Investments

6 Months Ended

Jun. 30, 2023

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
	June 30,				December 31,		June 30,				December 31,
In thousands	2023		2022		2022		2023		2022		2022
Investments in life insurance policies	$	46,772	$	48,735	$	49,358	$	46,772	$	48,735	$	49,358
Investments in gas reserves, non-current	21,488		24,695		22,970		21,488		24,695		22,970
Investment in unconsolidated affiliates	36,070		22,597		23,376		19,588		8,056		7,782
Total other investments	$	104,330	$	96,027	$	95,704	$	87,848	$	81,486	$	80,110

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 2022 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 June 30, 2023. Gas reserves are stated at cost, net of regulatory amortization, with the associated deferred tax benefits of $4.4 million, $5.3 million, and $5.2 million, which are recorded as liabilities in the June 30, 2023, June 30, 2022, and December 31, 2022 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 $3.2 million, $4.3 million, and $3.4 million as of June 30, 2023, June 30, 2022, and December 31, 2022, respectively. See Note 13 in the 2022 Form 10-K.

Investments in Unconsolidated Affiliates

In December 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. In July 2022, NW Natural Water increased its ownership stake in Avion Water to 40.3% for an additional $1.0 million. In June 2023, NW Natural Water increased its ownership stake in Avion Water to 43.1% for an additional $1.0 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 $10.2 million higher than the underlying equity in the net assets of the investee at June 30, 2023 due to equity method goodwill. NW Natural Water's share in the earnings (loss) 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 renewable natural gas (RNG) development projects that are designed to 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. NW Natural determined it was no longer the primary beneficiary, deconsolidated the variable interest entity and recorded the investment in Lexington as an equity method investment. As of June 30, 2023, NW Natural had an investment balance in Lexington of $8.0 million. NW Natural's share in the earnings (loss) of Lexington is included in cost of gas.

In 2023, commissioning of the second project, Dakota City Renewable Energy LLC (Dakota City), was completed. NW Natural determined it was no longer the primary beneficiary of Dakota City once the project was commissioned. The investment in the variable interest entity was deconsolidated and recorded as an equity method investment. NW Natural accounts for its interest in Dakota City using the equity method of accounting because NW Natural does not control but has the ability to exercise significant influence over Dakota City'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 June 30, 2023, NW Natural had an investment balance in Dakota City of $11.6 million. NW Natural's share in the earnings (loss) of Dakota City is included in cost of gas.