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Leases
 3 Months Ended
Mar. 31, 2024
Leases [Abstract]  
Lessee, Operating Leases LEASES
Lease Revenue
Leasing revenue primarily consists of NW Natural's North Mist natural gas storage agreement with PGE, which is billed under an OPUC-approved rate schedule and includes an initial 30-year term beginning May 2019 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 and NW Holdings 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 March 31,
In thousands20242023
Lease revenue
Operating leases$22 $19 
Sales-type leases4,104 3,979 
Total lease revenue$4,126 $3,998 

Additionally, lease revenue of $0.1 million and $0.2 million was recognized for the three months ended March 31, 2024 and 2023, respectively, related to operating leases associated with non-utility property rentals. Lease revenue related to these leases was presented in other income (expense), net on the consolidated statements of comprehensive income as it is non-operating income.

Total future minimum lease payments to be received under non-cancelable leases at March 31, 2024 are as follows:
In thousandsOperatingSales-TypeTotal
NW Natural:
Remainder of 2024$452 $11,900 $12,352 
2025599 15,306 15,905 
202636 14,901 14,937 
202722 14,521 14,543 
2028— 13,983 13,983 
Thereafter— 208,218 208,218 
Total minimum lease payments$1,109 278,829 $279,938 
Less: imputed interest151,120 
Total leases receivable$127,709 
Other (NW Holdings):
Remainder of 2024$39 $— $39 
202553 — 53 
202656 — 56 
202757 — 57 
202858 — 58 
Thereafter800 — 800 
Total minimum lease payments$1,063 $— $1,063 
NW Holdings:
Remainder of 2024$491 $11,900 $12,391 
2025652 15,306 15,958 
202692 14,901 14,993 
202779 14,521 14,600 
202858 13,983 14,041 
Thereafter800 208,218 209,018 
Total minimum lease payments$2,172 278,829 $281,001 
Less: imputed interest151,120 
Total leases receivable$127,709 

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 $5.6 million, $5.2 million and $5.5 million at March 31, 2024 and 2023 and December 31, 2023, 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 headquarters and operations center. Our leases have remaining lease terms of 8 months to 16 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 March 31,
In thousands20242023
NW Natural:
Operating lease expense$1,862 $1,775 
Short-term lease expense81 80 
Other (NW Holdings):
Operating lease expense$45 $40 
NW Holdings:
Operating lease expense$1,907 $1,815 
Short-term lease expense81 80 

Supplemental balance sheet information related to operating leases as of March 31, 2024 and 2023 and December 31, 2023 is as follows:
In thousandsMarch 31,December 31,
202420232023
NW Natural:
Operating lease right of use asset$70,019 $72,077 $70,728 
Operating lease liabilities - current liabilities$1,863 $1,538 $2,128 
Operating lease liabilities - non-current liabilities76,624 77,840 76,757 
Total operating lease liabilities$78,487 $79,378 $78,885 
Other (NW Holdings):
Operating lease right of use asset$528 $622 $580 
Operating lease liabilities - current liabilities$190 $162 $205 
Operating lease liabilities - non-current liabilities427 462 410 
Total operating lease liabilities$617 $624 $615 
NW Holdings:
Operating lease right of use asset$70,547 $72,699 $71,308 
Operating lease liabilities - current liabilities$2,053 $1,700 $2,333 
Operating lease liabilities - non-current liabilities77,051 78,302 77,167 
Total operating lease liabilities$79,104 $80,002 $79,500 

The weighted-average remaining lease terms and weighted-average discount rates for the operating leases at NW Natural were as follows:
In thousandsMarch 31,December 31,
202420232023
Weighted-average remaining lease term (years)16.017.016.2
Weighted-average discount rate7.3 %7.3 %7.3 %

Headquarters and Operations Center Lease
NW Natural commenced a 20-year operating lease agreement in March 2020 for a new headquarters and operations center in Portland, Oregon. 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 $8.3 million, $7.2 million and $8.0 million as of March 31, 2024 and 2023 and December 31, 2023, respectively.

Maturities of operating lease liabilities at March 31, 2024 were as follows:
In thousandsNW NaturalOther
(NW Holdings)		NW Holdings
Remainder of 2024$5,673 $138 $5,811 
20257,362 176 7,538 
20267,361 153 7,514 
20277,538 107 7,645 
20287,719 6 7,725 
Thereafter101,272 6 101,278 
Total lease payments136,925 586 137,511 
Less: imputed interest58,438 (31)58,407 
Total lease obligations78,487 617 79,104 
Less: current obligations1,863 190 2,053 
Long-term lease obligations$76,624 $427 $77,051 

Supplemental cash flow information related to leases was as follows:
Three Months Ended March 31,
In thousands20242023
NW Natural:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$1,811 $1,767 
Finance cash flows from finance leases97 173 
Right of use assets obtained in exchange for lease obligations
Finance leases97 173 
Other (NW Holdings):
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$44 $39 
Right of use assets obtained in exchange for lease obligations
Finance leases— 90 
NW Holdings:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$1,855 $1,806 
Finance cash flows from finance leases97 173 
Right of use assets obtained in exchange for lease obligations
Finance leases97 263 

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 $2.7 million, $2.4 million and $2.6 million at March 31, 2024 and 2023 and at December 31, 2023, respectively. As of March 31, 2024, there were no finance lease liabilities at NW Natural.