NORTHWEST NATURAL GAS CO

Previous wording

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 for the three months ended March 31, 2025 and 2024 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 2024 Annual Report on Form 10-K, as applicable (2024 Form 10-K).

Current wording

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 for the three and six months ended June 30, 2025 and 2024 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 2024 Annual Report on Form 10-K, as applicable (2024 Form 10-K).

Previous wording

NW Natural's natural gas distribution activities are reported in the NWN Gas Utility segment, which was previously referred to as the natural gas distribution (NGD) segment in prior periods, serving customers in Oregon and southwest Washington. The NWN Gas Utility segment also includes NWN Gas Reserves, which is a wholly-owned subsidiary of Energy Corp, the NWN Gas Utility portion of NW Natural's Mist storage facility in Oregon, 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.

Current wording

NW Natural's natural gas distribution activities are reported in the NWN Gas Utility segment, which was previously referred to as the natural gas distribution (NGD) segment prior to 2025, serving customers in Oregon and southwest Washington. The NWN Gas Utility segment also includes NWN Gas Reserves, which is a wholly-owned subsidiary of Energy Corp, the NWN Gas Utility portion of NW Natural's Mist storage facility in Oregon, 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.

Previous wording

SiEnergy Gas Utility, which was acquired in January 7, 2025, is a regulated natural gas distribution utility and serves residential and commercial customers in the greater metropolitan areas of Houston, Dallas, and Austin, Texas. SiEnergy also includes a regulated natural gas transmission utility serving customers in the greater metropolitan areas of Dallas and Austin, Texas. SiEnergy activities are reported in the SiEnergy Gas Utility segment.

Current wording

SiEnergy Gas Utility, which was acquired in January 7, 2025, is a regulated natural gas distribution utility and serves residential and commercial customers in the greater metropolitan areas of Houston, Dallas, and Austin, Texas. SiEnergy also includes a natural gas transmission utility serving customers in the greater metropolitan areas of Dallas and Austin, Texas. SiEnergy activities are reported in the SiEnergy Gas Utility segment.

Previous wording

•$38.7 million increase in margin at NWN Gas Utility, primarily driven by new rates on November 1, 2024 for Oregon;

Current wording

•$16.9 million increase in margin at NWN Gas Utility, primarily driven by new rates on November 1, 2024 for Oregon;

Previous wording

•$13.6 million increase in margin from the acquisition of SiEnergy; partially offset by

Current wording

•$8.2 million increase in margin from the acquisition of SiEnergy;

Previous wording

•$10.1 million increase in operations and maintenance expenses, which included $5.3 million of transaction costs related to the SiEnergy acquisition; also impacting the increase was a$2.2 million increase at NWN Gas Utility driven by higher payroll and benefits costs and contract labor costs; and a$1.7 million increase from the addition of SiEnergy operations and maintenance expenses.

Current wording

•$14.1 million increase in operations and maintenance expenses, which included a $6.3 million increase at NWN Gas Utility driven by higher payroll and benefits costs and contract labor costs; $3.9 million of transaction and business development costs; and a $1.9 million increase from the addition of SiEnergy operations and maintenance expenses;

Previous wording

•$8.9 million increase in interest expense due primarily to higher long-term debt balances related to debt issuances in March and December 2024 at NW Holdings reflected in Other results; and

Current wording

•$11.2 million increase in interest expense due primarily to higher long-term debt balances related to debt issuances at NW Holdings reflected in Other results; and

Previous wording

•$7.4 million increase in depreciation expense due primarily to$4.9 million of higher depreciation at NWN Gas Utility from additional capital investment and$2.1 million increase from the addition of SiEnergy.

Current wording

•$7.8 million increase in depreciation expense due primarily to $4.8 million of higher depreciation at NWN Gas Utility from additional capital investment and $2.4 million increase from the addition of SiEnergy.

Previous wording

Consolidated operating income and net income increased $44.5 million and $24.1 million, respectively at NW Holdings primarily due to the following factors:

Current wording

Consolidated operating income and net income increased $56.0 million and $24.4 million, respectively at NW Holdings primarily due to the following factors:

Previous wording

THREE MONTHS ENDED MARCH 31, 2025 COMPARED TO MARCH 31, 2024. The primary factors contributing to the $21.5 million, or $0.42 per share, increase in NWN Gas Utility net income were as follows:

Current wording

THREE MONTHS ENDED JUNE 30, 2025 COMPARED TO JUNE 30, 2024. The primary factors contributing to the $4.5 million, or $0.12 per share, increase in NWN Gas Utility net income were as follows:

Previous wording

•$38.7 million increase in margin driven by new rates on November 1, 2024 for Oregon; partially offset by a decrease in the amortization of deferred balances. See the NWN Gas Utility margin table below for additional margin detail.

Current wording

•$16.9 million increase in margin driven by new rates on November 1, 2024 for Oregon; partially offset by a decrease in the amortization of deferred balances. See the NWN Gas Utility margin table below for additional margin detail.

Previous wording

•$2.2 million increase in operations and maintenance expenses due primarily to higher payroll and benefit costs and an increase in contract labor costs, partially offset by a decrease in regulatory deferral amortization; and

Current wording

•$6.3 million increase in operations and maintenance expenses due primarily to higher payroll and benefit costs and an increase in contract labor costs, partially offset by a decrease in regulatory deferral amortization;

Previous wording

•$4.9 million increase in depreciation expense due to additional capital investments;

Current wording

•$4.8 million increase in depreciation expense due to additional capital investments; and

Previous wording

For the three months ended March 31, 2025, total NWN Gas Utility volumes sold and delivered increased 5.7 million compared to the same period in 2024 primarily due to higher usage from residential and commercial sales customers as weather was 4% warmer than average in the first quarter of 2025 compared to 9% warmer than average in the prior period, partially offset by lower usage from industrial sales and transportation customers in the first quarter of 2025.

Current wording

For the three months ended June 30, 2025, total NWN Gas Utility volumes sold and delivered decreased 22.8 million compared to the same period in 2024 primarily due to lower usage from residential and commercial sales customers as weather was 56% warmer than average in the first quarter of 2025 compared to 30% warmer than average in the prior year period.

Previous wording

SiEnergy was acquired by NW Holdings on January 7, 2025. Results for the period from January 7, 2025 to March 31, 2025 are presented in the table above. Prior to January 7, 2025, NW Holdings did not operate any assets that fall within its SiEnergy Gas Utility segment.

Current wording

SiEnergy was acquired by NW Holdings on January 7, 2025. Results for the period from January 7, 2025 to June 30, 2025 are presented in the table above. SiEnergy acquired Pines on June 2, 2025, and results from June 2, 2025 to June 30, 2025 are included in the table above. Prior to January 7, 2025, NW Holdings did not operate any assets that fall within its SiEnergy Gas Utility segment.

Previous wording

•$0.5 million increase in operations and maintenance expenses primarily due to acquisitions.

Current wording

•$1.4 million increase in operations and maintenance expenses primarily due to acquisitions; and

Previous wording

•$3.2 million increase in operating revenues primarily driven by new rates at our largest utility in Arizona, additional revenues from the Infrastructure Capital Holdings acquisition, and organic customer growth; and

Current wording

•$8.0 million increase in operating revenues primarily driven by new rates at our largest utility in Arizona, additional revenues from the Infrastructure Capital Holdings acquisition, and organic customer growth; and

Previous wording

THREE MONTHS ENDED MARCH 31, 2025 COMPARED TO MARCH 31, 2024. The primary factors contrib uting to the $5.3 million, or $0.13 per share, decrease in net income were as follows:

Current wording

THREE MONTHS ENDED JUNE 30, 2025 COMPARED TO JUNE 30, 2024. The primary factors contrib uting to the $7.0 million, or $0.18 per share, increase in net loss were as follows:

Previous wording

•$5.7 million increase in operations and maintenance expenses due primarily to transaction costs related to the SiEnergy acquisition; and

Current wording

•$4.5 million increase in operations and maintenance expenses due primarily to transaction costs and other business development costs; partially offset by

Previous wording

•$11.7 million increase in operating revenues primarily driven by$7.7 million of revenues from NWN Renewables' first quarter of RNG revenues and$2.8 million related to higher interstate storage and asset management revenues.

Current wording

•$8.8 million increase in operating revenues primarily driven by$6.9 million of revenues from NWN Renewables' second quarter of RNG revenues and$1.2 million related to higher interstate storage and asset management revenues.

Previous wording

•$7.8 million increase in interest expense due primarily to higher long-term debt at NW Holdings from bonds issued in March and December 2024 and the bridge financing issued in January 2025 for the SiEnergy acquisition;

Current wording

•$16.9 million increase in interest expense due primarily to higher long-term debt at NW Holdings from bonds issued in December 2024, bridge financing issued in January 2025 for the SiEnergy acquisition, and Junior Subordinated Debentures issued in March 2025;

Previous wording

•$5.3 million increase in cost of gas due primarily to the purchase of RNG by Ohio Renewables following the commencement of operations at the EDL facilities in 2024; partially offset by

Current wording

•$10.0 million increase in cost of gas due primarily to the purchase of RNG by Ohio Renewables following the commencement of operations at the EDL facilities in 2024; partially offset by

Previous wording

We continue to evaluate the effect of additional tariffs on our businesses. For our gas utilities we evaluated natural gas imports. SiEnergy, located in Texas, does not import natural gas. NWN Gas Utility imported approximately 63% of our natural gas from Canada in Q1 2025. NWN Gas Utility's third-party asset manager imports the majority of NWN Gas Utility's gas each year. The asset manager is a United States-Mexico-Canada Agreement (USMCA) certified importer of record and as such, is not subject to the tariffs. During the winter period from November 2024 through March 2025, NWN Gas Utility was the importer of record for a small percentage of gas. NWN Gas Utility filed for deferral of all tariff costs in Oregon and Washington in anticipation of potential tariff costs of up to approximately $1.0 million in the first quarter 2025. NWN Gas Utility has since filed for the qualification of its gas imports under the USMCA, exempting it from the application of tariffs during this period.

Current wording

We continue to evaluate the effect of additional tariffs on our businesses. For our gas utilities we evaluated natural gas imports. SiEnergy, located in Texas, does not import natural gas. NWN Gas Utility imported approximately 60% of our natural gas from Canada in 2024. NWN Gas Utility's third-party asset manager imports the majority of NWN Gas Utility's gas each year. The asset manager is a United States-Mexico-Canada Agreement (USMCA) certified importer of record and as such, is not subject to the tariffs. During the winter period from November 2024 through March 2025, NWN Gas Utility was the importer of record for a small percentage of gas. NWN Gas Utility filed for deferral of all tariff costs in Oregon and Washington in anticipation of potential tariff costs of up to approximately $1.0 million in the first quarter 2025. NWN Gas Utility has since filed for the qualification of its gas imports under the USMCA, exempting it from the application of tariffs during this period.

Previous wording

We have also evaluated the effect of tariffs on our cost of materials across our businesses. We are not the importer of record for any materials purchased at our businesses. Therefore, we do not expect any direct impacts from tariffs on materials. However, across our businesses, there are certain materials our suppliers source from other countries. For our gas utilities, we evaluated higher volume items, including purchased valves and meters. For our water utilities, we evaluated steel products used in the construction of wells and storage tanks that are sourced from other countries. We do not anticipate the currently proposed tariffs to have a material impact on our businesses.

Current wording

We have also evaluated the effect of tariffs on our cost of materials across our businesses. We are not the importer of record for any materials purchased at our businesses. Therefore, we do not expect any direct impacts from tariffs on materials. However, across our businesses, there are certain materials our suppliers source from other countries. For our gas utilities, we evaluated higher volume items, including purchased valves and meters. For our water utilities, we evaluated steel products used in the construction of wells and storage tanks that are sourced from other countries. We do not anticipate the currently proposed and recently implemented tariffs to have a material impact on our businesses.

Previous wording

We continue to monitor interest rates and financing options for all of our businesses. Recently the U.S. Federal Reserve has been lowering interest rates as the rate of inflation decreases. This year there have been no changes to the short-term rates by the U.S. Federal Reserve, however, there have been fluctuations in long-term rates as a result of the anticipated impacts of tariffs. Our regulated utilities generally recover interest expense on their long-term debt through their authorized cost of capital.

Current wording

We continue to monitor interest rates and financing options for all of our businesses. In 2024, the U.S. Federal Reserve lowered interest rates as the rate of inflation decreased. This year there have beenno changes to the short-term rates by the U.S. Federal Reserve, however, there have been fluctuations in long-term rates as a result of the anticipated impacts of tariffs. Our regulated utilities generally recover interest expense on their long-term debt through their authorized cost of capital.

Previous wording

2025 OREGON RATE CASE. On December 30, 2024, NW Natural filed a request for a general rate increase with the OPUC. The filing includes a requested $59.4 million annual revenue requirement increase, or an approximate 5.79% increase over current customer rates. The request is based upon the following assumptions or requests:

Current wording

2025 OREGON RATE CASE. On December 30, 2024, NW Natural filed a request for a general rate increase with the OPUC. The filing requested a $59.4 million annual revenue requirement increase, which included approximately $10 million related to an updated depreciation study.

Previous wording

METER MODERNIZATION PROGRAM. In January 2024, NW Natural filed a request with the OPUC and WUTC to defer the incremental costs to replace or upgrade approximately 500,000 meters over four years. The deferral was approved by the WUTC in February 2024 and by the OPUC in February 2025. The amount deferred to a regulatory asset as of March 31, 2025 was approximately $1.9 million.

Current wording

METER MODERNIZATION PROGRAM. In January 2024, NW Natural filed a request with the OPUC and WUTC to defer the incremental costs to replace or upgrade approximately 500,000 meters over four years. The deferral was approved by the WUTC in February 2024 and by the OPUC in February 2025. The amount deferred to a regulatory asset as of June 30, 2025 was approximately $2.5 million.

Previous wording

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 2022 IRP for both Oregon and Washington on September 23, 2022. The 2022 IRP evaluates several varying scenarios based on a range of inputs and outlines the least-cost least-risk resources required to meet future demand and environmental compliance obligations. With respect to IRPs generally, the WUTC issues letters of compliance and Oregon acknowledges the IRP Action Plan individually or in total. In August 2023, NW Natural received a letter of compliance from the WUTC acknowledging compliance of the 2022 IRP. The OPUC issued their order on NW Natural's 2022 IRP in August 2023. We currently expect to file our next full IRP with Oregon and Washington in 2025.

Current wording

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 2025 IRP for both Oregon and Washington on August 1, 2025. The 2025 IRP evaluates several varying scenarios based on a range of inputs and outlines the least-cost least-risk resources required to meet future demand and environmental compliance obligations. With respect to IRPs generally, the WUTC issues letters of compliance and Oregon acknowledges the IRP Action Plan individually or in total. NW Natural anticipates that decisions from both the OPUC and WUTC will come in either the first or second quarter of 2026.

Previous wording

As of May 1, 2024, core customers recalled non-utility Mist gas storage capacity of 0.2 million therms per day of deliverability and 1.15 Bcf of associated storage capacity to serve core utility customer needs. Customer impacts of this recall began on November 1, 2024.

Current wording

As of May 1, 2024, non-utility Mist gas storage deliverability of 0.2 million therms per day and 1.15 Bcf of associated storage capacity was recalled on behalf of customers to serve core utility customer needs. Customer rate impacts of this recall began on November 1, 2024.

Previous wording

EARNINGS TEST REVIEW. NW Natural is subject to an annual earnings review in Oregon to determine if the NWN Gas Utility business is earning above its authorized ROE threshold. If NWN Gas Utility 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 2025-26 and 2024-25 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 2024, the ROE threshold was 10.40%. NWN Gas Utility filed the 2023 earnings test in April 2024, indicating no customer credit adjustment based on results, which was approved by the OPUC in July 2024. NW Natural does not expect a customer credit adjustment for 2024 based on results of the earnings test.

Current wording

EARNINGS TEST REVIEW. NW Natural is subject to an annual earnings review in Oregon to determine if the NWN Gas Utility business is earning above its authorized ROE threshold. If NWN Gas Utility 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 2025-26 and 2024-25 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 2024, the ROE threshold was 10.40%. NWN Gas Utility filed the 2024 earnings test in April 2025, indicating no customer credit adjustment based on results, which was approved by the OPUC in July 2025. NW Natural does not expect a customer credit adjustment for 2025 based on preliminary results of the earnings test.

Previous wording

DECOUPLING. In Oregon, NW Natural has a decoupling mechanism that covers residential and some commercial sales customers. Decoupling is intended to break the link between revenue and the quantity of gas consumed by customers, removing any financial incentive to discourage customers’ efforts to conserve energy. 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 along with the annual PGA filing. The 2024 Oregon general rate case reset the Oregon decoupling baseline usage per customer.

Current wording

DECOUPLING. In Oregon, NW Natural has a partial decoupling mechanism that covers residential and some commercial sales customers. Decoupling is intended to break the link between revenue and the quantity of gas consumed by customers, removing any financial incentive to discourage customers’ efforts to conserve energy. 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 along with the annual PGA filing. The 2024 Oregon general rate case reset the Oregon decoupling baseline usage per customer.

Previous wording

WARM. In Oregon, NW Natural has an approved weather normalization mechanism (WARM), 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, along with 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 March 31, 2025, 7% 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.

Current wording

WARM. In Oregon, NW Natural has an approved weather normalization mechanism (WARM), 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, along with 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, 2025, 7% 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.

Previous wording

NW Natural has two investments in RNG facilities the OPUC has approved for recovery in rates. For 2024, NW Natural has performed this test, which is anticipated to be submitted to the OPUC in May 2025. No earnings test adjustment is expected for 2024.

Current wording

NW Natural has two investments in RNG facilities the OPUC has approved for recovery in rates. NW Natural filed the 2024 earnings test in April 2025, indicating no adjustment based on results. The OPUC approved the 2024 earnings test in July 2025.

Previous wording

To the extent the NWN Gas Utility 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 has performed this test, which is anticipated to be submitted to the OPUC in May 2025. No earnings test adjustment is expected for 2024.

Current wording

To the extent the NWN Gas Utility 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 2024 based on the environmental earnings test that was filed in April 2025 and approved by the OPUC in July 2025.

Previous wording

NWN Water Utility currently serves approximately 194,000 people through over 78,000 connections across six states. The wholly-owned regulated water businesses of NWN Water are subject to regulation by the utility commissions in the states in which they are located, which currently includes Oregon, Washington, Arizona, Idaho, and Texas. The wholly-owned regulated wastewater businesses of NWN Water are subject to regulation by the utility commissions in the states in which they are located, which currently includes Texas and Arizona.

Current wording

NWN Water Utility currently serves approximately 195,000 people through over 79,000 connections across six states. The wholly-owned regulated water businesses of NWN Water are subject to regulation by the utility commissions in the states in which they are located, which currently includes Oregon, Washington, Arizona, Idaho, and Texas. The wholly-owned regulated wastewater businesses of NWN Water are subject to regulation by the utility commissions in the states in which they are located, which currently includes Texas and Arizona. In addition, NWN Water includes wholly-owned unregulated wastewater businesses in Oregon, Washington, and Idaho.

Previous wording

•Blue Topaz water utility in Texas is seeking approval of the acquisition of a water utility with approximately 700 connections in Texas. After completing a fair market valuation process through the Public Utility Commission of Texas (PUCT), NWN Water filed the application with the PUCT in the first quarter of 2024. The acquisition closed in the first quarter of 2025.

Current wording

•Blue Topaz water utility in Texas received approval of the acquisition of a water utility with approximately 700 connections in Texas. After completing a fair market valuation process through the Public Utility Commission of Texas (PUCT), NWN Water filed the application with the PUCT in the first quarter of 2024. The acquisition closed in the first quarter of 2025.

Previous wording

•In the fourth quarter of 2024, Blue Topaz water utility in Texas signed a purchase agreement for a water utility with approximately 1,500 connections in Texas. NWN Water filed its notice of intent to seek fair market valuation with the PUCT in October 2024.

Current wording

•Blue Topaz water utility in Texas is seeking approval of the acquisition of a water utility with approximately 1,500 connections in Texas. After completing a fair market valuation process through the PUCT, Blue Topaz filed the application in the second quarter of 2025. The application is in process.

Previous wording

Certain of our businesses, including our natural gas businesses, are subject to or likely to be affected by current or future legislation, regulation, directed government funding, penalties for non-compliance, litigation and other forms of policies or actions seeking to regulate GHG emissions, including, but not limited to: GHG emissions limits, reporting requirements, carbon taxes, requirements to purchase carbon credits, building codes, increased efficiency standards, additional charges to fund energy efficiency activities or other regulatory actions, incentives or mandates to conserve energy or use renewable energy sources, tax advantages and other subsidies to support alternative energy sources, a reduction in rate recovery for construction costs related to the installation of new customer services or other new infrastructure investments, mandates for the use of specific fuels or technologies, bans on specific fuels or technologies, or promotion of research into new technologies to reduce the cost and increase the scalability of alternative energy sources.

Current wording

Certain of our businesses, including our natural gas businesses, are subject to or likely to be affected by current or future legislation, regulation, directed government funding, penalties for non-compliance, litigation and other forms of policies or actions seeking to regulate GHG emissions, including, but not limited to: GHG emissions limits, reporting requirements, carbon taxes, requirements to purchase carbon credits, building codes, efficiency standards, charges to fund energy efficiency activities or other regulatory actions, incentives or mandates to conserve energy or use renewable energy sources, tax advantages or other subsidies to support alternative energy sources, a reduction in rate recovery for construction costs related to the installation of new customer services or other new infrastructure investments, mandates for the use of specific fuels or technologies, bans on specific fuels or technologies, or promotion of research into new technologies to reduce the cost and increase the scalability of alternative energy sources.

Previous wording

During his administration, former President Biden issued a number of executive orders and a wide range of federal agencies took action aimed at addressing climate change and other environmental matters, including, but not limited to the Securities and Exchange Commission (SEC), the Federal Trade Commission, the Federal Energy and Regulatory Commission, PHMSA, and the Commodities Futures Trading Commission. Federal legislation passed under the Biden administration, such as the Inflation Reduction Act of 2022 (IRA), included several climate and energy provisions. Upon taking office in January 2025, President Trump issued executive orders directing the U.S. Ambassador to the United Nations to withdraw from the Paris Agreement on Climate and declaring a “national energy emergency” in the United States. He also issued other executive orders described as seeking to promote energy independence and revoking Biden administration executive orders that are related to climate policy. We expect there to be a number of additional changes related to climate policy under the Trump Administration, including additional executive orders, federal regulations, programs and other federal actions. We are currently evaluating the effect of various changes in federal climate policy, regulation and law, and cannot currently predict when or if the Trump Administration or Congress will act, the form of the action, or the impact of those actions on our business.

Current wording

During his administration, former President Biden advanced a range of climate-related initiatives through executive orders and agency actions. Federal legislation passed under the Biden administration, such as the Inflation Reduction Act of 2022 (IRA), included several climate and energy provisions. Upon taking office in January 2025, President Trump issued executive orders directing the U.S. Ambassador to the United Nations to withdraw from the Paris Agreement on Climate and declaring a “national energy emergency” in the United States. Additional executive orders have sought to promote energy independence and revoke Biden administration executive orders related to climate policy. In addition, the recently enacted One Big Beautiful Bill Act (OBBBA) includes provisions that phase out tax credits for certain renewable fuels projects. We expect continued changes to climate policy under the Trump Administration, including additional executive orders, regulations, programs and other federal actions. We are currently evaluating these developments but cannot predict the timing, form, or potential impact of future federal actions on our business.

Previous wording

In November 2024, Washington Ballot initiative I-2066 was passed. I-2066 was described on the ballot as prohibiting state and local governments from restricting access to natural gas, prohibiting the SBCC from discouraging or penalizing the use of natural gas in any building, requiring providers of natural gas to provide energy services regardless of the other energy sources available, and prohibiting the Washington Utilities and Transportation Commission (WUTC) from approving any multiyear rate plan requiring or incentivizing a natural gas company to terminate natural gas service or make such natural gas service cost-prohibitive. Although the SBCC has indicated that the current SBCC codes will remain in place while the SBCC investigates any changes necessary under I-2066, the King County Washington Superior Court recently issued a ruling declaring I-2066 invalid under the Washington state constitution. The plaintiffs in such litigation have indicated that they plan to appeal. We cannot currently predict the ultimate outcome of such appeal, or if there will be any further changes to the SBCC codes.

Current wording

In November 2024, Washington Ballot initiative I-2066 was passed. I-2066 was described on the ballot as prohibiting state and local governments from restricting access to natural gas, prohibiting the SBCC from discouraging or penalizing the use of natural gas in any building, requiring providers of natural gas to provide energy services regardless of the other energy sources available, and prohibiting the Washington Utilities and Transportation Commission (WUTC) from approving any multiyear rate plan requiring or incentivizing a natural gas company to terminate natural gas service or make such natural gas service cost-prohibitive. Although the SBCC has indicated that the current SBCC codes will remain in place while the SBCC investigates any changes necessary under I-2066, the King County Washington Superior Court recently issued a ruling declaring I-2066 invalid under the Washington state constitution. The plaintiffs have appealed such litigation. We cannot currently predict the ultimate outcome of such appeal, or if there will be any further changes to the SBCC codes.