expense presented in operating expenses. Revenue taxes are collected from NGD customers and remitted to taxing authorities. The collections from customers are offset by the expense recognition of the obligation to the taxing

authority. By subtracting cost of gas, environmental remediation expense, and revenue taxes from NGD operating revenues, NGD margin provides a key metric used by the CODM in assessing the performance of the NGD segment.

The following table presents additional segment information concerning NGD margin:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2021		2020		2021		2020
NGD margin calculation:
NGD distribution revenues	$	134,849	$	122,071	$	431,402	$	395,632
Other regulated services	4,765		4,921		9,550		9,847
Total NGD operating revenues	139,614		126,992		440,952		405,479
Less: NGD cost of gas	41,249		41,265		153,515		149,860
Environmental remediation	1,509		1,622		5,286		5,627
Revenue taxes	5,650		4,454		18,305		16,197
NGD margin	$	91,206	$	79,651	$	263,846	$	233,795

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Revenue

6 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer

REVENUE

The following tables present disaggregated revenue from continuing operations:

	Three Months Ended June 30,
In thousands	NGD		Other (NW Natural)		NW Natural		Other (NW Holdings)		NW Holdings
2021
Natural gas sales	$	123,739	$	—	$	123,739	$	—	$	123,739
Gas storage revenue, net	—		2,805		2,805		—		2,805
Asset management revenue, net	—		817		817		—		817
Appliance retail center revenue	—		1,343		1,343		—		1,343
Other revenue	399		—		399		4,338		4,737
Revenue from contracts with customers	124,138		4,965		129,103		4,338		133,441
Alternative revenue	11,083		—		11,083		—		11,083
Leasing revenue	4,393		—		4,393		—		4,393
Total operating revenues	$	139,614	$	4,965	$	144,579	$	4,338	$	148,917
2020
Natural gas sales	$	116,682	$	—	$	116,682	$	—	$	116,682
Gas storage revenue, net	—		2,449		2,449		—		2,449
Asset management revenue, net	—		910		910		—		910
Appliance retail center revenue	—		806		806		—		806
Other revenue	332		—		332		3,814		4,146
Revenue from contracts with customers	117,014		4,165		121,179		3,814		124,993
Alternative revenue	5,365		—		5,365		—		5,365
Leasing revenue	4,613		—		4,613		—		4,613
Total operating revenues	$	126,992	$	4,165	$	131,157	$	3,814	$	134,971

	Six Months Ended June 30,
In thousands	NGD		Other (NW Natural)		NW Natural		Other (NW Holdings)		NW Holdings
2021
Natural gas sales	$	419,822	$	—	$	419,822	$	—	$	419,822
Gas storage revenue, net	—		5,300		5,300		—		5,300
Asset management revenue, net	—		7,745		7,745		—		7,745
Appliance retail center revenue	—		2,932		2,932		—		2,932
Other revenue	814		—		814		7,934		8,748
Revenue from contracts with customers	420,636		15,977		436,613		7,934		444,547
Alternative revenue	11,536		—		11,536		—		11,536
Leasing revenue	8,780		—		8,780		—		8,780
Total operating revenues	$	440,952	$	15,977	$	456,929	$	7,934	$	464,863
2020
Natural gas sales	$	390,686	$	—	$	390,686	$	—	$	390,686
Gas storage revenue, net	—		4,785		4,785		—		4,785
Asset management revenue, net	—		1,060		1,060		—		1,060
Appliance retail center revenue	—		2,362		2,362		—		2,362
Other revenue	669		—		669		6,436		7,105
Revenue from contracts with customers	391,355		8,207		399,562		6,436		405,998
Alternative revenue	4,893		—		4,893		—		4,893
Leasing revenue	9,231		—		9,231		—		9,231
Total operating revenues	$	405,479	$	8,207	$	413,686	$	6,436	$	420,122

NW Natural's revenue represents substantially all of NW Holdings' revenue and is recognized for both registrants when the obligation to customers is satisfied and in the amount expected to be received in exchange for transferring goods or providing services. Revenue from contracts with customers contains one performance obligation that is generally satisfied over time, using the output method based on time elapsed, due to the continuous nature of the service provided. The transaction price is determined by a set price agreed upon in the contract or dependent on regulatory tariffs. Customer accounts are settled on a monthly basis or paid at time of sale and based on historical experience. It is probable that we will collect substantially all of the consideration to which we are entitled. We evaluated the probability of collection in accordance with the current expected credit losses standard.

NW Holdings and NW Natural do not have any material contract assets, as net accounts receivable and accrued unbilled revenue balances are unconditional and only involve the passage of time until such balances are billed and collected. NW Holdings and NW Natural do not have any material contract liabilities.

Revenue taxes are included in operating revenues with an offsetting expense recognized in operating expense in the consolidated statements of comprehensive income. Revenue-based taxes are primarily franchise taxes, which are collected from customers and remitted to taxing authorities.

Natural Gas Distribution

Natural Gas Sales

NW Natural's primary source of revenue is providing natural gas to customers in the NGD service territory, which includes residential, commercial, industrial and transportation customers. NGD revenue is generally recognized over time upon delivery of the gas commodity or service to the customer, and the amount of consideration received and recognized as revenue is dependent on the Oregon and Washington tariffs. Customer accounts are to be paid in full each month, and there is no right of return or warranty for services provided. Revenues include firm and interruptible sales and transportation services, franchise taxes recovered from the customer, late payment fees, service fees, and accruals for gas delivered but not yet billed (accrued unbilled revenue). The accrued unbilled revenue balance is based on estimates of deliveries during the period from the last meter reading and management judgment is required for a number of factors used in this calculation, including customer use and weather factors.

We applied the significant financing practical expedient and have not adjusted the consideration NW Natural expects to receive from NGD customers for the effects of a significant financing component as all payment arrangements are settled annually. Due to the election of the right to invoice practical expedient, we do not disclose the value of unsatisfied performance obligations.

Alternative Revenue

Weather normalization (WARM) and decoupling mechanisms are considered to be alternative revenue programs. Alternative revenue programs are considered to be contracts between NW Natural and its regulator and are excluded from revenue from contracts with customers.

Leasing Revenue

Leasing revenue primarily consists of revenues from NW Natural's North Mist Storage contract with Portland General Electric (PGE) in support of PGE's gas-fired electric power generation facilities under an initial 30-year contract with options to extend, totaling up to an additional 50 years upon mutual agreement of the parties. The facility is accounted for as a sales-type lease with regulatory accounting deferral treatment. The investment is included in rate base under an established cost-of-service tariff schedule, with revenues recognized according to the tariff schedule and as such, profit upon commencement was deferred and will be amortized over the lease term. Leasing revenue also contains rental revenue from small leases of property owned by NW Natural to third parties. The majority of these transactions are accounted for as operating leases and the revenue is recognized over the term of the lease agreement. Lease revenue is excluded from revenue from contracts with customers. See Note 6 for additional information.

NW Natural Other

Gas Storage Revenue

NW Natural's other revenue includes gas storage activity, which includes Interstate Storage Services used to store natural gas for customers. Gas storage revenue is generally recognized over time as the gas storage service is provided to the customer and the amount of consideration received and recognized as revenue is dependent on set rates defined per the storage agreements. Noncash consideration in the form of dekatherms of natural gas is received as consideration for providing gas injection services to gas storage customers. This noncash consideration is measured at fair value using the average spot rate. Customer accounts are generally paid in full each month, and there is no right of return or warranty for services provided. Revenues include firm and interruptible storage services, net of the profit sharing amount refunded to NGD customers.

Asset Management Revenue

Revenues include the optimization of third-party storage assets and pipeline capacity and are provided net of the profit sharing amount refunded to NGD customers. Certain asset management revenues received are recognized over time using a straight-line approach over the term of each contract, and the amount of consideration received and recognized as revenue is dependent on a variable pricing model. Variable revenues earned above guaranteed amounts are estimated and recognized at the end of each period using the most likely amount approach. Additionally, other asset management revenues may be based on a fixed rate. Generally, asset management accounts are settled on a monthly basis.

As of June 30, 2021, unrecognized revenue for the fixed component of the transaction price related to gas storage and asset management revenue was approximately $79.2 million. Of this amount, approximately $9.6 million will be recognized during the remainder of 2021, $19.4 million in 2022, $17.8 million in 2023, $14.0 million in 2024, $11.1 million in 2025 and $7.3 million thereafter. The amounts presented here are calculated using current contracted rates.

Appliance Retail Center Revenue

NW Natural owns and operates an appliance store that is open to the public, where customers can purchase natural gas home appliances. Revenue from the sale of appliances is recognized at the point in time in which the appliance is transferred to the third party responsible for delivery and installation services and when the customer has legal title to the appliance. It is required that the sale be paid for in full prior to transfer of legal title. The amount of consideration received and recognized as revenue varies with changes in marketing incentives and discounts offered to customers.

NW Holdings Other

NW Holdings' primary source of other revenue is providing water and wastewater services to customers. Water and wastewater service revenue is generally recognized over time upon delivery of the water commodity or service to the customer, and the amount of consideration received and recognized as revenue is dependent on the tariffs established in the state we operate. Customer accounts are to be paid in full each month, and there is no right of return or warranty for services provided.

We applied the significant financing practical expedient and have not adjusted the consideration we expect to receive from water distribution customers for the effects of a significant financing component as all payment arrangements are settled annually. Due to the election of the right to invoice practical expedient, we do not disclose the value of unsatisfied performance obligations.

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Leases

6 Months Ended

Jun. 30, 2021

Leases [Abstract]

Leases of Lessee Disclosure

LEASES

Lease Revenue

Leasing revenue primarily consists of NW Natural's North Mist natural gas storage agreement with Portland General Electric (PGE), which is billed under an OPUC-approved rate schedule and includes an initial 30-year term with options to extend, totaling up to an additional 50 years upon mutual agreement of the parties. Under U.S. GAAP, this agreement is classified as a sales-type lease and qualifies for regulatory accounting deferral treatment. The investment in the storage facility is included in rate base under a separately established cost-of-service tariff, with revenues recognized according to the tariff schedule. As such, the selling profit that was calculated upon commencement as part of the sale-type lease recognition was deferred and will

be amortized over the lease term. Billing rates under the cost-of-service tariff will be updated annually to reflect current information including depreciable asset levels, forecasted operating expenses, and the results of regulatory proceedings, as applicable, and revenue received under this agreement is recognized as operating revenue on the consolidated statements of comprehensive income. There are no variable payments or residual value guarantees. The lease does not contain an option to purchase the underlying assets.

NW Natural also maintains a sales-type lease for specialized compressor facilities to provide high pressure compressed natural gas (CNG) services. Lease payments are outlined in an OPUC-approved rate schedule over a 10-year term. There are no variable payments or residual value guarantees. The selling profit computed upon lease commencement was not significant.

Our lessor portfolio also contains small leases of property owned by NW Natural to third parties. These transactions are accounted for as operating leases and the revenue is recognized over the term of the lease agreement.

The components of lease revenue at NW Natural were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2021		2020		2021		2020
Lease revenue
Operating leases	$	25	$	25	$	43	$	53
Sales-type leases	4,368		4,588		8,737		9,178
Total lease revenue	$	4,393	$	4,613	$	8,780	$	9,231

Total future minimum lease payments to be received under non-cancellable leases at June 30, 2021 are as follows:

In thousands	Operating		Sales-Type		Total
NW Natural:
Remainder of 2021	$	36	$	8,701	$	8,737
2022	72		17,026		17,098
2023	64		16,557		16,621
2024	65		15,867		15,932
2025	60		15,306		15,366
Thereafter	229		251,721		251,950
Total lease revenue	$	526	$	325,178	$	325,704
Less: imputed interest			183,237
Total leases receivable			$	141,941
Other (NW Holdings):
Remainder of 2021	$	25	$	—	$	25
2022	50		—		50
2023	51		—		51
2024	52		—		52
2025	53		—		53
Thereafter	970		—		970
Total lease revenue	$	1,201	$	—	$	1,201
NW Holdings:
Remainder of 2021	$	61	$	8,701	$	8,762
2022	122		17,026		17,148
2023	115		16,557		16,672
2024	117		15,867		15,984
2025	113		15,306		15,419
Thereafter	1,199		251,721		252,920
Total lease revenue	$	1,727	$	325,178	$	326,905
Less: imputed interest			183,237
Total leases receivable			$	141,941

The total leases receivable above is reported under the NGD segment and the short- and long-term portions are included within other current assets and assets under sales-type leases on the consolidated balance sheets, respectively. The total amount of unguaranteed residual assets was $4.5 million, $4.1 million and $4.3 million at June 30, 2021 and 2020 and December 31, 2020, respectively, and is included in assets under sales-type leases on the consolidated balance sheets. Additionally, under regulatory accounting, the revenues and expenses associated with these agreements are presented on the consolidated statements of comprehensive income such that their presentation aligns with similar regulated activities at NW Natural.

Lease Expense

Operating Leases

We have operating leases for land, buildings and equipment. Our primary lease is for NW Natural's corporate operations center. Our leases have remaining lease terms of two months to 19 years. Many of our lease agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. Short-term leases with a term of 12 months or less are not recorded on the balance sheet. As most of our leases do not provide an implicit rate and are entered into by NW Natural, we use an estimated discount rate representing the rate we would have incurred to finance the funds necessary to purchase the leased asset and is based on information available at the lease commencement date in determining the present value of lease payments.

The components of lease expense, a portion of which is capitalized, were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2021		2020		2021		2020
NW Natural:
Operating lease expense	$	1,710	$	914	$	3,388	$	2,116
Short-term lease expense	$	349	$	285	$	569	$	483
Other (NW Holdings):
Operating lease expense	$	18	$	40	$	36	$	92
NW Holdings:
Operating lease expense	$	1,728	$	954	$	3,424	$	2,208
Short-term lease expense	$	349	$	285	$	569	$	483

Supplemental balance sheet information related to operating leases as of June 30, 2021 is as follows:

In thousands	June 30,				December 31,
	2021		2020		2020
NW Natural:
Operating lease right of use asset	$	76,211	$	78,464	$	77,328
Operating lease liabilities - current liabilities	$	1,193	$	868	$	1,054
Operating lease liabilities - non-current liabilities	80,043		80,120		80,559
Total operating lease liabilities	$	81,236	$	80,988	$	81,613
Other (NW Holdings):
Operating lease right of use asset	$	83	$	102	$	118
Operating lease liabilities - current liabilities	$	35	$	63	$	51
Operating lease liabilities - non-current liabilities	45		39		62
Total operating lease liabilities	$	80	$	102	$	113
NW Holdings:
Operating lease right of use asset	$	76,294	$	78,566	$	77,446
Operating lease liabilities - current liabilities	$	1,228	$	931	$	1,105
Operating lease liabilities - non-current liabilities	80,088		80,159		80,621
Total operating lease liabilities	$	81,316	$	81,090	$	81,726

The weighted-average remaining lease terms and weighted-average discount rates for the operating leases at NW Natural were as follows:

In thousands	June 30,				December 31,
	2021		2020		2020
Weighted-average remaining lease term (years)	18.7		19.7		19.2
Weighted-average discount rate	7.2	%	7.2	%	7.2	%

Commencement of Significant Lease

NW Natural commenced a 20-year operating lease agreement in March 2020 for a new corporate operations center in Portland, Oregon. Total estimated base rent payments over the life of the lease are $159.4 million. There is an option to extend the term of the lease for two additional periods of seven years.

There is a material timing difference between the minimum lease payments and expense recognition as calculated under operating lease accounting rules. OPUC issued an order allowing us to align our expense recognition with cash payments for ratemaking purposes. We recorded the difference between the minimum lease payments and the aggregate of the imputed interest on the finance lease obligation and amortization of the right-of-use asset as a deferred regulatory asset on our balance sheet. The balance of the regulatory asset was $5.0 million, $2.4 million and $4.2 million as of June 30, 2021 and 2020 and December 31, 2020, respectively.

Maturities of operating lease liabilities at June 30, 2021 were as follows:

In thousands	NW Natural		Other (NW Holdings)		NW Holdings
Remainder of 2021	$	3,445	$	25	$	3,470
2022	6,933		24		6,957
2023	6,986		6		6,992
2024	7,150		6		7,156
2025	7,185		6		7,191
Thereafter	123,784		24		123,808
Total lease payments	155,483		91		155,574
Less: imputed interest	74,247		11		74,258
Total lease obligations	81,236		80		81,316
Less: current obligations	1,193		35		1,228
Long-term lease obligations	$	80,043	$	45	$	80,088

As of June 30, 2021, finance lease liabilities with maturities of less than one year were $0.2 million at NW Natural.

Supplemental cash flow information related to leases was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2021		2020		2021		2020
NW Natural:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,717	$	931	$	3,386	$	2,127
Finance cash flows from finance leases	$	134	$	302	$	678	$	457
Right of use assets obtained in exchange for lease obligations
Operating leases	$	—	$	445	$	154	$	78,433
Finance leases	$	20	$	477	$	94	$	710
Other (NW Holdings):
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	17	$	39	$	33	$	91
NW Holdings:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,734	$	970	$	3,419	$	2,218
Finance cash flows from finance leases	$	134	$	302	$	678	$	457
Right of use assets obtained in exchange for lease obligations
Operating leases	$	—	$	445	$	154	$	78,433
Finance leases	$	20	$	477	$	94	$	710

Finance Leases

NW Natural also leases building storage spaces for use as a gas meter room in order to provide natural gas to multifamily or mixed use developments. These contracts are accounted for as finance leases and typically involve a one-time upfront payment with no remaining liability. The right of use assets for finance leases were $1.9 million, $1.1 million and $1.8 million at June 30, 2021 and 2020 and at December 31, 2020, respectively.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

Stock-based compensation plans are designed to promote stock ownership in NW Holdings by employees and officers. These compensation plans include a Long Term Incentive Plan (LTIP), an Employee Stock Purchase Plan (ESPP), and a Restated Stock Option Plan. For additional information on stock-based compensation plans, see Note 8 in the 2020 Form 10-K and the updates provided below.

Long Term Incentive Plan

Performance Shares

LTIP performance shares incorporate a combination of market, performance, and service-based factors. During the six months ended June 30, 2021, the final performance factor under the 2019 LTIP was approved and 28,866 performance-based shares were granted under the 2019 LTIP for accounting purposes. As such, NW Natural and other subsidiaries began recognizing compensation expense. In February 2020 and 2021, LTIP shares were awarded to participants; however, the agreements allow for one of the performance factors to remain variable until the first quarter of the third year of the award period. As the performance factor will not be approved until the first quarters of 2022 and 2023, respectively, there is not a mutual understanding of the awards' key terms and conditions between NW Holdings and the participants as of June 30, 2021, and therefore, no expense was recognized for the 2020 and 2021 awards. NW Holdings will calculate the grant date fair value and NW Natural will recognize expense over the remaining service period for each award once the final performance factor has been approved.

For the 2020 and 2021 LTIP awards, share payouts range from a threshold of 0% to a maximum of 200% based on achievement of pre-established goals. The performance criteria for the 2020 and 2021 performance shares consists of a three-year Return on Invested Capital (ROIC) threshold that must be satisfied and a cumulative EPS factor, which can be modified by a total shareholder return factor (TSR modifier) relative to the performance of peer group companies over the performance period of three years for each respective award. If the targets were achieved for the 2020 and 2021 awards, NW Holdings would grant for accounting purposes 31,830 and 56,335 shares in the first quarters of 2022 and 2023, respectively.

As of June 30, 2021, there was $0.2 million of unrecognized compensation cost associated with the 2019 LTIP grants, which is expected to be recognized through 2021.

Restricted Stock Units

During the six months ended June 30, 2021, 37,756 RSUs were granted under the LTIP with a weighted-average grant date fair value of $49.16 per share. Generally, the RSUs awarded are forfeitable and include a performance-based threshold as well as a vesting period of four years from the grant date. The majority of our RSU grants obligate NW Holdings, upon vesting, to issue the RSU holder one share of common stock. The grant may also include a cash payment equal to the total amount of dividends paid per share between the grant date and vesting date of that portion of the RSU depending on the structure of the award agreement. The fair value of an RSU is equal to the closing market price of common stock on the grant date. As of June 30, 2021, there was $4.2 million of unrecognized compensation cost from grants of RSUs, which is expected to be recognized by NW Natural and other subsidiaries over a period extending through 2025.

Restated Stock Option Plan

The Restated Stock Option Plan (Restated SOP) was terminated with respect to new grants in 2012; however, options granted before the Restated SOP was terminated remained outstanding until the earlier of their expiration, forfeiture, or exercise. Options were exercisable for shares of NW Holdings common stock. As of June 30, 2021 there were no options exercisable or outstanding.

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Debt

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Debt

DEBT

Short-Term Debt

In June 2021, NW Natural entered into a $100.0 million 364-Day Term Loan Credit Agreement (Term Loan) and borrowed the full amount. All principal and unpaid interest under the Term Loan is due and payable in June 2022. The Term Loan requires NW Natural to maintain a consolidated indebtedness to total capitalization ratio of 70% or less. Failure to comply with this covenant would entitle the lenders to terminate their lending commitments and accelerate the maturity of all amounts outstanding. NW Natural was in compliance with this covenant at June 30, 2021, with a consolidated indebtedness to total capitalization ratio of 56.2%.

At June 30, 2021, NW Holdings and NW Natural had short-term debt outstanding of $240.0 million and $198.0 million, respectively. NW Holdings' short-term debt consisted of $42.0 million in revolving credit agreement loans at NW Holdings, $98.0 million of commercial paper outstanding at NW Natural, and the aforementioned $100.0 million Term Loan. The weighted average interest rate on the revolving credit agreement at June 30, 2021 was 1.1% at NW Holdings. The weighted average interest rate of commercial paper and the Term Loan outstanding at June 30, 2021 was 0.2% and 0.6%, respectively, at NW Natural. At June 30, 2021, NW Natural's commercial paper had a maximum remaining maturity of 29 days and an average remaining maturity of 15 days.

Long-Term Debt

At June 30, 2021, NW Holdings and NW Natural had long-term debt outstanding of $975.8 million and $917.4 million, respectively, which included $7.4 million and $7.3 million of unamortized debt issuance costs at NW Holdings and NW Natural, respectively. NW Natural's long-term debt consists of first mortgage bonds (FMBs) with maturity dates ranging from 2021 through 2050, interest rates ranging from 2.8% to 9.1%, and a weighted average interest rate of 4.6%.

In June 2019, NW Natural Water, a wholly-owned subsidiary of NW Holdings, entered into a two-year term loan agreement for $35.0 million. The loan was repaid in June 2021 upon its maturity date.

In June 2021, NW Natural Water entered into a five-year term loan credit agreement for $55.0 million and borrowed the full amount. The loan carried an interest rate of 0.9% at June 30, 2021, which is based upon the one-month LIBOR rate plus a spread. The loan is guaranteed by NW Holdings and requires NW Holdings to maintain a consolidated indebtedness to total capitalization ratio of 70% or less. Failure to comply with this covenant would entitle the lenders to terminate their lending commitments and accelerate the maturity of all amounts outstanding. NW Holdings was in compliance with this covenant at June 30, 2021, with a consolidated indebtedness to total capitalization ratio of 56.8%.

Fair Value of Long-Term Debt

NW Holdings' and NW Natural's outstanding debt does not trade in active markets. The fair value of long-term debt is estimated using the value of outstanding debt at natural gas distribution companies with similar credit ratings, terms, and remaining maturities to NW Holdings' and NW Natural's debt that actively trade in public markets. Substantially all outstanding debt at NW Holdings is comprised of NW Natural debt. These valuations are based on Level 2 inputs as defined in the fair value hierarchy. See Note 2 in the 2020 Form 10-K for a description of the fair value hierarchy.

The following table provides an estimate of the fair value of NW Holdings' long-term debt, including current maturities of long-term debt, using market prices in effect on the valuation date:

	NW Holdings
	June 30,				December 31,
In thousands	2021		2020		2020
Gross long-term debt	$	983,221	$	961,784	$	962,905
Unamortized debt issuance costs	(7,446)		(7,688)		(7,480)
Carrying amount	$	975,775	$	954,096	$	955,425
Estimated fair value(1)	$	1,104,230	$	1,135,349	$	1,136,311

(1) Estimated fair value does not include unamortized debt issuance costs.

The following table provides an estimate of the fair value of NW Natural's long-term debt, including current maturities of long-term debt, using market prices in effect on the valuation date:

	NW Natural
	June 30,				December 31,
In thousands	2021		2020		2020
Gross long-term debt	$	924,700	$	924,700	$	924,700
Unamortized debt issuance costs	(7,291)		(7,688)		(7,480)
Carrying amount	$	917,409	$	917,012	$	917,220
Estimated fair value(1)	$	1,043,696	$	1,097,188	$	1,097,348

(1) Estimated fair value does not include unamortized debt issuance costs.

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Pension and Other Postretirement Benefit Costs

6 Months Ended

Jun. 30, 2021

Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract]

Pension and Other Postretirement Benefit Costs

PENSION AND OTHER POSTRETIREMENT BENEFIT COSTS

NW Natural maintains a qualified non-contributory defined benefit pension plan (Pension Plan), non-qualified supplemental pension plans for eligible executive officers and other key employees, and other postretirement employee benefit plans. NW Natural also has a qualified defined contribution plan (Retirement K Savings Plan) for all eligible employees. The Pension Plan and Retirement K Savings Plan have plan assets, which are held in qualified trusts to fund retirement benefits.

The service cost component of net periodic benefit cost for NW Natural pension and other postretirement benefit plans is recognized in operations and maintenance expense in the consolidated statements of comprehensive income. The other non-service cost components are recognized in other income (expense), net in the consolidated statements of comprehensive income.

The following table provides the components of net periodic benefit cost for the pension and other postretirement benefit plans:

	Three Months Ended June 30,								Six Months Ended June 30,
	Pension Benefits				Other Postretirement Benefits				Pension Benefits				Other Postretirement Benefits
In thousands	2021		2020		2021		2020		2021		2020		2021		2020
Service cost	$	1,714	$	1,658	$	56	$	64	$	3,428	$	3,315	$	111	$	128
Interest cost	3,342		4,011		165		223		6,685		8,022		330		446
Expected return on plan assets	(6,099)		(5,496)		—		—		(12,198)		(10,992)		—		—
Amortization of prior service credit	—		—		(117)		(117)		—		—		(234)		(234)
Amortization of net actuarial loss	5,500		4,778		131		142		11,001		9,556		262		285
Net periodic benefit cost	4,457		4,951		235		312		8,916		9,901		469		625
Amount allocated to construction	(743)		(680)		(22)		(23)		(1,469)		(1,348)		(43)		(46)
Net periodic benefit cost charged to expense	3,714		4,271		213		289		7,447		8,553		426		579
Amortization of regulatory balancing account	1,281		1,281		—		—		4,082		4,082		—		—
Net amount charged to expense	$	4,995	$	5,552	$	213	$	289	$	11,529	$	12,635	$	426	$	579

Net periodic benefit costs are reduced by amounts capitalized to NGD plant. In addition, net periodic benefit costs were recorded to a regulatory balancing account as approved by the OPUC and amortized accordingly.

The following table presents amounts recognized in accumulated other comprehensive loss (AOCL) and the changes in AOCL related to non-qualified employee benefit plans:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2021		2020		2021		2020
Beginning balance	$	(12,681)	$	(10,573)	$	(12,902)	$	(10,733)
Amounts reclassified from AOCL:
Amortization of actuarial losses	301		218		602		436
Total reclassifications before tax	301		218		602		436
Tax benefit	(80)		(58)		(160)		(116)
Total reclassifications for the period	221		160		442		320
Ending balance	$	(12,460)	$	(10,413)	$	(12,460)	$	(10,413)

Employer Contributions to Company-Sponsored Defined Benefit Pension Plans

For the six months ended June 30, 2021, NW Natural made cash contributions totaling $9.6 million to qualified defined benefit pension plans. The American Rescue Plan, which was signed into law on March 11, 2021, includes a provision for pension relief that extends the amortization period for required contributions from 7 to 15 years and provides for the stabilization of interest rates used to calculate future required contributions. As a result, NW Natural does not expect to make any further plan contributions during the remainder of 2021.

Defined Contribution Plan

The Retirement K Savings Plan is a qualified defined contribution plan under Internal Revenue Code Sections 401(a) and 401(k). Employer contributions totaled $4.7 million and $4.4 million for the six months ended June 30, 2021 and 2020, respectively.

See Note 10 in the 2020 Form 10-K for more information concerning these retirement and other postretirement benefit plans.

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Income Tax

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Tax

INCOME TAX

An estimate of annual income tax expense is made each interim period using estimates for annual pre-tax income, regulatory flow-through adjustments, tax credits, and other items. The estimated annual effective tax rate is applied to year-to-date, pre-tax income to determine income tax expense for the interim period consistent with the annual estimate. Discrete events are recorded in the interim period in which they occur or become known.

The effective income tax rate varied from the federal statutory rate due to the following:

	Three Months Ended June 30,
	NW Holdings						NW Natural
In thousands	2021			2020			2021			2020
Income tax at statutory rate (federal)	$	(210)		$	(1,429)		$	184		$	(1,287)
State income tax	(48)			(333)			41			(281)
Increase (decrease):
Differences required to be flowed-through by regulatory commissions	21			173			21			173
Other, net	(40)			(83)			42			(24)
Total provision for income taxes on continuing operations	$	(277)		$	(1,672)		$	288		$	(1,419)
Effective income tax rate for continuing operations	27.7		%	24.6		%	32.8		%	23.1		%

	Six Months Ended June 30,
	NW Holdings						NW Natural
In thousands	2021			2020			2021			2020
Income tax at statutory rate (federal)	$	16,598		$	11,676		$	17,123		$	12,068
State income tax	7,260			3,344			7,366			3,456
Increase (decrease):
Differences required to be flowed-through by regulatory commissions	(3,584)			(2,352)			(3,584)			(2,352)
Other, net	(30)			(213)			(65)			(173)
Total provision for income taxes on continuing operations	$	20,244		$	12,455		$	20,840		$	12,999
Effective income tax rate for continuing operations	25.6		%	22.4		%	25.6		%	22.6		%

The NW Holdings and NW Natural effective income tax rates for the six months ended June 30, 2021 compared to the same period in 2020 changed primarily as a result of changes in pre-tax income, the Oregon Corporate Activity Tax (CAT), and regulatory amortization of deferred Tax Cuts and Jobs Act (TCJA) benefits. See Note 11 in the 2020 Form 10-K for more detail on income taxes and effective tax rates.

The IRS Compliance Assurance Process (CAP) examination of the 2019 tax year was completed during the first quarter of 2021. There were no material changes to the return as filed. The 2020 and 2021 tax years are subject to examination under CAP.

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Property, Plant and Equipment

6 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

PROPERTY, PLANT, AND EQUIPMENT

The following table sets forth the major classifications of property, plant, and equipment and accumulated depreciation of continuing operations:

	June 30,				December 31,
In thousands	2021		2020		2020
NW Natural:
NGD plant in service	$	3,623,092	$	3,404,145	$	3,548,543
NGD work in progress	99,646		90,903		63,901
Less: Accumulated depreciation	1,068,603		1,040,616		1,055,809
NGD plant, net	2,654,135		2,454,432		2,556,635
Other plant in service	66,315		64,317		66,300
Other construction work in progress	5,817		5,342		5,032
Less: Accumulated depreciation	20,140		19,144		19,637
Other plant, net	51,992		50,515		51,695
Total property, plant, and equipment, net	$	2,706,127	$	2,504,947	$	2,608,330
Other (NW Holdings):
Other plant in service	$	54,922	$	44,195	$	50,263
Less: Accumulated depreciation	5,120		2,539		3,823
Other plant, net	$	49,802	$	41,656	$	46,440
NW Holdings:
Total property, plant, and equipment, net	$	2,755,929	$	2,546,603	$	2,654,770
NW Natural:
Capital expenditures in accrued liabilities	$	37,968	$	31,847	$	25,129
NW Holdings:
Capital expenditures in accrued liabilities	$	38,395	$	31,847	$	25,129

NW Holdings

Other plant balances include long-lived assets associated with water and wastewater utility operations and non-regulated activities not held by NW Natural or its subsidiaries.

NW Natural

Other plant balances primarily include non-utility gas storage assets at the Mist facility and other long-lived assets not related to NGD.

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Gas Reserves

6 Months Ended

Jun. 30, 2021

Gas Reserves [Abstract]

Gas Reserves

GAS RESERVES

NW Natural has invested $188 million through the gas reserves program in the Jonah Field located in Wyoming as of June 30, 2021. Gas reserves are stated at cost, net of regulatory amortization, with the associated deferred tax benefits recorded as liabilities in the consolidated balance sheets. The investment in gas reserves provides long-term price protection for NGD customers through the original agreement with Encana Oil & Gas (USA) Inc. under which NW Natural invested $178 million and the amended agreement with Jonah Energy LLC under which an additional $10 million was invested.

The cost of gas, including a carrying cost for the rate base investment, is included in the annual Oregon PGA filing, which allows NW Natural to recover these costs through customer rates. The investment under the original agreement, less accumulated amortization and deferred taxes, earns a rate of return. See Note 13 in the 2020 Form 10-K.

Gas produced from the additional wells is included in the Oregon PGA at a fixed rate of $0.4725 per therm, which approximates the 10-year hedge rate plus financing costs at the inception of the investment.

The following table outlines NW Natural's net gas reserves investment:

	June 30,				December 31,
In thousands	2021		2020		2020
Gas reserves, current	$	8,444	$	13,646	$	11,409
Gas reserves, non-current	178,863		173,661		175,898
Less: Accumulated amortization	149,011		132,202		141,414
Total gas reserves(1)	38,296		55,105		45,893
Less: Deferred taxes on gas reserves	8,760		13,324		10,572
Net investment in gas reserves	$	29,536	$	41,781	$	35,321

(1)     The net investment in additional wells included in total gas reserves was $2.7 million, $3.4 million and $3.0 million at June 30, 2021 and 2020 and December 31, 2020, respectively.

NW Natural's investment is included in NW Holdings' and NW Natural's consolidated balance sheets under gas reserves with the maximum loss exposure limited to the investment balance.

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Investments

6 Months Ended

Jun. 30, 2021

Investments [Abstract]

Investments

INVESTMENTS

Investment in Life Insurance Policies

Other investments include financial investments in life insurance policies, which are accounted for at cash surrender value, net of policy loans. See Note 14 in the 2020 Form 10-K.

Investments in Gas Pipeline

On August 6, 2020, NWN Energy completed the sale of 100% of its interest in Trail West Holdings, LLC (TWH) to an unrelated third party for a purchase price of $14.0 million, $7.0 million of which was paid upon closing the transaction, and $7.0 million is to be paid upon the one-year anniversary of the close date. The completion of the sale resulted in an after-tax gain of approximately $0.5 million.

TWH was a variable interest entity reported under equity method accounting through its sale. The investment in TWH did not meet the criteria to be classified as held for sale or discontinued operations. The investment balance in TWH was $13.4 million at June 30, 2020. See Note 14 in the 2020 Form 10-K.

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Business Combinations Business Combinations

6 Months Ended

Jun. 30, 2021

Business Combinations [Abstract]

Business Combination Disclosure

BUSINESS COMBINATIONS

2021 Business Combinations

During the six months ended June 30, 2021, NWN Water completed one acquisition of a water system that qualified as a business combination. The aggregate fair value of the preliminary consideration transferred for this acquisition was not material and is not significant to NW Holdings' results of operations.

2020 Business Combinations

During 2020, NWN Water and its subsidiaries completed two significant acquisitions qualifying as business combinations. The aggregate fair value of the total cash consideration transferred for these acquisitions was $38.1 million, most of which was allocated to property, plant and equipment and goodwill. These transactions align with NW Holdings' water sector strategy as it continues to expand its water services territories in the Pacific Northwest and beyond and included:

•Suncadia Water Company, LLC and Suncadia Environmental Company, LLC which were acquired by NWN Water of Washington on January 31, 2020, and

•T&W Water Service Company which was acquired by NWN Water of Texas on March 2, 2020.

As each of these acquisitions met the criteria of a business combination, a preliminary allocation of the consideration to the acquired net assets based on their estimated fair value as of the acquisition date was performed. In accordance with U.S. GAAP, the fair value determination involves management judgment in determining the significant estimates and assumptions used and was made using existing regulatory conditions for net assets associated with Suncadia Water Company, LLC and T&W Water Service Company.

Final goodwill of $18.2 million was recognized from the acquisitions described above. No intangible assets aside from goodwill were acquired. The goodwill recognized is attributable to the regulated water utility service territories, experienced workforces, and the strategic benefits from both the water and wastewater utilities expected from growth in their service territories. The total amount of goodwill that is expected to be deductible for income tax purposes is approximately $16.5 million. The acquisition costs associated with each business combination were expensed as incurred. The results of these business combinations were not material to the consolidated financial results of NW Holdings.

Other Business Combinations

During 2020, NWN Water completed three additional acquisitions, comprised of four water systems and one wastewater system, which qualified as business combinations. The aggregate fair value of the preliminary consideration transferred for these acquisitions was approximately $1.5 million. These business combinations were not significant to NW Holdings' results of operations.

Goodwill

NW Holdings allocates goodwill to reporting units based on the expected benefit from the business combination. We perform an annual impairment assessment of goodwill at the reporting unit level, or more frequently if events and circumstances indicate that goodwill might be impaired. An impairment loss is recognized if the carrying value of a reporting unit’s goodwill exceeds its fair value.

As a result of all acquisitions completed, total goodwill was $69.3 million, $70.2 million and $69.2 million as of June 30, 2021, June 30, 2020 and December 31, 2020, respectively. The decrease in the goodwill balance from the second quarter of 2020 is primarily due to a measurement period adjustment that occurred in the fourth quarter of 2020, partially offset by acquisitions in the water sector. The increase in the goodwill balance from the fourth quarter of 2020 is primarily due to additions associated with our acquisitions in the water sector. All of our goodwill is related to water and wastewater acquisitions and is included in the other category for segment reporting purposes. The annual impairment assessment of goodwill occurs in the fourth quarter of each year. There have been no impairments recognized to date.

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Derivative Instruments

6 Months Ended

Jun. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

DERIVATIVE INSTRUMENTS

NW Natural enters into financial derivative contracts to hedge a portion of the NGD segment's natural gas sales requirements. These contracts include swaps, options, and combinations of option contracts. These derivative financial instruments are primarily used to manage commodity price variability. A small portion of NW Natural's derivative hedging strategy involves foreign currency exchange contracts.

NW Natural enters into these financial derivatives, up to prescribed limits, primarily to hedge price variability related to physical gas supply contracts as well as to hedge spot purchases of natural gas. The foreign currency forward contracts are used to hedge the fluctuation in foreign currency exchange rates for pipeline demand charges paid in Canadian dollars.

In the normal course of business, NW Natural also enters into indexed-price physical forward natural gas commodity purchase contracts and options to meet the requirements of NGD customers. These contracts qualify for regulatory deferral accounting treatment.

NW Natural also enters into exchange contracts related to the third-party asset management of its gas portfolio, some of which are derivatives that do not qualify for hedge accounting or regulatory deferral, but are subject to NW Natural's regulatory sharing agreement. These derivatives are recognized in operating revenues, net of amounts shared with NGD customers.

Notional Amounts

The following table presents the absolute notional amounts related to open positions on NW Natural derivative instruments:

	June 30,				December 31,
In thousands	2021		2020		2020
Natural gas (in therms):
Financial	680,335		654,145		784,400
Physical	419,148		570,600		457,593
Foreign exchange	$	6,477	$	7,176	$	5,896

Purchased Gas Adjustment (PGA)

Derivatives entered into by NW Natural for the procurement or hedging of natural gas for future gas years generally receive regulatory deferral accounting treatment. In general, commodity hedging for the current gas year is completed prior to the start of the gas year, and hedge prices are reflected in the weighted-average cost of gas in the PGA filing. Rates and hedging approaches may vary between states due to different rate structures and mechanisms. Hedge contracts entered into after the start of the PGA period are subject to the PGA incentive sharing mechanism in Oregon. NW Natural entered the 2020-21 and 2019-20 gas years with forecasted sales volumes hedged at 53% and 52% in financial swap and option contracts, and 17% and 19% in physical gas supplies, respectively. Hedge contracts entered into prior to the PGA filing in September 2020 were included in the PGA for the 2020-21 gas year. Hedge contracts entered into after the PGA filing, and related to subsequent gas years, may be included in future PGA filings and qualify for regulatory deferral.

Unrealized and Realized Gain/Loss

The following table reflects the income statement presentation for the unrealized gains and losses from NW Natural's derivative instruments, which also represents all derivative instruments at NW Holdings:

	Three Months Ended June 30,
	2021				2020
In thousands	Natural gas commodity		Foreign exchange		Natural gas commodity		Foreign exchange
Benefit (expense) to cost of gas	$	16,323	$	(45)	$	5,492	$	459
Operating revenues (expense)	—		—		754		—
Amounts deferred to regulatory accounts on balance sheet	(16,323)		45		(6,119)		(459)
Total gain (loss) in pre-tax earnings	$	—	$	—	$	127	$	—

	Six Months Ended June 30,
	2021				2020
In thousands	Natural gas commodity		Foreign exchange		Natural gas commodity		Foreign exchange
Benefit (expense) to cost of gas	$	36,805	$	32	$	149	$	(7)
Operating revenues (expense)	(27)		—		(1,679)		—
Amounts deferred to regulatory accounts on balance sheet	(36,782)		(32)		1,286		7
Total gain (loss) in pre-tax earnings	$	(4)	$	—	$	(244)	$	—

Unrealized Gain/Loss

Outstanding derivative instruments related to regulated NGD operations are deferred in accordance with regulatory accounting standards. The cost of foreign currency forward and natural gas derivative contracts are recognized immediately in the cost of gas; however, costs above or below the amount embedded in the current year PGA are subject to a regulatory deferral tariff and therefore, are recorded as a regulatory asset or liability.

Realized Gain/Loss

NW Natural realized net gains of $4.2 million and $9.3 million for the three and six months ended June 30, 2021 from the settlement of natural gas financial derivative contracts, whereas, net losses of $1.1 million and $3.2 million were realized for the three and six months ended June 30, 2020. Realized gains and losses offset the higher or lower cost of gas purchased, resulting in no incremental amounts to collect or refund to customers.

Credit Risk Management of Financial Derivatives Instruments

No collateral was posted with or by NW Natural counterparties as of June 30, 2021 or 2020. NW Natural attempts to minimize the potential exposure to collateral calls by diversifying counterparties to manage liquidity risk. Counterparties generally allow a certain credit limit threshold before requiring NW Natural to post collateral against loss positions. Given NW Natural's counterparty credit limits and portfolio diversification, it was not subject to collateral calls in 2021 or 2020. The collateral call exposure is set forth under credit support agreements, which generally contain credit limits. 

NW Natural could also be subject to collateral call exposure where it has agreed to provide adequate assurance, which is not specific as to the amount of credit limit allowed, but could potentially require additional collateral in the event of a material adverse change. If credit-risk related contingent features within these contracts were triggered as of June 30, 2021, assuming current gas prices and a credit rating downgrade to a speculative level, we would not be required to post collateral calls, including estimates for adequate assurance.

NW Natural's financial derivative instruments are subject to master netting arrangements; however, they are presented on a gross basis in the consolidated balance sheets. NW Natural and its counterparties have the ability to set-off obligations to each other under specified circumstances. Such circumstances may include a defaulting party, a credit change due to a merger affecting either party, or any other termination event.

NW Natural’s current commodity financial swap and option contracts outstanding reflect unrealized gains of $54.3 million and $5.3 million at June 30, 2021 and June 30, 2020, respectively. If netted by counterparty, NW Natural's physical and financial derivative position would result in an asset of $51.8 million and a liability of $1.6 million as of June 30, 2021, an asset of $6.7 million and a liability of $1.5 million as of June 30, 2020, and an asset of $14.1 million and a liability of $1.3 million as of December 31, 2020.

NW Natural is exposed to derivative credit and liquidity risk primarily through securing fixed price natural gas commodity swaps with financial counterparties. NW Natural utilizes master netting arrangements through International Swaps and Derivatives Association contracts to minimize this risk along with collateral support agreements with counterparties based on their credit ratings. In certain cases, NW Natural requires guarantees or letters of credit from counterparties to meet its minimum credit requirement standards. See Note 16 in the 2020 Form 10-K for additional information.

Fair Value

In accordance with fair value accounting, NW Natural includes non-performance risk in calculating fair value adjustments. This includes a credit risk adjustment based on the credit spreads of NW Natural counterparties when in an unrealized gain position, or on NW Natural's own credit spread when in an unrealized loss position. The inputs in our valuation models include natural gas futures, volatility, credit default swap spreads and interest rates. Additionally, the assessment of non-performance risk is generally derived from the credit default swap market and from bond market credit spreads. The impact of the credit risk adjustments for all outstanding derivatives was immaterial to the fair value calculation at June 30, 2021. Using significant other observable or Level 2 inputs, the net fair value was an asset of $50.2 million, an asset of $5.2 million, and an asset of $12.8 million as of June 30, 2021 and 2020, and December 31, 2020, respectively. No Level 3 inputs were used in our derivative valuations during the six months ended June 30, 2021 and 2020. See Note 2 in the 2020 Form 10-K.

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Environmental Matters

6 Months Ended

Jun. 30, 2021

Environmental Remediation Obligations [Abstract]

Environmental Matters

ENVIRONMENTAL MATTERS

NW Natural owns, or previously owned, properties that may require environmental remediation or action. The range of loss for environmental liabilities is estimated based on current remediation technology, enacted laws and regulations, industry experience gained at similar sites, and an assessment of the probable level of involvement and financial condition of other potentially responsible parties (PRPs). When amounts are prudently expended related to site remediation of those sites described herein, NW Natural has recovery mechanisms in place to collect 96.7% of remediation costs allocable to Oregon customers and 3.3% of costs allocable to Washington customers.

These sites are subject to the remediation process prescribed by the Environmental Protection Agency (EPA) and the Oregon Department of Environmental Quality (ODEQ). The process begins with a remedial investigation (RI) to determine the nature and extent of contamination and then a risk assessment (RA) to establish whether the contamination at the site poses unacceptable risks to humans and the environment. Next, a feasibility study (FS) or an engineering evaluation/cost analysis (EE/CA) evaluates various remedial alternatives. It is at this point in the process when NW Natural is able to estimate a range of remediation costs and record a reasonable potential remediation liability, or make an adjustment to the existing liability. From this study, the regulatory agency selects a remedy and issues a Record of Decision (ROD). After a ROD is issued, NW Natural would seek to negotiate a consent decree or consent judgment for designing and implementing the remedy. NW Natural would have the ability to further refine estimates of remediation liabilities at that time.

Remediation may include treatment of contaminated media such as sediment, soil and groundwater, removal and disposal of media, institutional controls such as legal restrictions on future property use, or natural recovery. Following construction of the remedy, the EPA and ODEQ also have requirements for ongoing maintenance, monitoring and other post-remediation care that may continue for many years. Where appropriate and reasonably known, NW Natural will provide for these costs in the remediation liabilities described below.

Due to the numerous uncertainties surrounding the course of environmental remediation and the preliminary nature of several site investigations, in some cases, NW Natural may not be able to reasonably estimate the high end of the range of possible loss. In those cases, the nature of the possible loss has been disclosed, as has the fact that the high end of the range cannot be reasonably estimated where a range of potential loss is available. Unless there is an estimate within the range of possible losses that is more likely than other cost estimates within that range, NW Natural records the liability at the low end of this range. It is likely changes in these estimates and ranges will occur throughout the remediation process for each of these sites due to the continued evaluation and clarification concerning responsibility, the complexity of environmental laws and regulations and the determination by regulators of remediation alternatives. In addition to remediation costs, NW Natural could also be subject to Natural Resource Damages (NRD) claims. NW Natural will assess the likelihood and probability of each claim and recognize a liability if deemed appropriate. Refer to "Other Portland Harbor" below.

Environmental Sites

The following table summarizes information regarding liabilities related to environmental sites, which are recorded in other current liabilities and other noncurrent liabilities in NW Natural's balance sheet:

	Current Liabilities						Non-Current Liabilities
	June 30,				December 31,		June 30,				December 31,
In thousands	2021		2020		2020		2021		2020		2020
Portland Harbor site:
Gasco/Siltronic Sediments	$	6,658	$	10,431	$	7,596	$	41,652	$	41,945	$	43,725
Other Portland Harbor	2,195		2,434		1,942		6,588		6,228		7,020
Gasco/Siltronic Upland site	12,442		10,979		14,887		38,401		41,878		40,250
Front Street site	1,219		10,222		3,816		975		1,059		1,107
Oregon Steel Mills	—		—		—		179		179		179
Total	$	22,514	$	34,066	$	28,241	$	87,795	$	91,289	$	92,281

Portland Harbor Site

The Portland Harbor is an EPA listed Superfund site that is approximately 10 miles long on the Willamette River and is adjacent to NW Natural's Gasco uplands site. NW Natural is one of over one hundred PRPs, each jointly and severally liable, at the Superfund site. In January 2017, the EPA issued its Record of Decision, which selects the remedy for the clean-up of the Portland Harbor site (Portland Harbor ROD). The Portland Harbor ROD estimates the present value total cost at approximately $1.05 billion with an accuracy between -30% and +50% of actual costs.

NW Natural's potential liability is a portion of the costs of the remedy for the entire Portland Harbor Superfund site. The cost of that remedy is expected to be allocated among more than one hundred PRPs. NW Natural is participating in a non-binding allocation process with the other PRPs in an effort to resolve its potential liability. The Portland Harbor ROD does not provide any additional clarification around allocation of costs among PRPs; accordingly, NW Natural has not modified any of the recorded liabilities at this time as a result of the issuance of the Portland Harbor ROD.

NW Natural manages its liability related to the Superfund site as two distinct remediation projects: the Gasco/Siltronic Sediments and Other Portland Harbor projects.

GASCO/SILTRONIC SEDIMENTS. In 2009, NW Natural and Siltronic Corporation entered into a separate Administrative Order on Consent with the EPA to evaluate and design specific remedies for sediments adjacent to the Gasco uplands and Siltronic uplands sites. NW Natural submitted a draft EE/CA to the EPA in May 2012 to provide the estimated cost of potential remedial alternatives for this site. In March 2020, NW Natural and the EPA amended the Administrative Order on Consent to include additional remedial design activities downstream of the Gasco sediments site and in the navigation channel. Siltronic Corporation is not a party to the amended order. In the second quarter of 2021, NW Natural began preliminary design discussions with the EPA. These preliminary design discussions did not include a cost estimate for alternatives, none of the alternatives are more likely than others at this time, and NW Natural expects further design discussion and iteration with the EPA.

The estimated costs for the various sediment remedy alternatives in the draft EE/CA for the additional studies and design work needed before the cleanup can occur, and for regulatory oversight throughout the cleanup range from $48.3 million to $350 million. NW Natural has recorded a liability of $48.3 million for the Gasco sediment clean-up, which reflects the low end of the range. At this time, we believe sediments at the Gasco sediments site represent the largest portion of NW Natural's liability related to the Portland Harbor site discussed above.

OTHER PORTLAND HARBOR. While we believe liabilities associated with the Gasco/Siltronic sediments site represent NW Natural's largest exposure, there are other potential exposures associated with the Portland Harbor ROD, including NRD costs and harborwide remedial design and cleanup costs (including downstream petroleum contamination), for which allocations among the PRPs have not yet been determined. 

NW Natural and other parties have signed a cooperative agreement with the Portland Harbor Natural Resource Trustee council to participate in a phased NRD assessment to estimate liabilities to support an early restoration-based settlement of NRD claims. One member of this Trustee council, the Yakama Nation, withdrew from the council in 2009, and in 2017, filed suit against NW Natural and 29 other parties seeking remedial costs and NRD assessment costs associated with the Portland Harbor site, set forth in the complaint. The complaint seeks recovery of alleged costs totaling $0.3 million in connection with the selection of a remedial action for the Portland Harbor site as well as declaratory judgment for unspecified future remedial action costs and for costs to assess the injury, loss or destruction of natural resources resulting from the release of hazardous substances at and from the Portland Harbor site. The Yakama Nation has filed two amended complaints addressing certain pleading defects and dismissing the State of Oregon. On the motion of NW Natural and certain other defendants, the federal court has stayed the case pending the outcome of the non-binding allocation proceeding discussed above. NW Natural has recorded a liability for NRD claims which is at the low end of the range of the potential liability; the high end of the range cannot be reasonably estimated at this time. The NRD liability is not included in the aforementioned range of costs provided in the Portland Harbor ROD.

Gasco Uplands Site

A predecessor of NW Natural, Portland Gas and Coke Company, owned a former gas manufacturing plant that was closed in 1958 (Gasco site) and is adjacent to the Portland Harbor site described above. The Gasco site has been under investigation by NW Natural for environmental contamination under the ODEQ Voluntary Cleanup Program (VCP). It is not included in the range of remedial costs for the Portland Harbor site noted above. The Gasco site is managed in two parts, the uplands portion and the groundwater source control action.

NW Natural submitted a revised Remedial Investigation Report for the uplands to ODEQ in May 2007. In March 2015, ODEQ approved Remedial Assessment (RA) for this site, enabling commencement of work on the FS in 2016. NW Natural has recognized a liability for the remediation of the uplands portion of the site which is at the low end of the range of potential liability; the high end of the range cannot be reasonably estimated at this time.

In October 2016, ODEQ and NW Natural agreed to amend their VCP agreement to incorporate a portion of the Siltronic property adjacent to the Gasco site formerly owned by Portland Gas & Coke between 1939 and 1960 into the Gasco RA and FS, excluding the uplands for Siltronic. Previously, NW Natural was conducting an investigation of manufactured gas plant constituents on the entire Siltronic uplands for ODEQ. Siltronic will be working with ODEQ directly on environmental impacts to the remainder of its property.

In September 2013, NW Natural completed construction of a groundwater source control system, including a water treatment station, at the Gasco site. NW Natural has estimated the cost associated with the ongoing operation of the system and has recognized a liability which is at the low end of the range of potential cost. NW Natural cannot estimate the high end of the range at this time due to the uncertainty associated with the duration of running the water treatment station, which is highly dependent on the remedy determined for both the upland portion as well as the final remedy for Gasco sediment exposure.

Other Sites

In addition to those sites above, NW Natural has environmental exposures at three other sites: Central Service Center, Front Street and Oregon Steel Mills. NW Natural may have exposure at other sites that have not been identified at this time. Due to the uncertainty of the design of remediation, regulation, timing of the remediation and in the case of the Oregon Steel Mills site, pending litigation, liabilities for each of these sites have been recognized at their respective low end of the range of potential liability; the high end of the range could not be reasonably estimated at this time.

FRONT STREET SITE. The Front Street site was the former location of a gas manufacturing plant NW Natural operated (the former Portland Gas Manufacturing site, or PGM). At ODEQ’s request, NW Natural conducted a sediment and source control investigation and provided findings to ODEQ. In December 2015, an FS on the former Portland Gas Manufacturing site was completed. 

In July 2017, ODEQ issued the PGM ROD. The ROD specifies the selected remedy, which requires a combination of dredging, capping, treatment, and natural recovery. In addition, the selected remedy also requires institutional controls and long-term inspection and maintenance. Construction of the remedy began in early July 2020 and was completed in October 2020. NW Natural has recognized an additional liability of $2.2 million for long term monitoring, regulatory and permitting issues, and post-construction work.

OREGON STEEL MILLS SITE. Refer to "Legal Proceedings" below.

Environmental Cost Deferral and Recovery

NW Natural has authorizations in Oregon and Washington to defer costs related to remediation of properties that are owned or were previously owned by NW Natural. In Oregon, a Site Remediation and Recovery Mechanism (SRRM) is currently in place to recover prudently incurred costs allocable to Oregon customers, subject to an earnings test. On October 21, 2019, the WUTC authorized an Environmental Cost Recovery Mechanism (ECRM) for recovery of prudently incurred costs allocable to Washington customers beginning November 1, 2019. See Note 18 in the 2020 Form 10-K for a description of SRRM and ECRM collection processes.

The following table presents information regarding the total regulatory asset deferred:

	June 30,				December 31,
In thousands	2021		2020		2020
Deferred costs and interest (1)	$	50,604	$	42,098	$	44,516
Accrued site liabilities (2)	110,237		124,981		120,352
Insurance proceeds and interest	(69,730)		(81,146)		(69,253)
Total regulatory asset deferral(1)	$	91,111	$	85,933	$	95,615
Current regulatory assets(3)	5,688		4,176		4,992
Long-term regulatory assets(3)	85,423		81,757		90,623

(1)     Includes pre-review and post-review deferred costs, amounts currently in amortization, and interest, net of amounts collected from customers.

(2)    Excludes 3.3% of the Front Street site liability as the OPUC only allows recovery of 96.7% of costs for those sites allocable to Oregon, including those that historically served only Oregon customers. Amounts excluded from regulatory assets were $0.1 million at June 30, 2021, $0.4 million at June 30, 2020, and $0.2 million at December 31, 2020,

(3)    Environmental costs relate to specific sites approved for regulatory deferral by the OPUC and WUTC. In Oregon, NW Natural earns a carrying charge on cash amounts paid, whereas amounts accrued but not yet paid do not earn a carrying charge until expended. It also accrues a carrying charge on insurance proceeds for amounts owed to customers. In Washington, neither the cash paid nor insurance proceeds received accrue a carrying charge. Current environmental costs represent remediation costs management expects to collect from customers in the next 12 months. Amounts included in this estimate are still subject to a prudence and earnings test review by the OPUC and do not include the $5.0 million tariff rider. The amounts allocable to Oregon are recoverable through NGD rates, subject to an earnings test.

Environmental Earnings Test

To the extent NW Natural earns at or below its authorized Return on Equity (ROE) as defined by the SRRM, remediation expenses and interest in excess of the $5.0 million tariff rider and $5.0 million insurance proceeds are recoverable through the SRRM. To the extent NW Natural earns more than its authorized ROE in a year, it is required to cover environmental expenses and interest on expenses greater than the $10.0 million with those earnings that exceed its authorized ROE.

Legal Proceedings

NW Holdings is not currently party to any direct claims or litigation, though in the future it may be subject to claims and litigation arising in the ordinary course of business.

NW Natural is subject to claims and litigation arising in the ordinary course of business including the matters discussed above and ordinary course claims and litigation noted below. Although the final outcome of any of these legal proceedings cannot be predicted with certainty, including the matter described below, NW Natural and NW Holdings do not expect that the ultimate disposition of any of these matters will have a material effect on financial condition, results of operations or cash flows. See also Part II, Item 1, “Legal Proceedings".

Oregon Steel Mills Site

See Note 18 in the 2020 Form 10-K.

For additional information regarding other commitments and contingencies, see Note 17 in the 2020 Form 10-K.

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Discontinued Operations

6 Months Ended

Jun. 30, 2019

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONS

NW Holdings

On June 20, 2018, NWN Gas Storage, then a wholly-owned subsidiary of NW Natural, entered into a Purchase and Sale Agreement (the Agreement) that provided for the sale by NWN Gas Storage of all of the membership interests in Gill Ranch. Gill Ranch owns a 75% interest in the natural gas storage facility located near Fresno, California known as the Gill Ranch Gas Storage Facility.

On December 4, 2020, NWN Gas Storage closed the sale of all of the membership interests in Gill Ranch and received payment of the initial cash purchase price of $13.5 million less the $1.0 million deposit previously paid. Furthermore, additional payments to NWN Gas Storage may be made subject to a maximum amount of $15.0 million in the aggregate (subject to a working capital adjustment) based on the economic performance of Gill Ranch for each full gas storage year (April 1 of one year through March 31 of the following year) occurring after the closing and the remaining portion of the 2020-2021 gas storage year and will continue until such time as the maximum amount has been paid. The fair value of this arrangement at the closing date was zero based on a discounted cash flow forecast. Subsequent changes in the fair value will be recorded in earnings. The completion of the sale resulted in an after-tax gain of $5.9 million for the year ended December 31, 2020.

As a result of the disposition of the membership interests in Gill Ranch, there were no assets or liabilities classified as held for sale at June 30, 2021 or December 31, 2020 and there was no activity in the consolidated statement of comprehensive income for the three and six months ended June 30, 2021. The assets and liabilities of the discontinued operations classified as held for sale in the consolidated balance sheet at June 30, 2020 include the following:

	NW Holdings Discontinued Operations
In thousands	June 30, 2020
Assets:
Accounts receivable	$	1,621
Inventories	821
Other current assets	250
Property, plant, and equipment, net	13,328
Operating lease right of use asset	118
Other non-current assets	254
Total discontinued operations assets - current assets (1)	$	16,392
Liabilities:
Accounts payable	$	999
Other current liabilities	1,119
Operating lease liabilities	112
Other non-current liabilities	11,344
Total discontinued operations liabilities - current liabilities (1)	$	13,574

(1)     The total assets and liabilities of Gill Ranch were classified as current because it was probable that the sale would be completed within one year.

The following table presents the operating results of Gill Ranch and is presented net of tax on the consolidated statements of comprehensive income:

	NW Holdings Discontinued Operations
	Three Months Ended June 30,		Six Months Ended June 30,
In thousands, except per share data	2020		2020
Revenues	$	3,374	$	4,282
Expenses:
Operations and maintenance	2,604		4,184
General taxes	53		100
Depreciation and amortization	106		212
Other expenses and interest	228		459
Total expenses	2,991		4,955
Income (loss) from discontinued operations before income taxes	383		(673)
Income tax expense (benefit)	103		(175)
Income (loss) from discontinued operations, net of tax	$	280	$	(498)
Earnings (loss) from discontinued operations per share of common stock:
Basic	$	0.01	$	(0.01)
Diluted	$	0.01	$	(0.01)

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Significant Accounting Policies

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Industry Regulation

Industry Regulation  

In applying regulatory accounting principles, NW Holdings and NW Natural capitalize or defer certain costs and revenues as regulatory assets and liabilities pursuant to orders of the Oregon Public Utilities Commission (OPUC), Washington Utilities and Transportation Commission (WUTC), Idaho Public Utilities Commission (IPUC) or Public Utility Commission of Texas (PUCT), which provide for the recovery of revenues or expenses from, or refunds to, utility customers in future periods, including a return or a carrying charge in certain cases.

New Accounting Standards

New Accounting Standards

We consider the applicability and impact of all accounting standards updates (ASUs) issued by the Financial Accounting Standards Board (FASB). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on NW Holdings' or NW Natural's consolidated financial position or results of operations.

Recently Adopted Accounting Pronouncements

INCOME TAXES. On December 18, 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." The purpose of the amendment is to reduce cost and complexity related to accounting for income taxes by removing certain exceptions to the general principles and improving consistent application for other areas in Topic 740. The amendments in this ASU were effective beginning January 1, 2021. The amended presentation and disclosure guidance was applied retrospectively. The adoption did not materially affect the financial statements and disclosures of NW Holdings or NW Natural.

REFERENCE RATE REFORM. On March 12, 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." The purpose of the amendment is to provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

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Significant Accounting Policies

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Schedule of Regulatory Assets

Amounts deferred as regulatory assets and liabilities for NW Holdings and NW Natural were as follows:

	Regulatory Assets
	June 30,				December 31,
In thousands	2021		2020		2020
NW Natural:
Current:
Unrealized loss on derivatives(1)	$	3,393	$	2,956	$	4,198
Gas costs	29,486		6,046		1,979
Environmental costs(2)	5,688		4,176		4,992
Decoupling(3)	1,011		85		361
Pension balancing(4)	7,131		7,131		7,131
Income taxes	2,345		2,208		3,484
Other(5)	11,618		7,419		9,600
Total current	$	60,672	$	30,021	$	31,745
Non-current:
Unrealized loss on derivatives(1)	$	453	$	1,658	$	2,852
Pension balancing(4)	40,342		45,315		43,383
Income taxes	13,903		17,608		15,368
Pension and other postretirement benefit liabilities	160,385		164,091		170,812
Environmental costs(2)	85,423		81,757		90,623
Gas costs	5,742		94		3,925
Decoupling(3)	198		—		1,031
Other(5)	24,224		13,797		20,893
Total non-current	$	330,670	$	324,320	$	348,887
Other (NW Holdings)	40		38		40
Total non-current - NW Holdings	$	330,710	$	324,358	$	348,927

Schedule of Regulatory Liabilities

	Regulatory Liabilities
	June 30,				December 31,
In thousands	2021		2020		2020
NW Natural:
Current:
Gas costs	$	1,519	$	3,767	$	1,118
Unrealized gain on derivatives(1)	46,168		5,950		13,674
Decoupling(3)	5,821		11,498		11,793
Income taxes	8,217		7,098		8,217
Asset optimization revenue sharing	39,348		7,116		10,298
Other(5)	2,137		5,697		5,262
Total current	$	103,210	$	41,126	$	50,362
Non-current:
Gas costs	$	101	$	538	$	314
Unrealized gain on derivatives(1)	7,912		3,958		6,135
Decoupling(3)	652		2,108		1,723
Income taxes(6)	182,977		193,414		189,587
Accrued asset removal costs(7)	439,685		414,719		427,960
Other(5)	12,850		16,794		13,074
Total non-current - NW Natural	$	644,177	$	631,531	$	638,793
Other (NW Holdings)	869		869		870
Total non-current - NW Holdings	$	645,046	$	632,400	$	639,663

(1)Unrealized gains or losses on derivatives are non-cash items and therefore do not earn a rate of return or a carrying charge. These amounts are recoverable through NGD rates as part of the annual Purchased Gas Adjustment (PGA) mechanism when realized at settlement.

(2)Refer to footnote (3) of the Deferred Regulatory Asset table in Note 16 for a description of environmental costs.

(3)This deferral represents the margin adjustment resulting from differences between actual and expected volumes. 

(4)Balance represents deferred net periodic benefit costs as approved by the OPUC.

(5)Balances consist of deferrals and amortizations under approved regulatory mechanisms and typically earn a rate of return or carrying charge.

(6)Balance represents excess deferred income tax benefits subject to regulatory flow-through.(7)Estimated costs of removal on certain regulated properties are collected through rates.

Accounts Receivable, Allowance for Credit Loss [Table Text Block]

The following table presents the activity related to the NW Holdings provision for uncollectible accounts by pool, substantially all of which is related to NW Natural's accounts receivable:

	As of						As of
	December 31, 2020		Six Months Ended June 30, 2021				June 30, 2021
In thousands	Beginning Balance		Provision recorded, net of adjustments		Write-offs recognized, net of recoveries		Ending Balance(1)
Allowance for uncollectible accounts:
Residential	$	2,153	$	1,294	$	(637)	$	2,810
Commercial	704		(233)		(265)		206
Industrial	142		(68)		5		79
Accrued unbilled and other	220		22		(54)		188
Total	$	3,219	$	1,015	$	(951)	$	3,283

(1) Includes $2.9 million that was deferred to a regulatory asset for costs associated with COVID-19 that are recoverable in future rates.

Schedule of Cash Flow, Supplemental Disclosures

The following table provides a reconciliation of the cash, cash equivalents and restricted cash balances at NW Holdings as of June 30, 2021 and 2020 and December 31, 2020:

	June 30,				December 31,
In thousands	2021		2020		2020
Cash and cash equivalents	$	20,084	$	137,057	$	30,168
Restricted cash included in other current assets	8,226		5,491		5,286
Cash, cash equivalents and restricted cash	$	28,310	$	142,548	$	35,454

The following table provides a reconciliation of the cash, cash equivalents and restricted cash balances at NW Natural as of June 30, 2021 and 2020 and December 31, 2020:

	June 30,				December 31,
In thousands	2021		2020		2020
Cash and cash equivalents	$	11,488	$	120,284	$	10,453
Restricted cash included in other current assets	8,226		5,491		5,286
Cash, cash equivalents and restricted cash	$	19,714	$	125,775	$	15,739

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Earnings Per Share

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

EPS Calculation

NW Holdings' diluted earnings or loss per share are calculated as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands, except per share data	2021		2020		2021		2020
Net income (loss) from continuing operations	$	(724)	$	(5,132)	$	58,793	$	43,144
Income (loss) from discontinued operations, net of tax	—		280		—		(498)
Net income (loss)	$	(724)	$	(4,852)	$	58,793	$	42,646
Average common shares outstanding - basic	30,664		30,537		30,639		30,514
Additional shares for stock-based compensation plans (See Note 7)	—		—		32		45
Average common shares outstanding - diluted	30,664		30,537		30,671		30,559
Earnings (loss) from continuing operations per share of common stock:
Basic	$	(0.02)	$	(0.17)	$	1.92	$	1.41
Diluted	$	(0.02)	$	(0.17)	$	1.92	$	1.41
Earnings (loss) from discontinued operations per share of common stock:
Basic	$	—	$	0.01	$	—	$	(0.01)
Diluted	$	—	$	0.01	$	—	$	(0.01)
Earnings (loss) per share of common stock:
Basic	$	(0.02)	$	(0.16)	$	1.92	$	1.40
Diluted	$	(0.02)	$	(0.16)	$	1.92	$	1.40
Additional information:
Anti-dilutive shares	48		41		7		—

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Segment Information

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

The following table presents summary financial information concerning the reportable segment and other of continuing operations. See Note 17 for information regarding discontinued operations for NW Holdings.

	Three Months Ended June 30,
In thousands	NGD		Other (NW Natural)		NW Natural		Other (NW Holdings)		NW Holdings
2021
Operating revenues	$	139,614	$	4,965	$	144,579	$	4,338	$	148,917
Depreciation and amortization	27,273		257		27,530		614		28,144
Income (loss) from operations	11,331		2,808		14,139		(1,515)		12,624
Net income (loss) from continuing operations	(1,381)		1,970		589		(1,313)		(724)
Capital expenditures	60,376		693		61,069		3,337		64,406
2020
Operating revenues	$	126,992	$	4,165	$	131,157	$	3,814	$	134,971
Depreciation and amortization	24,738		248		24,986		850		25,836
Income (loss) from operations	6,434		2,465		8,899		43		8,942
Net income (loss) from continuing operations	(6,347)		1,635		(4,712)		(420)		(5,132)
Capital expenditures	61,472		521		61,993		2,843		64,836

	Six Months Ended June 30,
In thousands	NGD		Other (NW Natural)		NW Natural		Other (NW Holdings)		NW Holdings
2021
Operating revenues	$	440,952	$	15,977	$	456,929	$	7,934	$	464,863
Depreciation and amortization	54,186		513		54,699		1,542		56,241
Income (loss) from operations	97,818		11,439		109,257		(1,927)		107,330
Net income (loss) from continuing operations	52,544		8,156		60,700		(1,907)		58,793
Capital expenditures	124,368		799		125,167		4,941		130,108
Total assets at June 30, 2021	3,587,966		51,466		3,639,432		144,068		3,783,500
2020
Operating revenues	$	405,479	$	8,207	$	413,686	$	6,436	$	420,122
Depreciation and amortization	48,684		492		49,176		1,335		50,511
Income (loss) from operations	81,692		4,228		85,920		(532)		85,388
Net income (loss) from continuing operations	41,596		2,871		44,467		(1,323)		43,144
Capital expenditures	117,629		598		118,227		4,055		122,282
Total assets at June 30, 2020(1)	3,470,306		10,398		3,480,704		144,251		3,624,955
Total assets at December 31, 2020	3,549,868		49,468		3,599,336		157,043		3,756,379

(1)     Total assets for NW Holdings exclude assets related to discontinued operations of $16.4 million as of June 30, 2020.

NGD Margin

The following table presents additional segment information concerning NGD margin:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2021		2020		2021		2020
NGD margin calculation:
NGD distribution revenues	$	134,849	$	122,071	$	431,402	$	395,632
Other regulated services	4,765		4,921		9,550		9,847
Total NGD operating revenues	139,614		126,992		440,952		405,479
Less: NGD cost of gas	41,249		41,265		153,515		149,860
Environmental remediation	1,509		1,622		5,286		5,627
Revenue taxes	5,650		4,454		18,305		16,197
NGD margin	$	91,206	$	79,651	$	263,846	$	233,795

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Revenue

3 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following tables present disaggregated revenue from continuing operations:

	Three Months Ended June 30,
In thousands	NGD		Other (NW Natural)		NW Natural		Other (NW Holdings)		NW Holdings
2021
Natural gas sales	$	123,739	$	—	$	123,739	$	—	$	123,739
Gas storage revenue, net	—		2,805		2,805		—		2,805
Asset management revenue, net	—		817		817		—		817
Appliance retail center revenue	—		1,343		1,343		—		1,343
Other revenue	399		—		399		4,338		4,737
Revenue from contracts with customers	124,138		4,965		129,103		4,338		133,441
Alternative revenue	11,083		—		11,083		—		11,083
Leasing revenue	4,393		—		4,393		—		4,393
Total operating revenues	$	139,614	$	4,965	$	144,579	$	4,338	$	148,917
2020
Natural gas sales	$	116,682	$	—	$	116,682	$	—	$	116,682
Gas storage revenue, net	—		2,449		2,449		—		2,449
Asset management revenue, net	—		910		910		—		910
Appliance retail center revenue	—		806		806		—		806
Other revenue	332		—		332		3,814		4,146
Revenue from contracts with customers	117,014		4,165		121,179		3,814		124,993
Alternative revenue	5,365		—		5,365		—		5,365
Leasing revenue	4,613		—		4,613		—		4,613
Total operating revenues	$	126,992	$	4,165	$	131,157	$	3,814	$	134,971

	Six Months Ended June 30,
In thousands	NGD		Other (NW Natural)		NW Natural		Other (NW Holdings)		NW Holdings
2021
Natural gas sales	$	419,822	$	—	$	419,822	$	—	$	419,822
Gas storage revenue, net	—		5,300		5,300		—		5,300
Asset management revenue, net	—		7,745		7,745		—		7,745
Appliance retail center revenue	—		2,932		2,932		—		2,932
Other revenue	814		—		814		7,934		8,748
Revenue from contracts with customers	420,636		15,977		436,613		7,934		444,547
Alternative revenue	11,536		—		11,536		—		11,536
Leasing revenue	8,780		—		8,780		—		8,780
Total operating revenues	$	440,952	$	15,977	$	456,929	$	7,934	$	464,863
2020
Natural gas sales	$	390,686	$	—	$	390,686	$	—	$	390,686
Gas storage revenue, net	—		4,785		4,785		—		4,785
Asset management revenue, net	—		1,060		1,060		—		1,060
Appliance retail center revenue	—		2,362		2,362		—		2,362
Other revenue	669		—		669		6,436		7,105
Revenue from contracts with customers	391,355		8,207		399,562		6,436		405,998
Alternative revenue	4,893		—		4,893		—		4,893
Leasing revenue	9,231		—		9,231		—		9,231
Total operating revenues	$	405,479	$	8,207	$	413,686	$	6,436	$	420,122

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Leases

6 Months Ended

12 Months Ended

Jun. 30, 2021

Dec. 31, 2019

Leases [Abstract]

Lease Revenue

The components of lease revenue at NW Natural were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2021		2020		2021		2020
Lease revenue
Operating leases	$	25	$	25	$	43	$	53
Sales-type leases	4,368		4,588		8,737		9,178
Total lease revenue	$	4,393	$	4,613	$	8,780	$	9,231

Lessor, Operating Lease, Payments to be Received, Maturity

Total future minimum lease payments to be received under non-cancellable leases at June 30, 2021 are as follows:

In thousands	Operating		Sales-Type		Total
NW Natural:
Remainder of 2021	$	36	$	8,701	$	8,737
2022	72		17,026		17,098
2023	64		16,557		16,621
2024	65		15,867		15,932
2025	60		15,306		15,366
Thereafter	229		251,721		251,950
Total lease revenue	$	526	$	325,178	$	325,704
Less: imputed interest			183,237
Total leases receivable			$	141,941
Other (NW Holdings):
Remainder of 2021	$	25	$	—	$	25
2022	50		—		50
2023	51		—		51
2024	52		—		52
2025	53		—		53
Thereafter	970		—		970
Total lease revenue	$	1,201	$	—	$	1,201
NW Holdings:
Remainder of 2021	$	61	$	8,701	$	8,762
2022	122		17,026		17,148
2023	115		16,557		16,672
2024	117		15,867		15,984
2025	113		15,306		15,419
Thereafter	1,199		251,721		252,920
Total lease revenue	$	1,727	$	325,178	$	326,905
Less: imputed interest			183,237
Total leases receivable			$	141,941

Lease Expense

The components of lease expense, a portion of which is capitalized, were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2021		2020		2021		2020
NW Natural:
Operating lease expense	$	1,710	$	914	$	3,388	$	2,116
Short-term lease expense	$	349	$	285	$	569	$	483
Other (NW Holdings):
Operating lease expense	$	18	$	40	$	36	$	92
NW Holdings:
Operating lease expense	$	1,728	$	954	$	3,424	$	2,208
Short-term lease expense	$	349	$	285	$	569	$	483

Operating Lease, Lease Asset and Liabilities

Supplemental balance sheet information related to operating leases as of June 30, 2021 is as follows:

In thousands	June 30,				December 31,
	2021		2020		2020
NW Natural:
Operating lease right of use asset	$	76,211	$	78,464	$	77,328
Operating lease liabilities - current liabilities	$	1,193	$	868	$	1,054
Operating lease liabilities - non-current liabilities	80,043		80,120		80,559
Total operating lease liabilities	$	81,236	$	80,988	$	81,613
Other (NW Holdings):
Operating lease right of use asset	$	83	$	102	$	118
Operating lease liabilities - current liabilities	$	35	$	63	$	51
Operating lease liabilities - non-current liabilities	45		39		62
Total operating lease liabilities	$	80	$	102	$	113
NW Holdings:
Operating lease right of use asset	$	76,294	$	78,566	$	77,446
Operating lease liabilities - current liabilities	$	1,228	$	931	$	1,105
Operating lease liabilities - non-current liabilities	80,088		80,159		80,621
Total operating lease liabilities	$	81,316	$	81,090	$	81,726

Operating Lease, Weighted Average Remaining Term and Discount Rates [Table Text Block]

The weighted-average remaining lease terms and weighted-average discount rates for the operating leases at NW Natural were as follows:

In thousands	June 30,				December 31,
	2021		2020		2020
Weighted-average remaining lease term (years)	18.7		19.7		19.2
Weighted-average discount rate	7.2	%	7.2	%	7.2	%

Lessee, Operating Lease, Liability, Maturity

Maturities of operating lease liabilities at June 30, 2021 were as follows:

In thousands	NW Natural		Other (NW Holdings)		NW Holdings
Remainder of 2021	$	3,445	$	25	$	3,470
2022	6,933		24		6,957
2023	6,986		6		6,992
2024	7,150		6		7,156
2025	7,185		6		7,191
Thereafter	123,784		24		123,808
Total lease payments	155,483		91		155,574
Less: imputed interest	74,247		11		74,258
Total lease obligations	81,236		80		81,316
Less: current obligations	1,193		35		1,228
Long-term lease obligations	$	80,043	$	45	$	80,088

Lessee, Leases, Supplemental Cash Flow Information

Supplemental cash flow information related to leases was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2021		2020		2021		2020
NW Natural:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,717	$	931	$	3,386	$	2,127
Finance cash flows from finance leases	$	134	$	302	$	678	$	457
Right of use assets obtained in exchange for lease obligations
Operating leases	$	—	$	445	$	154	$	78,433
Finance leases	$	20	$	477	$	94	$	710
Other (NW Holdings):
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	17	$	39	$	33	$	91
NW Holdings:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	1,734	$	970	$	3,419	$	2,218
Finance cash flows from finance leases	$	134	$	302	$	678	$	457
Right of use assets obtained in exchange for lease obligations
Operating leases	$	—	$	445	$	154	$	78,433
Finance leases	$	20	$	477	$	94	$	710

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Debt

6 Months Ended

Jun. 30, 2021

Debt Disclosure [Abstract]

Schedule of Carrying Values and Estimated Fair Values of Debt Instruments

The following table provides an estimate of the fair value of NW Holdings' long-term debt, including current maturities of long-term debt, using market prices in effect on the valuation date:

	NW Holdings
	June 30,				December 31,
In thousands	2021		2020		2020
Gross long-term debt	$	983,221	$	961,784	$	962,905
Unamortized debt issuance costs	(7,446)		(7,688)		(7,480)
Carrying amount	$	975,775	$	954,096	$	955,425
Estimated fair value(1)	$	1,104,230	$	1,135,349	$	1,136,311

(1) Estimated fair value does not include unamortized debt issuance costs.

The following table provides an estimate of the fair value of NW Natural's long-term debt, including current maturities of long-term debt, using market prices in effect on the valuation date:

	NW Natural
	June 30,				December 31,
In thousands	2021		2020		2020
Gross long-term debt	$	924,700	$	924,700	$	924,700
Unamortized debt issuance costs	(7,291)		(7,688)		(7,480)
Carrying amount	$	917,409	$	917,012	$	917,220
Estimated fair value(1)	$	1,043,696	$	1,097,188	$	1,097,348

(1) Estimated fair value does not include unamortized debt issuance costs.

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Pension and Other Postretirement Benefit Costs

6 Months Ended

Jun. 30, 2021

Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract]

Schedule of Net Benefit Costs

The following table provides the components of net periodic benefit cost for the pension and other postretirement benefit plans:

	Three Months Ended June 30,								Six Months Ended June 30,
	Pension Benefits				Other Postretirement Benefits				Pension Benefits				Other Postretirement Benefits
In thousands	2021		2020		2021		2020		2021		2020		2021		2020
Service cost	$	1,714	$	1,658	$	56	$	64	$	3,428	$	3,315	$	111	$	128
Interest cost	3,342		4,011		165		223		6,685		8,022		330		446
Expected return on plan assets	(6,099)		(5,496)		—		—		(12,198)		(10,992)		—		—
Amortization of prior service credit	—		—		(117)		(117)		—		—		(234)		(234)
Amortization of net actuarial loss	5,500		4,778		131		142		11,001		9,556		262		285
Net periodic benefit cost	4,457		4,951		235		312		8,916		9,901		469		625
Amount allocated to construction	(743)		(680)		(22)		(23)		(1,469)		(1,348)		(43)		(46)
Net periodic benefit cost charged to expense	3,714		4,271		213		289		7,447		8,553		426		579
Amortization of regulatory balancing account	1,281		1,281		—		—		4,082		4,082		—		—
Net amount charged to expense	$	4,995	$	5,552	$	213	$	289	$	11,529	$	12,635	$	426	$	579

Schedule of Amounts Recognized in Other Comprehensive Income (Loss)

The following table presents amounts recognized in accumulated other comprehensive loss (AOCL) and the changes in AOCL related to non-qualified employee benefit plans:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2021		2020		2021		2020
Beginning balance	$	(12,681)	$	(10,573)	$	(12,902)	$	(10,733)
Amounts reclassified from AOCL:
Amortization of actuarial losses	301		218		602		436
Total reclassifications before tax	301		218		602		436
Tax benefit	(80)		(58)		(160)		(116)
Total reclassifications for the period	221		160		442		320
Ending balance	$	(12,460)	$	(10,413)	$	(12,460)	$	(10,413)

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Income Tax

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation

The effective income tax rate varied from the federal statutory rate due to the following:

	Three Months Ended June 30,
	NW Holdings						NW Natural
In thousands	2021			2020			2021			2020
Income tax at statutory rate (federal)	$	(210)		$	(1,429)		$	184		$	(1,287)
State income tax	(48)			(333)			41			(281)
Increase (decrease):
Differences required to be flowed-through by regulatory commissions	21			173			21			173
Other, net	(40)			(83)			42			(24)
Total provision for income taxes on continuing operations	$	(277)		$	(1,672)		$	288		$	(1,419)
Effective income tax rate for continuing operations	27.7		%	24.6		%	32.8		%	23.1		%

	Six Months Ended June 30,
	NW Holdings						NW Natural
In thousands	2021			2020			2021			2020
Income tax at statutory rate (federal)	$	16,598		$	11,676		$	17,123		$	12,068
State income tax	7,260			3,344			7,366			3,456
Increase (decrease):
Differences required to be flowed-through by regulatory commissions	(3,584)			(2,352)			(3,584)			(2,352)
Other, net	(30)			(213)			(65)			(173)
Total provision for income taxes on continuing operations	$	20,244		$	12,455		$	20,840		$	12,999
Effective income tax rate for continuing operations	25.6		%	22.4		%	25.6		%	22.6		%

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Property, Plant and Equipment

6 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

Public Utility Property, Plant, and Equipment [Table Text Block]

The following table sets forth the major classifications of property, plant, and equipment and accumulated depreciation of continuing operations:

	June 30,				December 31,
In thousands	2021		2020		2020
NW Natural:
NGD plant in service	$	3,623,092	$	3,404,145	$	3,548,543
NGD work in progress	99,646		90,903		63,901
Less: Accumulated depreciation	1,068,603		1,040,616		1,055,809
NGD plant, net	2,654,135		2,454,432		2,556,635
Other plant in service	66,315		64,317		66,300
Other construction work in progress	5,817		5,342		5,032
Less: Accumulated depreciation	20,140		19,144		19,637
Other plant, net	51,992		50,515		51,695
Total property, plant, and equipment, net	$	2,706,127	$	2,504,947	$	2,608,330
Other (NW Holdings):
Other plant in service	$	54,922	$	44,195	$	50,263
Less: Accumulated depreciation	5,120		2,539		3,823
Other plant, net	$	49,802	$	41,656	$	46,440
NW Holdings:
Total property, plant, and equipment, net	$	2,755,929	$	2,546,603	$	2,654,770
NW Natural:
Capital expenditures in accrued liabilities	$	37,968	$	31,847	$	25,129
NW Holdings:
Capital expenditures in accrued liabilities	$	38,395	$	31,847	$	25,129

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Gas Reserves

6 Months Ended

Jun. 30, 2021

Gas Reserves [Abstract]

Gas Reserves

The following table outlines NW Natural's net gas reserves investment:

	June 30,				December 31,
In thousands	2021		2020		2020
Gas reserves, current	$	8,444	$	13,646	$	11,409
Gas reserves, non-current	178,863		173,661		175,898
Less: Accumulated amortization	149,011		132,202		141,414
Total gas reserves(1)	38,296		55,105		45,893
Less: Deferred taxes on gas reserves	8,760		13,324		10,572
Net investment in gas reserves	$	29,536	$	41,781	$	35,321

(1)     The net investment in additional wells included in total gas reserves was $2.7 million, $3.4 million and $3.0 million at June 30, 2021 and 2020 and December 31, 2020, respectively.

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Derivative Instruments

6 Months Ended

Jun. 30, 2021

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Notional Amounts of Outstanding Derivative Positions

The following table presents the absolute notional amounts related to open positions on NW Natural derivative instruments:

	June 30,				December 31,
In thousands	2021		2020		2020
Natural gas (in therms):
Financial	680,335		654,145		784,400
Physical	419,148		570,600		457,593
Foreign exchange	$	6,477	$	7,176	$	5,896

Income Statement Presentation of Derivative Instruments

The following table reflects the income statement presentation for the unrealized gains and losses from NW Natural's derivative instruments, which also represents all derivative instruments at NW Holdings:

	Three Months Ended June 30,
	2021				2020
In thousands	Natural gas commodity		Foreign exchange		Natural gas commodity		Foreign exchange
Benefit (expense) to cost of gas	$	16,323	$	(45)	$	5,492	$	459
Operating revenues (expense)	—		—		754		—
Amounts deferred to regulatory accounts on balance sheet	(16,323)		45		(6,119)		(459)
Total gain (loss) in pre-tax earnings	$	—	$	—	$	127	$	—

	Six Months Ended June 30,
	2021				2020
In thousands	Natural gas commodity		Foreign exchange		Natural gas commodity		Foreign exchange
Benefit (expense) to cost of gas	$	36,805	$	32	$	149	$	(7)
Operating revenues (expense)	(27)		—		(1,679)		—
Amounts deferred to regulatory accounts on balance sheet	(36,782)		(32)		1,286		7
Total gain (loss) in pre-tax earnings	$	(4)	$	—	$	(244)	$	—

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Environmental Matters

6 Months Ended

Jun. 30, 2021

Environmental Remediation Obligations [Abstract]

Schedule of Environmental Loss Contingencies by Site

The following table summarizes information regarding liabilities related to environmental sites, which are recorded in other current liabilities and other noncurrent liabilities in NW Natural's balance sheet:

	Current Liabilities						Non-Current Liabilities
	June 30,				December 31,		June 30,				December 31,
In thousands	2021		2020		2020		2021		2020		2020
Portland Harbor site:
Gasco/Siltronic Sediments	$	6,658	$	10,431	$	7,596	$	41,652	$	41,945	$	43,725
Other Portland Harbor	2,195		2,434		1,942		6,588		6,228		7,020
Gasco/Siltronic Upland site	12,442		10,979		14,887		38,401		41,878		40,250
Front Street site	1,219		10,222		3,816		975		1,059		1,107
Oregon Steel Mills	—		—		—		179		179		179
Total	$	22,514	$	34,066	$	28,241	$	87,795	$	91,289	$	92,281

Environmental Regulatory Table

The following table presents information regarding the total regulatory asset deferred:

	June 30,				December 31,
In thousands	2021		2020		2020
Deferred costs and interest (1)	$	50,604	$	42,098	$	44,516
Accrued site liabilities (2)	110,237		124,981		120,352
Insurance proceeds and interest	(69,730)		(81,146)		(69,253)
Total regulatory asset deferral(1)	$	91,111	$	85,933	$	95,615
Current regulatory assets(3)	5,688		4,176		4,992
Long-term regulatory assets(3)	85,423		81,757		90,623

(1)     Includes pre-review and post-review deferred costs, amounts currently in amortization, and interest, net of amounts collected from customers.

(2)    Excludes 3.3% of the Front Street site liability as the OPUC only allows recovery of 96.7% of costs for those sites allocable to Oregon, including those that historically served only Oregon customers. Amounts excluded from regulatory assets were $0.1 million at June 30, 2021, $0.4 million at June 30, 2020, and $0.2 million at December 31, 2020,

(3)    Environmental costs relate to specific sites approved for regulatory deferral by the OPUC and WUTC. In Oregon, NW Natural earns a carrying charge on cash amounts paid, whereas amounts accrued but not yet paid do not earn a carrying charge until expended. It also accrues a carrying charge on insurance proceeds for amounts owed to customers. In Washington, neither the cash paid nor insurance proceeds received accrue a carrying charge. Current environmental costs represent remediation costs management expects to collect from customers in the next 12 months. Amounts included in this estimate are still subject to a prudence and earnings test review by the OPUC and do not include the $5.0 million tariff rider. The amounts allocable to Oregon are recoverable through NGD rates, subject to an earnings test.

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Discontinued Operations

6 Months Ended

Jun. 30, 2021

Jun. 30, 2019

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Discontinued Operations

DISCONTINUED OPERATIONS

NW Holdings

On June 20, 2018, NWN Gas Storage, then a wholly-owned subsidiary of NW Natural, entered into a Purchase and Sale Agreement (the Agreement) that provided for the sale by NWN Gas Storage of all of the membership interests in Gill Ranch. Gill Ranch owns a 75% interest in the natural gas storage facility located near Fresno, California known as the Gill Ranch Gas Storage Facility.

On December 4, 2020, NWN Gas Storage closed the sale of all of the membership interests in Gill Ranch and received payment of the initial cash purchase price of $13.5 million less the $1.0 million deposit previously paid. Furthermore, additional payments to NWN Gas Storage may be made subject to a maximum amount of $15.0 million in the aggregate (subject to a working capital adjustment) based on the economic performance of Gill Ranch for each full gas storage year (April 1 of one year through March 31 of the following year) occurring after the closing and the remaining portion of the 2020-2021 gas storage year and will continue until such time as the maximum amount has been paid. The fair value of this arrangement at the closing date was zero based on a discounted cash flow forecast. Subsequent changes in the fair value will be recorded in earnings. The completion of the sale resulted in an after-tax gain of $5.9 million for the year ended December 31, 2020.

As a result of the disposition of the membership interests in Gill Ranch, there were no assets or liabilities classified as held for sale at June 30, 2021 or December 31, 2020 and there was no activity in the consolidated statement of comprehensive income for the three and six months ended June 30, 2021. The assets and liabilities of the discontinued operations classified as held for sale in the consolidated balance sheet at June 30, 2020 include the following:

	NW Holdings Discontinued Operations
In thousands	June 30, 2020
Assets:
Accounts receivable	$	1,621
Inventories	821
Other current assets	250
Property, plant, and equipment, net	13,328
Operating lease right of use asset	118
Other non-current assets	254
Total discontinued operations assets - current assets (1)	$	16,392
Liabilities:
Accounts payable	$	999
Other current liabilities	1,119
Operating lease liabilities	112
Other non-current liabilities	11,344
Total discontinued operations liabilities - current liabilities (1)	$	13,574

(1)     The total assets and liabilities of Gill Ranch were classified as current because it was probable that the sale would be completed within one year.

The following table presents the operating results of Gill Ranch and is presented net of tax on the consolidated statements of comprehensive income:

	NW Holdings Discontinued Operations
	Three Months Ended June 30,		Six Months Ended June 30,
In thousands, except per share data	2020		2020
Revenues	$	3,374	$	4,282
Expenses:
Operations and maintenance	2,604		4,184
General taxes	53		100
Depreciation and amortization	106		212
Other expenses and interest	228		459
Total expenses	2,991		4,955
Income (loss) from discontinued operations before income taxes	383		(673)
Income tax expense (benefit)	103		(175)
Income (loss) from discontinued operations, net of tax	$	280	$	(498)
Earnings (loss) from discontinued operations per share of common stock:
Basic	$	0.01	$	(0.01)
Diluted	$	0.01	$	(0.01)

Northwest Holdings [Member]

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Disposal Groups, Including Discontinued Operations

The following table presents the operating results of Gill Ranch and is presented net of tax on the consolidated statements of comprehensive income:

	NW Holdings Discontinued Operations
	Three Months Ended June 30,		Six Months Ended June 30,
In thousands, except per share data	2020		2020
Revenues	$	3,374	$	4,282
Expenses:
Operations and maintenance	2,604		4,184
General taxes	53		100
Depreciation and amortization	106		212
Other expenses and interest	228		459
Total expenses	2,991		4,955
Income (loss) from discontinued operations before income taxes	383		(673)
Income tax expense (benefit)	103		(175)
Income (loss) from discontinued operations, net of tax	$	280	$	(498)
Earnings (loss) from discontinued operations per share of common stock:
Basic	$	0.01	$	(0.01)
Diluted	$	0.01	$	(0.01)

Northwest Holdings [Member]

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Disposal Groups, Including Discontinued Operations

	NW Holdings Discontinued Operations
In thousands	June 30, 2020
Assets:
Accounts receivable	$	1,621
Inventories	821
Other current assets	250
Property, plant, and equipment, net	13,328
Operating lease right of use asset	118
Other non-current assets	254
Total discontinued operations assets - current assets (1)	$	16,392
Liabilities:
Accounts payable	$	999
Other current liabilities	1,119
Operating lease liabilities	112
Other non-current liabilities	11,344
Total discontinued operations liabilities - current liabilities (1)	$	13,574

(1)     The total assets and liabilities of Gill Ranch were classified as current because it was probable that the sale would be completed within one year.

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Significant Accounting Policies - Regulatory Asset Disclosure - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020
Regulatory Assets [Line Items]
Regulatory Assets, Current	$ 60,672	$ 31,745	$ 30,021
Regulatory Assets, Noncurrent	330,710	348,927	324,358
Other [Member]
Regulatory Assets [Line Items]
Regulatory Assets, Noncurrent	40	40	38
Northwest Natural Gas Company [Member]
Regulatory Assets [Line Items]
Regulatory Assets, Current	60,672	31,745	30,021
Regulatory Assets, Noncurrent	330,670	348,887	324,320
Northwest Natural Gas Company [Member] | Deferred Derivative Gain (Loss) [Member]
Regulatory Assets [Line Items]
Regulatory Assets, Current	3,393	4,198	2,956
Regulatory Assets, Noncurrent	453	2,852	1,658
Northwest Natural Gas Company [Member] | Gas costs [Member]
Regulatory Assets [Line Items]
Regulatory Assets, Current	29,486	1,979	6,046
Regulatory Assets, Noncurrent	5,742	3,925	94
Northwest Natural Gas Company [Member] | Environmental costs [Member]
Regulatory Assets [Line Items]
Regulatory Assets, Current	5,688	4,992	4,176
Regulatory Assets, Noncurrent	85,423	90,623	81,757
Northwest Natural Gas Company [Member] | Decoupling [Member]
Regulatory Assets [Line Items]
Regulatory Assets, Current	1,011	361	85
Regulatory Assets, Noncurrent	198	1,031	0
Northwest Natural Gas Company [Member] | Pension balancing [Member]
Regulatory Assets [Line Items]
Regulatory Assets, Current	7,131	7,131	7,131
Regulatory Assets, Noncurrent	40,342	43,383	45,315
Northwest Natural Gas Company [Member] | Income taxes [Member]
Regulatory Assets [Line Items]
Regulatory Assets, Current	2,345	3,484	2,208
Regulatory Assets, Noncurrent	13,903	15,368	17,608
Northwest Natural Gas Company [Member] | Pension and other postretirement benefit liabilities [Member]
Regulatory Assets [Line Items]
Regulatory Assets, Noncurrent	160,385	170,812	164,091
Northwest Natural Gas Company [Member] | Other [Member]
Regulatory Assets [Line Items]
Regulatory Assets, Current	11,618	9,600	7,419
Regulatory Assets, Noncurrent	$ 24,224	$ 20,893	$ 13,797

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Significant Accounting Policies - Regulatory Liability Disclosure - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020
Regulatory Liabilities [Line Items]
Regulatory Liability, Current	$ 103,210	$ 50,362	$ 41,126
Regulatory Liability, Noncurrent	645,046	639,663	632,400
Other [Member]
Regulatory Liabilities [Line Items]
Regulatory Liability, Noncurrent	869	870	869
Northwest Natural Gas Company [Member]
Regulatory Liabilities [Line Items]
Regulatory Liability, Current	103,210	50,362	41,126
Regulatory Liability, Noncurrent	644,177	638,793	631,531
Northwest Natural Gas Company [Member] | Gas costs [Member]
Regulatory Liabilities [Line Items]
Regulatory Liability, Current	1,519	1,118	3,767
Regulatory Liability, Noncurrent	101	314	538
Northwest Natural Gas Company [Member] | Deferred Derivative Gain (Loss) [Member]
Regulatory Liabilities [Line Items]
Regulatory Liability, Current	46,168	13,674	5,950
Regulatory Liability, Noncurrent	7,912	6,135	3,958
Northwest Natural Gas Company [Member] | Decoupling [Member]
Regulatory Liabilities [Line Items]
Regulatory Liability, Current	5,821	11,793	11,498
Regulatory Liability, Noncurrent	652	1,723	2,108
Northwest Natural Gas Company [Member] | Income taxes [Member]
Regulatory Liabilities [Line Items]
Regulatory Liability, Current	8,217	8,217	7,098
Regulatory Liability, Noncurrent	182,977	189,587	193,414
Northwest Natural Gas Company [Member] | Other [Member]
Regulatory Liabilities [Line Items]
Regulatory Liability, Current	2,137	5,262	5,697
Regulatory Liability, Noncurrent	12,850	13,074	16,794
Northwest Natural Gas Company [Member] | Accrued asset removal costs [Member]
Regulatory Liabilities [Line Items]
Regulatory Liability, Noncurrent	439,685	427,960	414,719
Northwest Natural Gas Company [Member] | Asset Optimization Revenue Sharing
Regulatory Liabilities [Line Items]
Regulatory Liability, Current	$ 39,348	$ 10,298	$ 7,116

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Significant Accounting Policies - Credit Losses - ASU 2016-13 $ in Thousands	6 Months Ended
	Jun. 30, 2021 USD ($) numberOfLeases	Dec. 31, 2020 USD ($)	Jun. 30, 2020 USD ($)
Accounts Receivable, Noncurrent, Credit Quality Indicator [Line Items]
Accounts Receivable, Allowance for Credit Loss	$ 3,283	$ 3,219
Accounts Receivable, Allowance for Credit Loss, Period Increase (Decrease)	1,015
Accounts Receivable, Allowance for Credit Loss, Recovery	(951)
Regulatory Assets, Noncurrent	$ 330,710	348,927	$ 324,358
Number of Net Investments in Sales-Type Leases | numberOfLeases	2
COVID-19 Related Costs
Accounts Receivable, Noncurrent, Credit Quality Indicator [Line Items]
Regulatory Assets, Noncurrent	$ 5,800
COVID-19 Related Costs | Accounts Receivable
Accounts Receivable, Noncurrent, Credit Quality Indicator [Line Items]
Regulatory Assets, Noncurrent	2,900
Residential [Member]
Accounts Receivable, Noncurrent, Credit Quality Indicator [Line Items]
Accounts Receivable, Allowance for Credit Loss	2,810	2,153
Accounts Receivable, Allowance for Credit Loss, Period Increase (Decrease)	1,294
Accounts Receivable, Allowance for Credit Loss, Recovery	(637)
Commercial [Member]
Accounts Receivable, Noncurrent, Credit Quality Indicator [Line Items]
Accounts Receivable, Allowance for Credit Loss	206	704
Accounts Receivable, Allowance for Credit Loss, Period Increase (Decrease)	(233)
Accounts Receivable, Allowance for Credit Loss, Recovery	(265)
Industrial [Member]
Accounts Receivable, Noncurrent, Credit Quality Indicator [Line Items]
Accounts Receivable, Allowance for Credit Loss	79	142
Accounts Receivable, Allowance for Credit Loss, Period Increase (Decrease)	(68)
Accounts Receivable, Allowance for Credit Loss, Writeoff	5
Accrued unbilled and other [Member]
Accounts Receivable, Noncurrent, Credit Quality Indicator [Line Items]
Accounts Receivable, Allowance for Credit Loss	188	$ 220
Accounts Receivable, Allowance for Credit Loss, Period Increase (Decrease)	22
Accounts Receivable, Allowance for Credit Loss, Recovery	$ (54)

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Supplemental Cash Flow - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2019
Restricted Cash and Cash Equivalents Items [Line Items]
Cash and cash equivalents	$ 20,084	$ 30,168	$ 137,057
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	28,310	35,454	142,548	$ 12,636
Northwest Natural Gas Company [Member]
Restricted Cash and Cash Equivalents Items [Line Items]
Cash and cash equivalents	11,488	10,453	120,284
Restricted Cash	8,226	5,286	5,491
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents	19,714	15,739	125,775	$ 8,907
Other Current Assets
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted Cash	$ 8,226	$ 5,286	$ 5,491

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Earnings Per Share - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Statement [Line Items]
Net income from continuing operations	$ (724)	$ (5,132)	$ 58,793	$ 43,144
Loss from discontinued operations, net of tax	0	280	0	(498)
Net income	$ (724)	$ (4,852)	$ 58,793	$ 42,646
Average common shares outstanding:
Average common shares outstanding - basic (in shares)	30,664	30,537	30,639	30,514
Additional shares for stock-based compensation plans	0	0	32	45
Average common shares outstanding - diluted (in shares)	30,664	30,537	30,671	30,559
Earnings from continuing operations per share of common stock:
Basic (in dollars per share)	$ (0.02)	$ (0.17)	$ 1.92	$ 1.41
Diluted (in dollars per share)	(0.02)	(0.17)	1.92	1.41
Loss from discontinued operations per share of common stock:
Basic (in dollars per share)	0	0.01	0	(0.01)
Diluted (in dollars per share)	0	0.01	0	(0.01)
Earnings (loss) per share of common stock
Basic (in dollars per share)	(0.02)	(0.16)	1.92	1.40
Diluted (in dollars per share)	$ (0.02)	$ (0.16)	$ 1.92	$ 1.40
Antidilutive shares	48	41	7	0
Discontinued Operations, Held-for-sale [Member] | Gill Ranch [Member]
Income Statement [Line Items]
Loss from discontinued operations, net of tax		$ 280		$ (498)
Loss from discontinued operations per share of common stock:
Basic (in dollars per share)	$ 0	$ 0.01	$ 0	$ (0.01)
Diluted (in dollars per share)	$ 0	$ 0.01	$ 0	$ (0.01)

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Segment Information - Narrative	6 Months Ended
	Jun. 30, 2021
Operating Segments [Member]
Segment Reporting Information [Line Items]
Number of Reportable Segments	1
Oregon [Member] | Northwest Holdings and Northwest Natural [Member] | Natural Gas Distribution [Member]
Segment Reporting Information [Line Items]
Percent Of Pre Tax Income From Gas Storage Retained When The Costs Of The Capacity Are Not In Utility Rates	80.00%
Percent Of Pre Tax Income From Gas Storage Retained When The Costs Of The Capacity Are In Utility Rates	10.00%
Percent Of Pre Tax Income From Gas Storage Credited To Deferred Regulatory Account	20.00%
Percent Of Pre Tax Income From Gas Storage Credited To Deferred Regulatory Account When In Rates	90.00%

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Segment Information - Schedule of Summarized Financial Information by Segment - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Segment Reporting Information [Line Items]
Operating revenues	$ 148,917	$ 134,971	$ 464,863	$ 420,122
Depreciation and amortization	28,144	25,836	56,241	50,511
Income from operations	12,624	8,942	107,330	85,388
Income (Loss) from Continuing Operations, Net of Tax, Attributable to Parent	(724)	(5,132)	58,793	43,144
Total assets	3,783,500	3,641,347	3,783,500	3,641,347	$ 3,756,379
Discontinued operations - total assets		16,400		16,400
Natural Gas Distribution [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Operating revenues	139,614	126,992	440,952	405,479
Depreciation and amortization	27,273	24,738	54,186	48,684
Income from operations	11,331	6,434	97,818	81,692
Income (Loss) from Continuing Operations, Net of Tax, Attributable to Parent	(1,381)	(6,347)	52,544	41,596
Capital expenditures	60,376	61,472	124,368	117,629
Total assets	3,587,966	3,470,306	3,587,966	3,470,306	3,549,868
Other Northwest Natural [Member] | Corporate, Non-Segment [Member]
Segment Reporting Information [Line Items]
Operating revenues	4,965	4,165	15,977	8,207
Depreciation and amortization	257	248	513	492
Income from operations	2,808	2,465	11,439	4,228
Income (Loss) from Continuing Operations, Net of Tax, Attributable to Parent	1,970	1,635	8,156	2,871
Capital expenditures	693	521	799	598
Total assets	51,466	10,398	51,466	10,398	49,468
Northwest Natural Gas Company [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Operating revenues	144,579	131,157	456,929	413,686
Depreciation and amortization	27,530	24,986	54,699	49,176
Income from operations	14,139	8,899	109,257	85,920
Income (Loss) from Continuing Operations, Net of Tax, Attributable to Parent	589	(4,712)	60,700	44,467
Capital expenditures	61,069	61,993	125,167	118,227
Total assets	3,639,432	3,480,704	3,639,432	3,480,704	3,599,336
Other Northwest Holdings [Member] | Corporate, Non-Segment [Member]
Segment Reporting Information [Line Items]
Operating revenues	4,338	3,814	7,934	6,436
Depreciation and amortization	614	850	1,542	1,335
Income from operations	(1,515)	43	(1,927)	(532)
Income (Loss) from Continuing Operations, Net of Tax, Attributable to Parent	(1,313)	(420)	(1,907)	(1,323)
Capital expenditures	3,337	2,843	4,941	4,055
Total assets	144,068	144,251	144,068	144,251	157,043
Northwest Natural Gas Company [Member]
Segment Reporting Information [Line Items]
Operating revenues	144,579	131,157	456,929	413,686
Depreciation and amortization	27,530	24,986	54,699	49,176
Income from operations	14,139	8,899	109,257	85,920
Total assets	3,639,432	3,480,704	3,639,432	3,480,704	3,599,336
Northwest Natural Gas Company [Member] | Natural Gas Distribution [Member] | Operating Segments [Member]
Segment Reporting Information [Line Items]
Operating revenues	139,614	126,992	440,952	405,479
Northwest Natural Gas Company [Member] | Other Northwest Natural [Member] | Corporate, Non-Segment [Member]
Segment Reporting Information [Line Items]
Operating revenues	4,965	4,165	15,977	8,207
Northwest Natural Gas Company [Member] | Northwest Natural Gas Company [Member]
Segment Reporting Information [Line Items]
Operating revenues	144,579	131,157	456,929	413,686
Parent Company [Member]
Segment Reporting Information [Line Items]
Operating revenues	148,917	134,971	464,863	420,122
Depreciation and amortization	28,144	25,836	56,241	50,511
Income from operations	12,624	8,942	107,330	85,388
Income (Loss) from Continuing Operations, Net of Tax, Attributable to Parent	(724)	(5,132)	58,793	43,144
Capital expenditures	64,406	64,836	130,108	122,282
Total assets	$ 3,783,500	$ 3,624,955	$ 3,783,500	$ 3,624,955	$ 3,756,379

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Segment Information - Additional Segment Information - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Segment Reporting Information [Line Items]
Operating revenues	$ 148,917	$ 134,971	$ 464,863	$ 420,122
Cost of gas	41,193	41,210	153,403	149,748
Environmental remediation	1,509	1,622	5,286	5,627
Operating Segments [Member] | Natural Gas Distribution [Member]
Segment Reporting Information [Line Items]
Natural Gas Distribution revenues	134,849	122,071	431,402	395,632
Other regulated services	4,765	4,921	9,550	9,847
Operating revenues	139,614	126,992	440,952	405,479
Cost of gas	41,249	41,265	153,515	149,860
Environmental remediation	1,509	1,622	5,286	5,627
Revenue taxes	5,650	4,454	18,305	16,197
NGD margin	$ 91,206	$ 79,651	$ 263,846	$ 233,795

XML

Revenue - Disaggregation of Revenue - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	$ 133,441	$ 124,993	$ 444,547	$ 405,998
Revenues	148,917	134,971	464,863	420,122
Operating leases	25	25	43	53
Natural Gas Sales [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	123,739	116,682	419,822	390,686
Gas Storage Revenue, Net of Regulatory Sharing [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	2,805	2,449	5,300	4,785
Asset Management Revenue, Net of Regulatory Sharing [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	817	910	7,745	1,060
Appliance Center Revenue [Member] | Transferred at Point in Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	1,343	806	2,932	2,362
Other revenue [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	4,737	4,146	8,748	7,105
Alternative revenue [Member]
Disaggregation of Revenue [Line Items]
Revenues	11,083	5,365	11,536	4,893
Leasing revenue [Member]
Disaggregation of Revenue [Line Items]
Operating leases	4,393	4,613	8,780	9,231
Northwest Natural Gas Company [Member]
Disaggregation of Revenue [Line Items]
Revenues	144,579	131,157	456,929	413,686
Northwest Natural Gas Company [Member] | Northwest Natural Gas Company [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	129,103	121,179	436,613	399,562
Revenues	144,579	131,157	456,929	413,686
Northwest Natural Gas Company [Member] | Northwest Natural Gas Company [Member] | Natural Gas Sales [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	123,739	116,682	419,822	390,686
Northwest Natural Gas Company [Member] | Northwest Natural Gas Company [Member] | Gas Storage Revenue, Net of Regulatory Sharing [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	2,805	2,449	5,300	4,785
Northwest Natural Gas Company [Member] | Northwest Natural Gas Company [Member] | Asset Management Revenue, Net of Regulatory Sharing [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	817	910	7,745	1,060
Northwest Natural Gas Company [Member] | Northwest Natural Gas Company [Member] | Appliance Center Revenue [Member] | Transferred at Point in Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	1,343	806	2,932	2,362
Northwest Natural Gas Company [Member] | Northwest Natural Gas Company [Member] | Other revenue [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	399	332	814	669
Northwest Natural Gas Company [Member] | Northwest Natural Gas Company [Member] | Alternative revenue [Member]
Disaggregation of Revenue [Line Items]
Revenues	11,083	5,365	11,536	4,893
Northwest Natural Gas Company [Member] | Northwest Natural Gas Company [Member] | Leasing revenue [Member]
Disaggregation of Revenue [Line Items]
Operating leases	4,393	4,613	8,780	9,231
Operating Segments [Member] | Natural Gas Distribution [Member]
Disaggregation of Revenue [Line Items]
Revenues	139,614	126,992	440,952	405,479
Operating Segments [Member] | Natural Gas Distribution [Member] | Northwest Natural Gas Company [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	124,138	117,014	420,636	391,355
Revenues	139,614	126,992	440,952	405,479
Operating Segments [Member] | Natural Gas Distribution [Member] | Northwest Natural Gas Company [Member] | Natural Gas Sales [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	123,739	116,682	419,822	390,686
Operating Segments [Member] | Natural Gas Distribution [Member] | Northwest Natural Gas Company [Member] | Gas Storage Revenue, Net of Regulatory Sharing [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	0	0	0	0
Operating Segments [Member] | Natural Gas Distribution [Member] | Northwest Natural Gas Company [Member] | Asset Management Revenue, Net of Regulatory Sharing [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	0	0	0	0
Operating Segments [Member] | Natural Gas Distribution [Member] | Northwest Natural Gas Company [Member] | Appliance Center Revenue [Member] | Transferred at Point in Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	0	0	0	0
Operating Segments [Member] | Natural Gas Distribution [Member] | Northwest Natural Gas Company [Member] | Other revenue [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	399	332	814	669
Operating Segments [Member] | Natural Gas Distribution [Member] | Northwest Natural Gas Company [Member] | Alternative revenue [Member]
Disaggregation of Revenue [Line Items]
Revenues	11,083	5,365	11,536	4,893
Operating Segments [Member] | Natural Gas Distribution [Member] | Northwest Natural Gas Company [Member] | Leasing revenue [Member]
Disaggregation of Revenue [Line Items]
Operating leases	4,393	4,613	8,780	9,231
Operating Segments [Member] | Northwest Natural Gas Company [Member]
Disaggregation of Revenue [Line Items]
Revenues	144,579	131,157	456,929	413,686
Corporate, Non-Segment [Member] | Other Northwest Natural [Member]
Disaggregation of Revenue [Line Items]
Revenues	4,965	4,165	15,977	8,207
Corporate, Non-Segment [Member] | Other Northwest Natural [Member] | Northwest Natural Gas Company [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	4,965	4,165	15,977	8,207
Revenues	4,965	4,165	15,977	8,207
Corporate, Non-Segment [Member] | Other Northwest Natural [Member] | Northwest Natural Gas Company [Member] | Natural Gas Sales [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	0	0	0	0
Corporate, Non-Segment [Member] | Other Northwest Natural [Member] | Northwest Natural Gas Company [Member] | Gas Storage Revenue, Net of Regulatory Sharing [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	2,805	2,449	5,300	4,785
Corporate, Non-Segment [Member] | Other Northwest Natural [Member] | Northwest Natural Gas Company [Member] | Asset Management Revenue, Net of Regulatory Sharing [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	817	910	7,745	1,060
Corporate, Non-Segment [Member] | Other Northwest Natural [Member] | Northwest Natural Gas Company [Member] | Appliance Center Revenue [Member] | Transferred at Point in Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	1,343	806	2,932	2,362
Corporate, Non-Segment [Member] | Other Northwest Natural [Member] | Northwest Natural Gas Company [Member] | Other revenue [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	0	0	0	0
Corporate, Non-Segment [Member] | Other Northwest Natural [Member] | Northwest Natural Gas Company [Member] | Alternative revenue [Member]
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Corporate, Non-Segment [Member] | Other Northwest Natural [Member] | Northwest Natural Gas Company [Member] | Leasing revenue [Member]
Disaggregation of Revenue [Line Items]
Operating leases	0	0	0	0
Corporate, Non-Segment [Member] | Other Northwest Holdings [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	4,338	3,814	7,934	6,436
Revenues	4,338	3,814	7,934	6,436
Corporate, Non-Segment [Member] | Other Northwest Holdings [Member] | Natural Gas Sales [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	0	0	0	0
Corporate, Non-Segment [Member] | Other Northwest Holdings [Member] | Gas Storage Revenue, Net of Regulatory Sharing [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	0	0	0	0
Corporate, Non-Segment [Member] | Other Northwest Holdings [Member] | Asset Management Revenue, Net of Regulatory Sharing [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	0	0	0	0
Corporate, Non-Segment [Member] | Other Northwest Holdings [Member] | Appliance Center Revenue [Member] | Transferred at Point in Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	0	0	0	0
Corporate, Non-Segment [Member] | Other Northwest Holdings [Member] | Other revenue [Member] | Transferred over Time [Member]
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Excluding Assessed Tax	4,338	3,814	7,934	6,436
Corporate, Non-Segment [Member] | Other Northwest Holdings [Member] | Alternative revenue [Member]
Disaggregation of Revenue [Line Items]
Revenues	0	0	0	0
Corporate, Non-Segment [Member] | Other Northwest Holdings [Member] | Leasing revenue [Member]
Disaggregation of Revenue [Line Items]
Operating leases	$ 0	$ 0	$ 0	$ 0

XML

Revenue - Revenue, Remaining Performance Obligation $ in Thousands	Jun. 30, 2021 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Lessor, Sales-type Lease, Term of Contract	30 years
Lessor, Sales-type Lease, Renewal Term	50 years
Revenue, Remaining Performance Obligation, Amount	$ 79,200
Natural Gas Distribution [Member] | Northwest Natural Gas Company [Member]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Contract with Customer, Refund Liability	0
Other Northwest Natural [Member] | Northwest Natural Gas Company [Member]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Contract with Customer, Refund Liability	0
Other Northwest Holdings [Member]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Contract with Customer, Refund Liability	$ 0
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-07-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Year	6 months
Revenue, Remaining Performance Obligation, Amount	$ 9,600
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Year	1 year
Revenue, Remaining Performance Obligation, Amount	$ 19,400
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Year	1 year
Revenue, Remaining Performance Obligation, Amount	$ 17,800
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Year	1 year
Revenue, Remaining Performance Obligation, Amount	$ 14,000
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Year	1 year
Revenue, Remaining Performance Obligation, Amount	$ 11,100
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Year	0 years
Revenue, Remaining Performance Obligation, Amount	$ 7,300

XML

Leases - Lease Revenue - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Lessor, Lease, Description [Line Items]
Lessor, Sales-type Lease, Renewal Term	50 years		50 years
Lessor, Sales-type Lease, Term of Contract	30 years		30 years
Residual Value of Leased Asset	$ 4,500	$ 4,100	$ 4,500	$ 4,100	$ 4,300
Lease Revenue [Abstract]
Operating leases	25	25	43	53
Sales-type leases	4,368	4,588	8,737	9,178
Total lease revenue	4,393	$ 4,613	8,780	$ 9,231
Operating Leases Payment to be Received [Abstract]
Operating Lease, Payments to be Received, Remainder of Fiscal Year	61		61
Operating Lease, Payments to be Received, Two Years	115		115
Operating Lease, Payments to be Received, Three Years	117		117
Operating Lease, Payments to be Received, Four Years	113		113
Operating Lease, Payments to be Received, Thereafter	1,199		1,199
Total lease revenue	1,727		1,727
Total Lease Payments to be Received [Abstract]
Lease Payments to be Received, Remainder of Fiscal Year	8,762		8,762
Lease Payments to be Received, Two Years	17,148		17,148
Lease Payments to be Received, Three Years	16,672		16,672
Lease Payments to be Received, Four Years	15,984		15,984
Lease Payments to be Received, Five Years	15,419		15,419
Lease Payments to be Received, Thereafter	252,920		252,920
Total lease revenue	326,905		326,905
Lessor, Operating Lease, Payment to be Received, Year One	122		122
Northwest Natural Gas Company [Member]
Operating Leases Payment to be Received [Abstract]
Operating Lease, Payments to be Received, Remainder of Fiscal Year	36		36
Operating Lease, Payments to be Received, Two Years	64		64
Operating Lease, Payments to be Received, Three Years	65		65
Operating Lease, Payments to be Received, Four Years	60		60
Operating Lease, Payments to be Received, Thereafter	229		229
Total lease revenue	526		526
Total Lease Payments to be Received [Abstract]
Lease Payments to be Received, Remainder of Fiscal Year	8,737		8,737
Lease Payments to be Received, Two Years	17,098		17,098
Lease Payments to be Received, Three Years	16,621		16,621
Lease Payments to be Received, Four Years	15,932		15,932
Lease Payments to be Received, Five Years	15,366		15,366
Lease Payments to be Received, Thereafter	251,950		251,950
Total lease revenue	325,704		325,704
Lessor, Operating Lease, Payment to be Received, Year One	72		72
Other Northwest Holdings [Member]
Operating Leases Payment to be Received [Abstract]
Operating Lease, Payments to be Received, Remainder of Fiscal Year	25		25
Operating Lease, Payments to be Received, Two Years	51		51
Operating Lease, Payments to be Received, Three Years	52		52
Operating Lease, Payments to be Received, Four Years	53		53
Operating Lease, Payments to be Received, Thereafter	970		970
Total lease revenue	1,201		1,201
Total Lease Payments to be Received [Abstract]
Lease Payments to be Received, Remainder of Fiscal Year	25		25
Lease Payments to be Received, Two Years	50		50
Lease Payments to be Received, Three Years	51		51
Lease Payments to be Received, Four Years	52		52
Lease Payments to be Received, Five Years	53		53
Lease Payments to be Received, Thereafter	970		970
Total lease revenue	1,201		1,201
Lessor, Operating Lease, Payment to be Received, Year One	$ 50		$ 50
Compressed Natural Gas Lease [Member]
Lessor, Lease, Description [Line Items]
Lessor, Sales-type Lease, Term of Contract	10 years		10 years
Residual Value of Leased Asset	$ 0		$ 0
Variable Lease, Payment			0
North Mist Lease [Member]
Lessor, Lease, Description [Line Items]
Residual Value of Leased Asset	0		0
Variable Lease, Payment			0
Sales-type Lease [Member]
Sales-type Leases Payments to be Received [Abstract]
Sales-type Lease, Payments to be Received, Remainder of Fiscal Year	8,701		8,701
Sales-type Lease, Payments to be Received, Two Years	16,557		16,557
Sales-type Lease, Payments to be Received, Three Years	15,867		15,867
Sales-type Lease, Payments to be Received, Four Years	15,306		15,306
Sales-type Lease, Payments to be Received, Thereafter	251,721		251,721
Total lease revenue	325,178		325,178
Less: imputed interest	183,237		183,237
Total leases receivable	141,941		141,941
Total Lease Payments to be Received [Abstract]
Sales-Type and Direct Financing Leases, Lease Receivable, to be Received, Year One	17,026		17,026
Sales-type Lease [Member] | Northwest Natural Gas Company [Member]
Sales-type Leases Payments to be Received [Abstract]
Sales-type Lease, Payments to be Received, Remainder of Fiscal Year	8,701		8,701
Sales-type Lease, Payments to be Received, Two Years	16,557		16,557
Sales-type Lease, Payments to be Received, Three Years	15,867		15,867
Sales-type Lease, Payments to be Received, Four Years	15,306		15,306
Sales-type Lease, Payments to be Received, Thereafter	251,721		251,721
Total lease revenue	325,178		325,178
Less: imputed interest	183,237		183,237
Total leases receivable	141,941		141,941
Total Lease Payments to be Received [Abstract]
Sales-Type and Direct Financing Leases, Lease Receivable, to be Received, Year One	17,026		17,026
Sales-type Lease [Member] | Other Northwest Holdings [Member]
Sales-type Leases Payments to be Received [Abstract]
Sales-type Lease, Payments to be Received, Remainder of Fiscal Year	0		0
Sales-type Lease, Payments to be Received, Two Years	0		0
Sales-type Lease, Payments to be Received, Three Years	0		0
Sales-type Lease, Payments to be Received, Four Years	0		0
Sales-type Lease, Payments to be Received, Thereafter	0		0
Total lease revenue	0		0
Total Lease Payments to be Received [Abstract]
Sales-Type and Direct Financing Leases, Lease Receivable, to be Received, Year One	$ 0		$ 0

XML

Leases - Lease Expense - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Lessee, Lease, Description [Line Items]
Residual Value of Leased Asset	$ 4,500	$ 4,100	$ 4,500	$ 4,100	$ 4,300
Lease Expense [Abstract]
Operating Lease, Expense	1,728	954	3,424	2,208
Short-term Lease, Cost	$ 349	285	$ 569	483
Minimum [Member]
Operating Lease Terms [Abstract]
Lessee, Operating Lease, Term of Contract	2 months		2 months
Maximum [Member]
Operating Lease Terms [Abstract]
Lessee, Operating Lease, Term of Contract	19 years		19 years
Northwest Natural Gas Company [Member]
Lease Expense [Abstract]
Operating Lease, Expense	$ 1,710	914	$ 3,388	2,116
Short-term Lease, Cost	349	285	569	483
Other Northwest Holdings [Member] | Corporate, Non-Segment [Member]
Lease Expense [Abstract]
Operating Lease, Expense	$ 18	$ 40	$ 36	$ 92

XML

Leases - Lease Asset and Liabilities - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Operating Lease Asset and Liabilities [Abstract]
Operating lease right of use asset	$ 76,294	$ 78,566	$ 76,294	$ 78,566	$ 77,446
Operating lease liabilities current liabilities	1,228	931	1,228	931	1,105
Operating lease liabilities noncurrent liabilities	80,088	80,159	80,088	80,159	80,621
Total operating lease liabilities	$ 81,316	$ 81,090	$ 81,316	$ 81,090	$ 81,726
Operating Lease, Weighted Average Remaining Lease Term	18 years 8 months 12 days	19 years 8 months 12 days	18 years 8 months 12 days	19 years 8 months 12 days	19 years 2 months 12 days
Operating Lease, Weighted Average Discount Rate, Percent	7.20%	7.20%	7.20%	7.20%	7.20%
Commencement of Significant Lease [Abstract]
Lessee, Operating Lease, Liability, Payments, Due	$ 155,574		$ 155,574
Regulatory Assets, Noncurrent	330,710	$ 324,358	330,710	$ 324,358	$ 348,927
Maturity of Operating Lease Liabilities [Abstract]
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year	3,470		3,470
Lessee, Operating Lease, Liability, to be Paid, Year One	6,957		6,957
Lessee, Operating Lease, Liability, Payments, Due Year Two	6,992		6,992
Lessee, Operating Lease, Liability, Payments, Due Year Three	7,156		7,156
Lessee, Operating Lease, Liability, Payments, Due Year Four	7,191		7,191
Lessee, Operating Lease, Liability, Payments, Due after Year Five	123,808		123,808
Lessee, Operating Lease, Liability, Payments, Due	155,574		155,574
Lessee, Operating Lease, Liability, Undiscounted Excess Amount	74,258		74,258
Total operating lease liabilities	81,316	81,090	81,316	81,090	81,726
Operating lease liabilities current liabilities	1,228	931	1,228	931	1,105
Operating lease liabilities noncurrent liabilities	80,088	80,159	80,088	80,159	80,621
Finance Lease, Liability, Payments, Due Next Twelve Months	200		200
Leases Cash Flow [Abstract]
Operating cash flows from operating leases	1,734	970	3,419	2,218
Finance Lease, Principal Payments	134	302	678	457
Operating leases	0	445	154	78,433
Right-of-Use Asset Obtained in Exchange for Finance Lease Liability	20	477	94	710
Finance Leases [Abstract]
Finance Lease, Right-of-Use Asset	1,900	1,100	1,900	1,100	1,800
Finance Lease, Liability	0		0
Other Northwest Holdings [Member] | Corporate, Non-Segment [Member]
Operating Lease Asset and Liabilities [Abstract]
Operating lease right of use asset	83	102	83	102	118
Operating lease liabilities current liabilities	35	63	35	63	51
Operating lease liabilities noncurrent liabilities	45	39	45	39	62
Total operating lease liabilities	80	102	80	102	113
Commencement of Significant Lease [Abstract]
Lessee, Operating Lease, Liability, Payments, Due	91		91
Maturity of Operating Lease Liabilities [Abstract]
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year	25		25
Lessee, Operating Lease, Liability, to be Paid, Year One	24		24
Lessee, Operating Lease, Liability, Payments, Due Year Two	6		6
Lessee, Operating Lease, Liability, Payments, Due Year Three	6		6
Lessee, Operating Lease, Liability, Payments, Due Year Four	6		6
Lessee, Operating Lease, Liability, Payments, Due after Year Five	24		24
Lessee, Operating Lease, Liability, Payments, Due	91		91
Lessee, Operating Lease, Liability, Undiscounted Excess Amount	11		11
Total operating lease liabilities	80	102	80	102	113
Operating lease liabilities current liabilities	35	63	35	63	51
Operating lease liabilities noncurrent liabilities	45	39	45	39	62
Leases Cash Flow [Abstract]
Operating cash flows from operating leases	17	39	33	91
Northwest Natural Gas Company [Member]
Operating Lease Asset and Liabilities [Abstract]
Operating lease right of use asset	76,211	78,464	76,211	78,464	77,328
Operating lease liabilities current liabilities	1,193	868	1,193	868	1,054
Operating lease liabilities noncurrent liabilities	80,043	80,120	80,043	80,120	80,559
Total operating lease liabilities	81,236	80,988	81,236	80,988	81,613
Commencement of Significant Lease [Abstract]
Lessee, Operating Lease, Liability, Payments, Due	155,483		155,483
Regulatory Assets, Noncurrent	330,670	324,320	330,670	324,320	348,887
Maturity of Operating Lease Liabilities [Abstract]
Lessee, Operating Lease, Liability, Payments, Remainder of Fiscal Year	3,445		3,445
Lessee, Operating Lease, Liability, to be Paid, Year One	6,933		6,933
Lessee, Operating Lease, Liability, Payments, Due Year Two	6,986		6,986
Lessee, Operating Lease, Liability, Payments, Due Year Three	7,150		7,150
Lessee, Operating Lease, Liability, Payments, Due Year Four	7,185		7,185
Lessee, Operating Lease, Liability, Payments, Due after Year Five	123,784		123,784
Lessee, Operating Lease, Liability, Payments, Due	155,483		155,483
Lessee, Operating Lease, Liability, Undiscounted Excess Amount	74,247		74,247
Total operating lease liabilities	81,236	80,988	81,236	80,988	81,613
Operating lease liabilities current liabilities	1,193	868	1,193	868	1,054
Operating lease liabilities noncurrent liabilities	80,043	80,120	80,043	80,120	80,559
Leases Cash Flow [Abstract]
Operating cash flows from operating leases	1,717	931	3,386	2,127
Finance Lease, Principal Payments	134	302	678	457
Operating leases	0	445	154	78,433
Right-of-Use Asset Obtained in Exchange for Finance Lease Liability	$ 20	477	$ 94	710
New Headquarters Lease [Member]
Commencement of Significant Lease [Abstract]
Lessee, Operating Lease, Term of Contract	20 years		20 years
Lessee, Operating Lease, Liability, Payments, Due	$ 159,400		$ 159,400
Regulatory Assets, Noncurrent	5,000	$ 2,400	5,000	$ 2,400	$ 4,200
Maturity of Operating Lease Liabilities [Abstract]
Lessee, Operating Lease, Liability, Payments, Due	$ 159,400		$ 159,400
New Headquarters Lease Renewal Term 2 of 2 [Member] | New Headquarters Lease [Member]
Commencement of Significant Lease [Abstract]
Lessee, Operating Lease, Renewal Term	7 years		7 years
New Headquarters Lease Renewal Term 1 of 2 [Member] | New Headquarters Lease [Member]
Commencement of Significant Lease [Abstract]
Lessee, Operating Lease, Renewal Term	7 years		7 years
Maximum [Member]
Commencement of Significant Lease [Abstract]
Lessee, Operating Lease, Term of Contract	19 years		19 years

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Stock-Based Compensation $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2021 USD ($) $ / shares shares
Long Term Incentive Plan | Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted (in shares)	28,866
Award vesting period	3 years
Unrecognized compensation costs | $	$ 200
Long Term Incentive Plan | Performance Shares | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Conversion ratio, percent of target	0.00%
Long Term Incentive Plan | Performance Shares | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Conversion ratio, percent of target	200.00%
Long Term Incentive Plan | Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	4 years
Number of RSUs granted in period (in shares)	37,756
Weighted-average grant date fair value (in dollars per share) | $ / shares	$ 49.16
Unrecognized compensation costs | $	$ 4,200
Restated Stock Option Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	0
A 2020 and 2021 Award | Long Term Incentive Plan | Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Payment Arrangement, Expense | $	$ 0
Target Achieved [Member] | A 2020 Award [Member] | Long Term Incentive Plan | Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share Based Compensation Award Target Share	31,830
Target Achieved [Member] | A 2021 Award | Long Term Incentive Plan | Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share Based Compensation Award Target Share	56,335

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Debt Short-term Debt $ in Thousands	6 Months Ended
	Jun. 30, 2021 USD ($)	Dec. 31, 2020 USD ($)	Jun. 30, 2020 USD ($)
Short-term Debt [Line Items]
Ratio of Indebtedness to Net Capital	0.568
Short-term debt	$ 240,000	$ 304,525	$ 233,000
Commercial Paper Maximum Maturity	29 days
Commercial Paper Average Maturity	15 days
Northwest Natural Gas Company [Member]
Short-term Debt [Line Items]
Ratio of Indebtedness to Net Capital	0.562
Short-term debt	$ 198,000	$ 231,525	$ 153,000
Line of Credit [Member]
Short-term Debt [Line Items]
Short-term debt	$ 42,000
Debt, Weighted Average Interest Rate	1.10%
Commercial Paper [Member] | Northwest Natural Gas Company [Member]
Short-term Debt [Line Items]
Short-term debt	$ 98,000
Debt, Weighted Average Interest Rate	0.20%
364-Day Term Loan, Due 2022 | Northwest Natural Gas Company [Member]
Short-term Debt [Line Items]
Proceeds from Issuance of Debt	$ 100,000
Debt, Weighted Average Interest Rate	0.60%

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Long-Term Debt $ in Thousands	6 Months Ended
	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)
Debt Instrument [Line Items]
Long-term Debt	$ 975,775	$ 954,096	$ 955,425
Unamortized debt issuance costs	$ 7,446	7,688	7,480
Ratio of Indebtedness to Net Capital	0.568
Northwest Natural Gas Company [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 917,409	917,012	917,220
Unamortized debt issuance costs	$ 7,291	7,688	$ 7,480
Weighted average interest rate	4.60%
Ratio of Indebtedness to Net Capital	0.562
Northwest Natural Gas Company [Member] | Minimum [Member]
Debt Instrument [Line Items]
Stated interest rate	2.80%
Northwest Natural Gas Company [Member] | Maximum [Member]
Debt Instrument [Line Items]
Stated interest rate	9.10%
Two-year Term Loan Due 2021 [Member]
Debt Instrument [Line Items]
Proceeds from Issuance of Debt		$ 35,000
Debt Instrument Covenant Consolidated Indebtedness to Capitalization Ratio	70.00%
364-Day Term Loan, Due 2022 | Northwest Natural Gas Company [Member]
Debt Instrument [Line Items]
Proceeds from Issuance of Debt	$ 100,000
Five-year Term Loan Due 2026
Debt Instrument [Line Items]
Stated interest rate	0.90%
Proceeds from Issuance of Debt	$ 55,000

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Debt Fair Value of Long Term Debt - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020
Debt Instrument [Line Items]
Gross long-term debt	$ 983,221	$ 962,905	$ 961,784
Unamortized debt issuance costs	(7,446)	(7,480)	(7,688)
Carrying amount	975,775	955,425	954,096
Estimated fair value	1,104,230	1,136,311	1,135,349
Northwest Natural Gas Company [Member]
Debt Instrument [Line Items]
Gross long-term debt	924,700	924,700	924,700
Unamortized debt issuance costs	(7,291)	(7,480)	(7,688)
Carrying amount	917,409	917,220	917,012
Estimated fair value	$ 1,043,696	$ 1,097,348	$ 1,097,188

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Pension and Other Postretirement Benefit Costs - Net Periodic Benefit Cost - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Pension Benefits
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Service cost	$ 1,714	$ 1,658	$ 3,428	$ 3,315
Interest cost	3,342	4,011	6,685	8,022
Expected return on plan assets	(6,099)	(5,496)	(12,198)	(10,992)
Amortization of net actuarial loss	0	0	0	0
Defined Benefit Plan, Amortization of Gain (Loss)	5,500	4,778	11,001	9,556
Net periodic benefit cost	4,457	4,951	8,916	9,901
Amount allocated to construction	(743)	(680)	(1,469)	(1,348)
Defined Benefit Plan Net Periodic Benefit Cost Charged To Expense	3,714	4,271	7,447	8,553
Amortization of Regulatory Balancing Account	1,281	1,281	4,082	4,082
Net amount charged to expense	4,995	5,552	11,529	12,635
Other Postretirement Benefits
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Service cost	56	64	111	128
Interest cost	165	223	330	446
Expected return on plan assets	0	0	0	0
Amortization of net actuarial loss	(117)	(117)	(234)	(234)
Defined Benefit Plan, Amortization of Gain (Loss)	131	142	262	285
Net periodic benefit cost	235	312	469	625
Amount allocated to construction	(22)	(23)	(43)	(46)
Defined Benefit Plan Net Periodic Benefit Cost Charged To Expense	213	289	426	579
Amortization of Regulatory Balancing Account	0	0	0	0
Net amount charged to expense	$ 213	$ 289	$ 426	$ 579

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Pension and Other Postretirement Benefit Costs - Amounts Recognized in Accumulated Other Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Defined Benefit Plan, Amounts Recognized in Other Comprehensive Income (Loss) [Abstract]
Beginning balance	$ (12,681)	$ (10,573)	$ (12,902)	$ (10,733)
Amortization of actuarial losses	301	218	602	436
Total reclassifications before tax	301	218	602	436
Tax benefit	(80)	(58)	(160)	(116)
Total reclassifications for the period	221	160	442	320
Ending balance	$ (12,460)	$ (10,413)	$ (12,460)	$ (10,413)

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Pension and Other Postretirement Benefit Costs - Narrative - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract]
Employer contributions	$ 4.7	$ 4.4
Defined benefit pension plan cash contributions	$ 9.6

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Income Tax - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Effective Income Tax Rate Reconciliation, Amount [Abstract]
Income taxes at statutory rates (federal and state)	$ (210)	$ (1,429)	$ 16,598	$ 11,676
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Amount	(48)	(333)	7,260	3,344
Differences required to be flowed-through by regulatory commissions	21	173	(3,584)	(2,352)
Other, net	(40)	(83)	(30)	(213)
Total provision for income taxes on continuing operations	$ (277)	$ (1,672)	$ 20,244	$ 12,455
Effective tax rate for continuing operations	27.70%	24.60%	25.60%	22.40%
Northwest Natural Gas Company [Member]
Effective Income Tax Rate Reconciliation, Amount [Abstract]
Income taxes at statutory rates (federal and state)	$ 184	$ (1,287)	$ 17,123	$ 12,068
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Amount	41	(281)	7,366	3,456
Differences required to be flowed-through by regulatory commissions	21	173	(3,584)	(2,352)
Other, net	42	(24)	(65)	(173)
Total provision for income taxes on continuing operations	$ 288	$ (1,419)	$ 20,840	$ 12,999
Effective tax rate for continuing operations	32.80%	23.10%	25.60%	22.60%

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Property, Plant and Equipment - USD ($)	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	$ 3,849,792,000	$ 3,734,039,000	$ 3,608,902,000
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	1,093,863,000	1,079,269,000	1,062,299,000
Property, Plant and Equipment, Net	2,755,929,000	2,654,770,000	2,546,603,000
Natural Gas Distribution [Member]
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	3,623,092,000	3,548,543,000	3,404,145,000
Public Utilities, Property, Plant and Equipment, Construction Work in Progress	99,646,000	63,901,000	90,903,000
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	1,068,603,000	1,055,809,000	1,040,616,000
Property, Plant and Equipment, Net	2,654,135,000	2,556,635,000	2,454,432,000
Other Northwest Natural [Member]
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	66,315,000	66,300,000	64,317,000
Public Utilities, Property, Plant and Equipment, Construction Work in Progress	5,817,000	5,032,000	5,342,000
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	20,140,000	19,637,000	19,144,000
Property, Plant and Equipment, Net	51,992,000	51,695,000	50,515,000
Northwest Natural Gas Company [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Net	2,706,127,000	2,608,330,000	2,504,947,000
Property, Plant, Equipment non-cash	37,968,000	25,129,000	31,847,000
Other Northwest Holdings [Member]
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	54,922,000	50,263,000	44,195,000
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	5,120,000	3,823,000	2,539,000
Property, Plant and Equipment, Net	49,802,000	46,440,000	41,656,000
Northwest Holdings [Member]
Property, Plant and Equipment [Line Items]
Property, Plant, Equipment non-cash	38,395	25,129	31,847
Northwest Natural Gas Company [Member]
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	3,794,870,000	3,683,776,000	3,564,707,000
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	1,088,743,000	1,075,446,000	1,059,760,000
Property, Plant and Equipment, Net	$ 2,706,127,000	$ 2,608,330,000	$ 2,504,947,000

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Gas Reserves	6 Months Ended
	Jun. 30, 2021 USD ($)
Reserve Quantities [Line Items]
Total cumulative gas reserves investment	$ 188,000,000
Term of hedge rate	10 years
Encana Oil & Gas (USA) Inc.
Reserve Quantities [Line Items]
Gas reserves investment	$ 178,000,000
Jonah Energy LLC
Reserve Quantities [Line Items]
Gas reserves investment	10,000,000
Additional rate per therm	$ 0.4725

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Gas Reserves - Investment - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020
Reserve Quantities [Line Items]
Gas reserves	$ 8,444	$ 11,409	$ 13,646
Gas reserves, non-current	178,863	175,898	173,661
Less: Accumulated amortization	149,011	141,414	132,202
Total gas reserves	38,296	45,893	55,105
Less: Deferred taxes on gas reserves	8,760	10,572	13,324
Net investment in gas reserves	29,536	35,321	41,781
Jonah Energy LLC
Reserve Quantities [Line Items]
Total Gas Reserves Investment	$ 2,700	$ 3,000	$ 3,400

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Investments - USD ($) $ in Millions	3 Months Ended
	Sep. 30, 2021	Sep. 30, 2020	Jun. 30, 2020
Schedule of Equity Method Investments [Line Items]
Percentage of Equity Method Investment Sold		100.00%
Investment balance in TWH			$ 13.4
Equity Method Investment, Realized Gain (Loss) on Disposal		$ 0.5
Forecast [Member]
Schedule of Equity Method Investments [Line Items]
Proceeds from Sale of Equity Method Investments	$ 14.0
Cash and Cash Equivalents [Member]
Schedule of Equity Method Investments [Line Items]
Proceeds from Sale of Equity Method Investments		7.0
Notes Receivable [Member]
Schedule of Equity Method Investments [Line Items]
Proceeds from Sale of Equity Method Investments		$ 7.0

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Business Combinations Business Combinations	6 Months Ended
	Jun. 30, 2021 USD ($) numberOfConnections	Jun. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)
Business Acquisition [Line Items]
Goodwill	$ 69,313,000	$ 70,183,000	$ 69,225,000
Goodwill, Impairment Loss	0
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets [Abstract]
Goodwill	69,313,000	70,183,000	$ 69,225,000
Suncadia & T&W Water [Member]
Business Acquisition [Line Items]
Business Combination, Consideration Transferred		$ 38,100,000
Goodwill	18,200,000
Business Acquisition, Goodwill, Expected Tax Deductible Amount	16,500,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill	0
Number of Businesses Acquired		2
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets [Abstract]
Goodwill	$ 18,200,000
Other insignificant acquisitions [Member]
Business Acquisition [Line Items]
Business Combination, Consideration Transferred		$ 1,500,000
Number of Businesses Acquired	1	3

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Derivative Instruments Notional Amounts therm in Thousands	Jun. 30, 2021 USD ($) therm	Dec. 31, 2020 USD ($) therm	Jun. 30, 2020 USD ($) therm
Collateral Posted with NW Natural Counterparties [Member]
Derivative [Line Items]
Additional Collateral, Aggregate Fair Value | $	$ 0		$ 0
Northwest Natural Gas Company [Member] | Financial [Member] | Gas Year 2019 - 2020 [Member]
Derivative [Line Items]
TargetHedgeAchieved	52.00%
Northwest Natural Gas Company [Member] | Financial [Member] | Gas Year 2020 - 2021
Derivative [Line Items]
TargetHedgeAchieved	53.00%
Northwest Natural Gas Company [Member] | Physical [Member] | Gas Year 2019 - 2020 [Member]
Derivative [Line Items]
TargetHedgeAchieved	19.00%
Northwest Natural Gas Company [Member] | Physical [Member] | Gas Year 2020 - 2021
Derivative [Line Items]
TargetHedgeAchieved	17.00%
Northwest Natural Gas Company [Member] | Natural Gas Therms [Member] | Financial [Member]
Derivative [Line Items]
Derivative, Nonmonetary Notional Amount | therm	680,335	784,400	654,145
Northwest Natural Gas Company [Member] | Natural Gas Therms [Member] | Physical [Member]
Derivative [Line Items]
Derivative, Nonmonetary Notional Amount | therm	419,148	457,593	570,600
Northwest Natural Gas Company [Member] | Foreign Exchange Contract [Member]
Derivative [Line Items]
Derivative, Notional Amount | $	$ 6,477,000	$ 5,896,000	$ 7,176,000

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Derivative Instruments Fair Value - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020
Derivative [Line Items]
Derivative, Fair Value, Net	$ 50.2	$ 12.8	$ 5.2

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Unrealized and Realized Gain/Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Derivative [Line Items]
Derivative, Gain on Derivative	$ 4,200		$ 9,300
Financial [Member]
Derivative [Line Items]
Derivative, Loss on Derivative		$ (1,100)		$ (3,200)
Incremental Cost or Benefit to Collect or Refund to Customers			0
Northwest Holdings and Northwest Natural [Member] | Natural gas commodity
Derivative [Line Items]
Gain (Loss) on Derivative Instruments, Net, Pretax	0	(127)	4	244
Northwest Holdings and Northwest Natural [Member] | Foreign exchange
Derivative [Line Items]
Gain (Loss) on Derivative Instruments, Net, Pretax	0	0	0	0
Northwest Holdings and Northwest Natural [Member] | Benefit (expense) to cost of gas | Natural gas commodity
Derivative [Line Items]
Gain (Loss) on Derivative Instruments, Net, Pretax	(16,323)	5,492	(36,805)	149
Northwest Holdings and Northwest Natural [Member] | Benefit (expense) to cost of gas | Foreign exchange
Derivative [Line Items]
Gain (Loss) on Derivative Instruments, Net, Pretax	45	(459)	(32)	7
Northwest Holdings and Northwest Natural [Member] | Sales [Member] | Natural gas commodity
Derivative [Line Items]
Gain (Loss) on Derivative Instruments, Net, Pretax	0	(754)	27	1,679
Northwest Holdings and Northwest Natural [Member] | Sales [Member] | Foreign exchange
Derivative [Line Items]
Gain (Loss) on Derivative Instruments, Net, Pretax	0	0	0	0
Deferred Derivative Gain (Loss) [Member] | Northwest Holdings and Northwest Natural [Member] | Natural gas commodity
Derivative [Line Items]
Gain (Loss) on Derivative Instruments, Net, Pretax	16,323	6,119	36,782	(1,286)
Deferred Derivative Gain (Loss) [Member] | Northwest Holdings and Northwest Natural [Member] | Foreign exchange
Derivative [Line Items]
Gain (Loss) on Derivative Instruments, Net, Pretax	$ (45)	$ 459	$ 32	$ (7)

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Derivative Instruments Credit Rating - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Derivative [Line Items]
Unrealized losses on derivatives	$ (54,300,000)	$ (5,300,000)
Collateral Posted with NW Natural Counterparties [Member]
Derivative [Line Items]
Additional Collateral, Aggregate Fair Value	0	0
Northwest Natural Gas Company [Member]
Derivative [Line Items]
Derivative Asset, Fair Value, Amount Not Offset Against Collateral	51,800,000	6,700,000	$ 14,100,000
Derivative liability	$ 1,600,000	$ 1,500,000	$ 1,300,000

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Environmental Matters	Jun. 30, 2021
Oregon [Member]
Site Contingency [Line Items]
Remediation Recovery Percentage	96.70%
WASHINGTON
Site Contingency [Line Items]
Remediation Recovery Percentage	3.30%

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Environmental Matters - Environmental Sites $ in Thousands	1 Months Ended	6 Months Ended
	Jan. 31, 2017 USD ($)	Jun. 30, 2021 USD ($) party property	Dec. 31, 2020 USD ($)	Jun. 30, 2020 USD ($)
Site Contingency [Line Items]
Current Liabilities		$ 22,514	$ 28,241	$ 34,066
Non-Current Liabilities		87,795	92,281	91,289
Gasco/Siltronic Sediments
Site Contingency [Line Items]
Current Liabilities		6,658	7,596	10,431
Non-Current Liabilities		41,652	43,725	41,945
Site Contingency, Environmental Remediation Costs Recognized		48,300
Gasco/Siltronic Sediments | Minimum [Member]
Site Contingency [Line Items]
Environmental Exit Costs, Anticipated Cost		48,300
Gasco/Siltronic Sediments | Maximum [Member]
Site Contingency [Line Items]
Environmental Exit Costs, Anticipated Cost		350,000
Portland Harbor Other [Member]
Site Contingency [Line Items]
Current Liabilities		2,195	1,942	2,434
Non-Current Liabilities		$ 6,588	7,020	6,228
Gasco Uplands [Member]
Site Contingency [Line Items]
Site contingency: number of management pieces		2
Gasco/Siltronic Upland [Member]
Site Contingency [Line Items]
Current Liabilities		$ 12,442	14,887	10,979
Non-Current Liabilities		38,401	40,250	41,878
Front Street [Member]
Site Contingency [Line Items]
Current Liabilities		1,219	3,816	10,222
Non-Current Liabilities		975	1,107	1,059
Additional studies and design costs		2,200
Oregon Steel Mills [Member]
Site Contingency [Line Items]
Current Liabilities		0	0	0
Non-Current Liabilities		$ 179	$ 179	$ 179
Portland Harbor [Member]
Site Contingency [Line Items]
Number of potentially responsible parties (more than) | party		100
EPA final feasibility study and proposed remediation plan, clean-up costs, portland harbor	$ 1,050,000
Number of remediation projects | property		2
Portland Harbor [Member] | Minimum [Member]
Site Contingency [Line Items]
Percentage of clean-up costs	(30.00%)
Portland Harbor [Member] | Maximum [Member]
Site Contingency [Line Items]
Percentage of clean-up costs	50.00%
Yakama Nation [Member] | Portland Harbor Other [Member]
Site Contingency [Line Items]
Trustee Council Members - Number of Claimants		1
Site Contingency, Number of Other Third-Party Defendants		29
NRD liability claim yakama nation		$ 300
Number of Amended Complaints Filed		2

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Environmental Matters - Regulatory Deferred Assets - USD ($)	6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020
Site Contingency [Line Items]
Regulatory Assets, Current	$ 60,672,000	$ 31,745,000	$ 30,021,000
Regulatory Assets, Noncurrent	$ 330,710,000	$ 348,927,000	$ 324,358,000
Remediation Non-recovery Percentage	3.30%	3.30%	3.30%
Annual tariff rider collection	$ 5,000,000.0
Annual insurance proceeds to apply against remediation costs	5,000,000.0
Total annual remediation expense and interest	$ 10,000,000.0
Oregon [Member]
Site Contingency [Line Items]
Remediation Recovery Percentage	96.70%
Front Street [Member] | Environmental costs [Member]
Site Contingency [Line Items]
Accrued site liabilities	$ 100,000	$ 0.2	$ 400,000
Northwest Natural Gas Company [Member]
Site Contingency [Line Items]
Regulatory Assets, Current	60,672,000	31,745,000	30,021,000
Regulatory Assets, Noncurrent	330,670,000	348,887,000	324,320,000
Northwest Natural Gas Company [Member] | Environmental costs [Member]
Site Contingency [Line Items]
Deferred costs and interest	50,604,000	44,516,000	42,098,000
Accrued site liabilities	110,237,000	120,352,000	124,981,000
Insurance proceeds and interest	(69,730,000)	(69,253,000)	(81,146,000)
Regulatory Assets	91,111,000	95,615,000	85,933,000
Regulatory Assets, Current	5,688,000	4,992,000	4,176,000
Regulatory Assets, Noncurrent	$ 85,423,000	$ 90,623,000	$ 81,757,000

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Discontinued Operations - USD ($)	3 Months Ended			6 Months Ended		9 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Sep. 30, 2020	Mar. 31, 2022	Dec. 31, 2020
Disposal Group, Including Discontinued Operation, Classified Balance Sheet Disclosures [Abstract]
Discontinued operations - total assets			$ 16,400,000		$ 16,400,000
Discontinued Operation, Income Statement Disclosures [Abstract]
Loss from discontinued operations, net of tax	$ 0		$ 280,000	$ 0	$ (498,000)
Loss from discontinued operations per share of common stock
Basic (in dollars per share)	$ 0		$ 0.01	$ 0	$ (0.01)
Diluted (in dollars per share)	$ 0		$ 0.01	$ 0	$ (0.01)
Gill Ranch [Member] | Discontinued Operations, Held-for-sale or Disposed of by Sale [Member]
Disposal Group, Including Discontinued Operation, Classified Balance Sheet Disclosures [Abstract]
Accounts receivable			$ 1,621,000		$ 1,621,000
Inventories			821,000		821,000
Other current assets			250,000		250,000
Property, plant, and equipment			13,328,000		13,328,000
Operating lease right of use asset			118,000		118,000
Other non-current assets			254,000		254,000
Discontinued operations - total assets	$ 0		16,392,000	$ 0	16,392,000
Accounts payable			999,000		999,000
Other current liabilities			1,119,000		1,119,000
Operating lease liabilities			112,000		112,000
Other non-current liabilities			11,344,000		11,344,000
Total discontinued operations liabilities		$ 0	13,574,000		13,574,000			$ 0
Gill Ranch [Member] | Discontinued Operations, Held-for-sale [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from divestiture of businesses		$ 13,500,000				$ 1,000,000.0
Discontinued Operation, Income Statement Disclosures [Abstract]
Revenues			3,374,000		4,282,000
Operations and maintenance			2,604,000		4,184,000
General taxes			53,000		100,000
Depreciation and amortization			106,000		212,000
Other expenses and interest			228,000		459,000
Total expenses			2,991,000		4,955,000
Loss from discontinued operations before income tax			383,000		(673,000)
Income tax benefit			103,000		(175,000)
Loss from discontinued operations, net of tax			$ 280,000		$ (498,000)
Loss from discontinued operations per share of common stock
Basic (in dollars per share)	$ 0		$ 0.01	$ 0	$ (0.01)
Diluted (in dollars per share)	$ 0		$ 0.01	$ 0	$ (0.01)
Discontinued Operation, Gain (Loss) on Disposal of Discontinued Operation, Net of Tax								$ 5,900,000
Gill Ranch [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Percent ownership	75.00%			75.00%
Forecast [Member] | Maximum [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from divestiture of businesses							$ 15,000,000.0