Investments

3 Months Ended

Mar. 31, 2022

INVESTMENTS

Investments include gas reserves, financial investments in life insurance policies, and equity method investments. The following table summarizes other investments:


	NW Holdings						NW Natural
	March 31,				December 31,		March 31,				December 31,
In thousands	2022		2021		2021		2022		2021		2021
Investments in life insurance policies	$	48,486	$	47,411	$	48,178	$	48,486	$	47,411	$	48,178
Investments in gas reserves, non-current	25,364		31,600		26,608		25,364		31,600		26,608
Investment in unconsolidated affiliates	22,416		23		14,492		7,947		—		—
Total other investments	$	96,266	$	79,034	$	89,278	$	81,797	$	79,011	$	74,786

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 13 in the 2021 Form 10-K.

NW Natural Gas Reserves

NW Natural has invested $188 million through the gas reserves program in the Jonah Field located in Wyoming as of March 31, 2022. Gas reserves are stated at cost, net of regulatory amortization, with the associated deferred tax benefits of $11.0 million $9.8 million and $6.9 million, which are recorded as liabilities in the March 31, 2022, March 31, 2021, and December 31, 2021 consolidated balance sheets, respectively. NW Natural's investment is included in NW Holdings' and NW Natural's consolidated balance sheets under other current assets and other investments (non-current portion) with the maximum loss exposure limited to the investment balance. The amount of gas reserves included in other current assets was $5.2 million, $10.7 million, and $5.4 million as of March 31, 2022, March 31, 2021, and December 31, 2021, respectively. See Note 13 in the 2021 Form 10-K.

Investments in Unconsolidated Affiliates

On December 17, 2021, NW Natural Water purchased a 37.3% ownership stake in Avion Water Company, Inc. (Avion Water), an investor-owned water utility for $14.5 million. Avion Water operates in Bend, Oregon and the surrounding communities, serving approximately 15,000 customer connections and employing 35 people. The carrying value of the equity method investment is $10.4 million higher than the underlying equity in the net assets of the investee at March 31, 2022 due to equity method goodwill. Equity in earnings of Avion Water is included in other income (expense), net.

In 2020, NW Natural began a partnership with BioCarbN to invest in up to four separate RNG development projects that will access biogas derived from water treatment at Tyson Foods’ processing plants, subject to approval by all parties. During the construction phase of the projects, NW Natural determined it is the primary beneficiary and fully consolidates each entity.

In 2022, commissioning of the first project, Lexington Renewable Energy LLC (Lexington), was completed and NW Natural determined it was no longer the primary beneficiary and deconsolidated the variable interest entity and recorded the investment in Lexington as an equity method investment. NW Natural accounts for its interest in Lexington using the equity method of accounting because NW Natural does not control but has the ability to exercise significant influence over Lexington's operations after commissioning. There was no gain or loss recognized upon deconsolidation. NW Natural determined the fair value of the investment approximated the carrying value which was primarily comprised of cash and property, plant and equipment. As of March 31, 2022, NW Natural had an investment balance in Lexington of $7.9 million.