XML 44 R11.htm IDEA: XBRL DOCUMENT v3.22.4
Segment Information
 12 Months Ended
Dec. 31, 2022
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 segment, which are aggregated and reported as other and described below for each entity.

No individual customer accounts for over 10% of NW Holdings' or NW Natural's operating revenues.

Natural Gas Distribution
NW Natural's local gas distribution segment (NGD) 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. The NGD business is responsible for building and maintaining a safe and reliable pipeline distribution system, purchasing sufficient gas supplies from producers and marketers, contracting for firm and interruptible transportation of gas over interstate pipelines to bring gas from the supply basins into its service territory, and re-selling the gas to customers subject to rates, terms, and conditions approved by the OPUC or WUTC. NGD also includes taking customer-owned gas and transporting it from interstate pipeline connections, or city gates, to the customers’ end-use facilities for a fee, which is approved by the OPUC or WUTC. Approximately 88% of NGD customers are located in Oregon and 12% in Washington. On an annual basis, residential and commercial customers typically account for around 60% of total NGD volumes delivered and around 90% of NGD margin. Industrial customers largely account for the remaining volumes and NGD margin. A small amount of the margin is also derived from miscellaneous services, gains or losses from an incentive gas cost sharing mechanism, and other service fees.

Industrial sectors served by the NGD business include: pulp, paper, and other forest products; the manufacture of electronic, electrochemical and electrometallurgical products; the processing of farm and food products; the production of various mineral products; metal fabrication and casting; the production of machine tools, machinery, and textiles; the manufacture of asphalt, concrete, and rubber; printing and publishing; nurseries; and government and educational institutions.

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 in Oregon, 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 regulated renewable natural gas for NW Natural.
NW Natural
NW Natural's activities in Other include Interstate Storage Services and third-party asset management services for the Mist facility in Oregon, appliance retail center operations, and corporate operating and non-operating revenues and expenses that cannot be allocated to NGD operations.

Earnings from Interstate Storage Services assets are primarily related to firm storage capacity revenues. Earnings from the Mist facility also include revenue, net of amounts shared with NGD customers, from management of NGD assets at Mist and upstream pipeline 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 to a deferred regulatory account for crediting back to NGD customers.

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 and wastewater sector through itself and wholly-owned subsidiaries; NWN Water's equity investment in Avion Water Company, Inc.; NWN Gas Storage, a wholly-owned subsidiary of NWN Energy; NWN Energy's equity investment in Trail West Holdings, LLC (TWH) through August 6, 2020; other pipeline assets in NNG Financial; and NW Natural Renewables Holdings, LLC and its non-regulated renewable natural gas activities. 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 for continuing operations. See Note 18 for information regarding discontinued operations for NW Holdings.
In thousandsNGDOther
(NW Natural)		NW NaturalOther
(NW Holdings)		NW Holdings
2022
Operating revenues$989,752 $24,587 $1,014,339 $23,014 $1,037,353 
Depreciation111,871 1,086 112,957 3,750 116,707 
Income (loss) from operations 152,839 16,535 169,374 (1,897)167,477 
Net income (loss) from continuing operations79,690 11,874 91,564 (5,261)86,303 
Capital expenditures315,979 2,707 318,686 19,916 338,602 
Total assets at December 31, 20224,392,699 60,019 4,452,718 295,608 4,748,326 
2021
Operating revenues$816,887 $26,170 $843,057 $17,343 $860,400 
Depreciation109,475 1,029 110,504 3,030 113,534 
Income (loss) from operations147,902 17,331 165,233 (2,116)163,117 
Net income (loss) from continuing operations68,988 12,184 81,172 (2,506)78,666 
Capital expenditures275,267 2,970 278,237 15,655 293,892 
Total assets at December 31, 20213,846,112 52,260 3,898,372 166,232 4,064,604 
2020
Operating revenues$741,072 $17,676 $758,748 $14,931 $773,679 
Depreciation100,591 995 101,586 2,097 103,683 
Income (loss) from operations137,724 9,916 147,640 711 148,351 
Net income (loss) from continuing operations63,555 7,008 70,563 (290)70,273 
Capital expenditures263,777 2,271 266,048 6,968 273,016 
Total assets at December 31, 2020 3,549,868 49,468 3,599,336 157,043 3,756,379 

Natural Gas Distribution Margin
NGD margin is the primary financial measure used by the 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 environmental recovery mechanisms in Oregon and Washington as well as adjustments for the Oregon 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:
In thousands202220212020
NGD margin calculation:
NGD operating revenues $970,124 $797,800 $721,950 
Other regulated services19,628 19,087 19,122 
Total NGD operating revenues989,752 816,887 741,072 
Less: NGD cost of gas429,861 292,538 262,980 
          Environmental remediation expense12,389 9,938 9,691 
 Revenue taxes41,627 34,600 30,291 
NGD margin$505,875 $479,811 $438,110