NORTHWEST NATURAL GAS CO
For the period ended Sep 30, 2026. Filed Nov 5, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 5, 2026
NWN$51.75-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-05.
0001733998-26-000127
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-05.
0001733998-26-000153
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 331 previous paragraphs and 323 current paragraphs.
219 unchanged; 74 reworded; 26 added; 29 removed; 9 previous and 4 current paragraphs rearranged.
Tables are not compared: 30 previous and 28 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (26)
Current report
•Consolidated net loss decreased by $0.1 million or $0.02 per diluted share.
Current report
•The decrease in net loss was primarily driven by new rates in Oregon and Washington for NW Natural, and organic customer growth across all segments. These benefits were partially offset by higher depreciation and interest expenses from continued investment in our utility systems.
Current report
NINE MONTHS ENDED SEPTEMBER 30, 2026 COMPARED TO SEPTEMBER 30, 2025.
Current report
•$1.7 million decrease in operations and maintenance expenses due primarily to lower contract labor and professional services costs.
Current report
•$5.6 million increase in other income due primarily to higher interest income on deferred regulatory balances; partially offset by
Current report
•$9.1 million increase in depreciation expense due to additional capital investments;
Current report
(6) NM indicates that the calculated value is not meaningful.
Current report
•$1.1 million increase in operations and maintenance expenses due primarily to higher payroll and benefit costs; partially offset by
Current report
(6) NM indicates that the calculated value is not meaningful.
Current report
THREE MONTHS ENDED SEPTEMBER 30, 2026 COMPARED TO SEPTEMBER 30, 2025. The primary factors contributing to the $0.9 million decrease in net income were as follows:
Current report
•$1.6 million increase in depreciation expense due to additional capital investments; partially offset by
Current report
•$2.4 million increase in depreciation expense due to additional capital investments; partially offset by
Current report
THREE MONTHS ENDED SEPTEMBER 30, 2026 COMPARED TO SEPTEMBER 30, 2025. The primary factor contributing to the $1.3 million decrease in net loss was as follows:
Current report
(3) Increase includes revenue resulting from provisional capital, which is subject to an annual review. Actual results may vary from forecasted plant in service. The Company is required to refund customers for amounts over collected as a result of variances from the forecast. As of September 30, 2026, estimated refund amounts are immaterial.
Current report
New rates were effective on August 1, 2026.
Current report
WASHINGTON EARNINGS TEST REVIEW. NW Natural is also subject to an annual earnings review in Washington under its multi-year rate plan. If NW Natural's annual Commission Basis Report, filed each year in May, demonstrates that its reported rate of return on rate base exceeds its authorized rate of return by more than 50 basis points, NW Natural is required to defer revenues above that threshold for refunds to customers or another determination by the WUTC.
Current report
On September 22, 2026, SiEnergy Gas, Pines Gas, Pines Gas Development, the staff of the RRC, the coalition of cities served by SiEnergy Gas, and other municipal parties to the Rate Case filed a settlement with the RRC that addresses all issues in the Rate Case (Stipulation). The Stipulation provides for the consolidation of SiEnergy Gas, Pines Gas, and Pines Gas Development as well as the establishment of systemwide rates. The Stipulation provides for a revenue requirement increase of approximately $8.6 million, a capital structure consisting of 59.75% equity and 40.25% long-term debt, a return on equity of 9.8%, and an overall cost of capital of 8.0%. Rate base of the combined entities is approximately $343 million, representing a $177 million increase since the last rate case in 2023. The Stipulation further sets forth baseline factors for future interim rate adjustment filings under Texas' Gas Reliability Infrastructure Program (GRIP). To participate in the GRIP program, SiEnergy must make an initial filing within two years of its Rate Case filing.
Current report
The Stipulation is subject to the review and approval of the RRC. For new rates to be effective, the RRC must issue an order, which may approve, modify or deny the terms of the Stipulation. New rates are expected to take effect in November 2026.
Current report
•On September 4, 2026, Sunriver filed a request for an alternative rate mechanism with the Oregon Public Utilities Commission for the recovery of costs associated with certain capital expenditures expected to be placed into service in Q4 2026. The request seeks an increase to annual revenues of $811 thousand, and is expected to go into effect in the first quarter of 2027.
Current report
•$17.4 million increase in cash used to purchase inventory; and
Current report
•$24.7 million decrease in cash from accounts receivable due to comparatively warmer weather in the current year;
Current report
•$22.4 million increase in cash used to purchase inventory;
Current report
•$13.5 million increase in cash used to pay accounts payable; partially offset by
Current report
In September 2026, NW Natural issued a $10.5 million letter of credit under the LC Facility, which expired October 16, 2026.
Current report
NW Natural's First Mortgage Bonds (FMBs) were issued under the Mortgage and Deed of Trust, which constitutes a first mortgage lien on certain gas properties owned from time to time by NW Natural, including substantially all of the property constituting NW Natural's natural gas distribution plant balances.
Current report
On August 6, 2026, NW Holdings repaid in full the $50.0 million outstanding principal amount of its senior unsecured Term Loan under the Term Loan Agreement, together with accrued interest and other amounts due. Following the repayment, no amounts remained outstanding under the Term Loan Agreement.
Removed paragraphs (29)
Previous report
•Consolidated net income increased by $3.1 million or $0.07 per diluted share.
Previous report
SIX MONTHS ENDED JUNE 30, 2026 COMPARED TO JUNE 30, 2025.
Previous report
•Consolidated net income decreased by $1.0 million.
Previous report
•Net income decreased as higher margin from new rates in Oregon, which were effective October 31, 2025, were more than offset by higher operations and maintenance expenses and continued investment in the system resulting in higher interest and depreciation expenses.
Previous report
•Capital expenditures were $87.0 million, due primarily to continued investments to support the safety and reliability of NW Natural.
Previous report
SIX MONTHS ENDED JUNE 30, 2026 COMPARED TO JUNE 30, 2025.
Previous report
•Consolidated net income increased by $1.7 million and was primarily driven by new rates for Oregon customers, effective October 31, 2025. This benefit was partially offset by increases from continued investment in the system that resulted in higher interest and depreciation expenses, and higher operations and maintenance expenses.
Previous report
•Capital expenditures were $166.6 million, due primarily to continued investments to support the safety and reliability of NW Natural.
Previous report
•$3.5 million increase in operations and maintenance expenses due primarily to higher contract labor costs and payroll and benefit costs;
Previous report
•$0.6 million decrease in depreciation expense due to the deferral of depreciation on investments allowed by Texas House Bill 4384. Benefits to net income were partially offset by
Previous report
•$0.9 million decrease in depreciation expense due to the deferral of depreciation on investments allowed by Texas House Bill 4384. Benefits to net income were partially offset by
Previous report
THREE MONTHS ENDED JUNE 30, 2026 COMPARED TO JUNE 30, 2025. The primary factors contributing to the $0.6 million decrease in net income were as follows:
Previous report
SIX MONTHS ENDED JUNE 30, 2026 COMPARED TO JUNE 30, 2025. The primary factors contributing to the $0.8 million decrease in net income were as follows:
Previous report
SIX MONTHS ENDED JUNE 30, 2026 COMPARED TO JUNE 30, 2025. The primary factors contributing to the $7.1 million decrease in net loss were as follows:
Previous report
On June 29, 2026, NW Natural, OPUC Staff, and the Alliance of Western Energy Consumers filed a Partial Multi-Party Stipulation resolving substantially all issues in the proceeding. The stipulation supports an annual revenue requirement increase of approximately $13.0 million, subject to completion of capital projects identified as being placed in service prior to the rate effective date. A limited number of issues remain contested, with no material impact expected to the overall revenue requirement. A Commission order is expected later this year, with new rates anticipated to take effect on October 31, 2026.
Previous report
•Capital structure of 40% long-term debt and 60% equity;
Previous report
•Return on equity of 10.75%;
Previous report
•Cost of long-term debt of 5.69%; and
Previous report
•Cost of capital of 8.73%.
Previous report
SiEnergy's filing will be reviewed by the RRC and other stakeholders. New rates are expected to take effect in the fourth quarter of 2026.
Previous report
Constitution. Washington State and the Building Industry Association of Washington have appealed that ruling to the Washington Supreme Court. We cannot currently predict the ultimate outcome of such appeal, or if there will be any further changes to the SBCC codes as a result of I-2066.
Previous report
•$13.2 million increase in cash used by deferred gas costs; partially offset by
Previous report
•$13.9 million increase in cash used for inventory; and
Previous report
•$13.2 million increase in cash used by deferred gas costs; partially offset by
Previous report
NW Holdings
Previous report
NW Holdings
Previous report
There were no letter of credits issued or outstanding under the 2024 or 2026 LC Reimbursement Agreements at June 30, 2026.
Previous report
(3) On January 7, 2025, NW Holdings acquired SiEnergy. SiEnergy's subsidiary, Si Investment Co., had this existing term loan outstanding at the date of acquisition. In August 2025, the associated facilities were terminated and are no longer available for financing.
Previous report
In June 2026, NW Holdings entered into a Note Purchase Agreement between NW Holdings and the institutional investors named as purchasers therein. The Note Purchase Agreement provided for the issuance of (i) $10.0 million in aggregate principal amount of its 5.35% Senior Notes, Series F, due August 5, 2031 (the Series F Notes) and (ii) $60.0 million in aggregate principal amount of its 5.83% Senior Notes, Series G, due August 5, 2036 (the Series G Notes) in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. The Series F Notes and Series G Notes were issued and sold on August 5, 2026.
Reworded paragraphs (74)
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 and six months ended June 30, 2026 and 2025 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 are not necessarily indicative of expected fiscal year results. Therefore, this discussion should be read in conjunction with NW Holdings' and NW Natural's 2025 Annual Report on Form 10-K, as applicable (2025 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 nine months ended September 30, 2026 and 2025 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 and nine month periods are not necessarily indicative of expected fiscal year results. Therefore, this discussion should be read in conjunction with NW Holdings' and NW Natural's 2025 Annual Report on Form 10-K, as applicable (2025 Form 10-K).
Previous wording
In addition to presenting diluted earnings per share for NW Holdings, we present diluted earnings per share for each of our segments (Segment EPS), which is a non-GAAP financial measure. We calculate Segment EPS by dividing the net income of each of our segments calculated in accordance with GAAP by the number of diluted shares outstanding for NW Holdings. We use Segment EPS to analyze our financial performance because we believe it provides useful information to our investors, analysts and creditors in evaluating our financial condition and results of operations of each of our segments. We believe investors find Segment EPS to be a useful indicator of our performance.
Current wording
In addition to presenting diluted earnings per share for NW Holdings, we present diluted earnings per share for each of our segments (Segment EPS), which is a non-GAAP financial measure. We calculate Segment EPS by dividing the net income of each of our segments calculated in accordance with GAAP by the number of diluted shares outstanding for NW Holdings. We use Segment EPS to analyze our financial performance because we believe it provides useful information to our investors, analysts and creditors in evaluating our financial condition and results of operations of each of our segments. We believe investors find Segment EPS to be a useful indicator of segment performance.
Previous wording
•Consolidated net income increased by $12.7 million or $0.22 per diluted share.
Current wording
•Consolidated net income increased by $12.7 million or $0.26 per diluted share.
Previous wording
•The increase in net income was primarily driven by new NW Natural rates in Oregon, effective October 31, 2025, organic customer growth, the acquisition of Pines in June 2025, and the implementation of House Bill 4384 in July 2025. These benefits were partially offset by increases from continued investment in our utility systems that resulted in higher interest and depreciation expenses.
Current wording
•The increase in net income was primarily driven by new NW Natural rates in Oregon, effective October 31, 2025, organic customer growth, and the acquisition of Pines in June 2025. These benefits were partially offset by higher interest and depreciation expenses from continued investment in our utility systems, and an increase in property taxes.
Previous wording
•Customer growth was 1.9%, driven by organic growth at SiEnergy and NWN Water, and the Pines and Inline acquisitions.
Current wording
•Customer growth was 1.8%, driven by organic growth at SiEnergy and NWN Water, and the Pines and Inline acquisitions.
Previous wording
•Capital expenditures were $235.0 million, as we continue to invest in our utility systems to support safety and reliability.
Current wording
•Capital expenditures were $373.4 million, as we continue to invest in our utility systems to support safety and reliability.
Previous wording
THREE MONTHS ENDED JUNE 30, 2026 COMPARED TO JUNE 30, 2025. The primary factors contributing to the $1.0 million decrease in NW Natural net income were as follows:
Current wording
THREE MONTHS ENDED SEPTEMBER 30, 2026 COMPARED TO SEPTEMBER 30, 2025. The primary factors contributing to the $0.1 million increase in NW Natural net loss were as follows:
Previous wording
•$2.3 million increase in interest expense due primarily to higher long-term debt from first mortgage bonds issued in December 2025; partially offset by
Current wording
•$3.3 million increase in interest expense due primarily to higher long-term debt from first mortgage bonds issued in December 2025 and September 2026;
Previous wording
•$3.0 million increase in depreciation expense due to additional capital investments; and
Current wording
•$2.7 million increase in depreciation expense due to additional capital investments; and
Previous wording
•$1.1 million decrease in income tax benefit due to lower pre-tax losses.
Current wording
•$2.3 million decrease in income tax benefit due to lower pre-tax losses; partially offset by
Previous wording
•$13.2 million increase in margin driven by new rates on October 31, 2025 for Oregon customers. See the NW Natural margin table below for additional margin detail; partially offset by
Current wording
•$6.5 million increase in margin driven by new rates on October 31, 2025 for Oregon customers and new rates on August 1, 2026 for Washington customers. See the NW Natural margin table below for additional margin detail; and
Previous wording
For the three months ended June 30, 2026, total NW Natural volumes sold and delivered decreased 7.7 million therms compared to the same period in 2025, primarily due to lower usage from residential and commercial sales customers.
Current wording
For the three months ended September 30, 2026, total NW Natural volumes sold and delivered increased 5.7 million therms compared to the same period in 2025, primarily due to higher usage from residential and commercial sales customers.
Previous wording
SIX MONTHS ENDED JUNE 30, 2026 COMPARED TO JUNE 30, 2025. The primary factors contributing to the $1.7 million increase in NW Natural net income were as follows:
Current wording
NINE MONTHS ENDED SEPTEMBER 30, 2026 COMPARED TO SEPTEMBER 30, 2025. The primary factors contributing to the $1.6 million increase in NW Natural net income were as follows:
Previous wording
•$7.4 million increase in margin driven by new rates on October 31, 2025 for Oregon customers. See the NW Natural margin table below for additional margin detail.
Current wording
•$19.7 million increase in margin driven by new rates on October 31, 2025 for Oregon customers. See the NW Natural margin table below for additional margin detail; and
Previous wording
•$6.2 million increase in operations and maintenance expenses due primarily to an increase in regulatory deferral amortization, payroll and benefit costs, and contract labor costs.
Current wording
•$4.6 million increase in operations and maintenance expenses due primarily to an increase in payroll and benefit costs and regulatory deferral amortization, which is mostly offset in revenues.
Previous wording
For the six months ended June 30, 2026, total NW Natural volumes sold and delivered decreased by 50.4 million therms compared to the same period in 2025 primarily due to lower usage from residential and commercial sales customers.
Current wording
For the nine months ended September 30, 2026, total NW Natural volumes sold and delivered decreased by 44.7 million therms compared to the same period in 2025 primarily due to lower usage from residential and commercial sales customers, and warmer than average weather.
Previous wording
THREE MONTHS ENDED JUNE 30, 2026 COMPARED TO JUNE 30, 2025. The primary factors contributing to the $1.0 million increase in SiEnergy net income were as follows:
Current wording
THREE MONTHS ENDED SEPTEMBER 30, 2026 COMPARED TO SEPTEMBER 30, 2025. The primary factors contributing to the $0.3 million decrease in SiEnergy net income were as follows:
Previous wording
•$6.5 million increase in margin driven primarily by organic customer growth and the acquisition of Pines Holdings, LLC (Pines) on June 2, 2025. See the SiEnergy margin table below for additional margin detail; and
Current wording
•$0.6 million increase in margin driven primarily by organic customer growth. See the SiEnergy margin table below for additional margin detail.
Previous wording
For the three months ended June 30, 2026, total SiEnergy volumes sold and delivered decreased by 1.2 million therms compared to the same period in 2025 primarily due to lower usage from transportation customers.
Current wording
For the three months ended September 30, 2026, total SiEnergy volumes sold and delivered increased by 1.5 million therms compared to the same period in 2025 primarily due to organic customer growth.
Previous wording
SIX MONTHS ENDED JUNE 30, 2026 COMPARED TO JUNE 30, 2025. The primary factors contributing to the $4.6 million increase in SiEnergy net income were as follows:
Current wording
NINE MONTHS ENDED SEPTEMBER 30, 2026 COMPARED TO SEPTEMBER 30, 2025. The primary factors contributing to the $4.4 million increase in SiEnergy net income were as follows:
Previous wording
•$1.6 million increase in margin driven primarily by organic customer growth and the acquisition of Pines Holdings, LLC (Pines) on June 2, 2025. See the SiEnergy margin table below for additional margin detail; and
Current wording
•$7.1 million increase in margin driven primarily by organic customer growth and the acquisition of Pines on June 2, 2025. See the SiEnergy margin table below for additional margin detail; partially offset by
Previous wording
•$0.9 million increase in operations and maintenance expenses due primarily to higher payroll and benefit costs and the acquisition of Pines.
Current wording
•$3.1 million increase in operations and maintenance expenses due primarily to higher payroll and benefit costs and the acquisition of Pines.
Previous wording
For the six months ended June 30, 2026, total SiEnergy volumes sold and delivered increased by 2.9 million therms compared to the same period in 2025 primarily due to organic growth and the Pines acquisition.
Current wording
For the nine months ended September 30, 2026, total SiEnergy volumes sold and delivered increased by 4.4 million therms compared to the same period in 2025 primarily due to organic growth and the Pines acquisition.
Previous wording
•$0.8 million increase in operating revenues primarily driven by regulated and unregulated rate increases.
Current wording
•$0.9 million increase in operating revenues primarily driven by regulated and unregulated rate increases.
Previous wording
•$1.8 million increase in operations and maintenance expenses primarily due to higher payroll and benefit costs, software and technology costs, and acquisitions; partially offset by
Current wording
•$2.9 million increase in operations and maintenance expenses primarily due to higher payroll and benefit costs, software and technology costs, and acquisitions; and
Previous wording
•$1.8 million increase in operating revenues primarily driven by regulated and unregulated rate increases.
Current wording
•$2.7 million increase in operating revenues primarily driven by rate increases.
Previous wording
•$10.7 million decrease in operations and maintenance expenses due primarily to lower business development and transaction expenses; partially offset by
Current wording
•$1.4 million decrease in operations and maintenance expenses due primarily to lower business development and transaction expenses.
Previous wording
THREE MONTHS ENDED JUNE 30, 2026 COMPARED TO JUNE 30, 2025. The primary factors contributing to the $3.6 million decrease in net loss were as follows:
Current wording
NINE MONTHS ENDED SEPTEMBER 30, 2026 COMPARED TO SEPTEMBER 30, 2025. The primary factors contributing to the $8.5 million decrease in net loss were as follows:
Previous wording
•$4.9 million decrease in operations and maintenance expenses due primarily to lower business development and transaction expenses; partially offset by
Current wording
•$12.1 million decrease in operations and maintenance expenses due primarily to lower business development and transaction expenses; partially offset by
Previous wording
•$2.1 million decrease in income tax benefit due to lower pre-tax losses; and
Current wording
•$2.4 million decrease in income tax benefit due to lower pre-tax losses; and
Previous wording
•$1.9 million increase in interest expense due primarily to higher long-term debt at NW Holdings from Junior Subordinated Debentures issued in March 2025.
Current wording
•$2.3 million increase in interest expense due primarily to higher long-term debt at NW Holdings from Junior Subordinated Debentures issued in March 2025 and Senior Notes issued in June and August 2026.
Previous wording
We continue to monitor the impact of the conflict in the Middle East and the resulting volatility in global natural gas prices. NW Natural and SiEnergy recover the cost of natural gas through rates. In addition, for the 2025-26 gas year, the total amount of forecasted sales volumes hedged was approximately 84% in Oregon and 33% in Washington. We expect to continue hedging for the upcoming 2026-27 gas year in the coming months, have not experienced gas price volatility in regard to the conflict in the Middle East, and will continue to assess these factors.
Current wording
We continue to monitor the impact of the conflict in the Middle East and the resulting volatility in global natural gas prices. NW Natural and SiEnergy recover the cost of natural gas through rates. In addition, for the 2026-27 gas year, the total amount of forecasted sales volumes hedged was approximately 83% in Oregon and 44% in Washington. We have not experienced gas price volatility in regard to the conflict in the Middle East, and will continue to assess these factors.
Previous wording
WASHINGTON. On July 29, 2026, the WUTC issued a final order in the Rate Case concluding NW Natural's multi-year rate case filed in August 2025 (Order). The Order provides for an annual revenue requirement across three years, beginning on August 1, 2026.
Current wording
2026 WASHINGTON RATE CASE. On July 29, 2026, the WUTC issued a final order in the Rate Case concluding NW Natural's multi-year rate case filed in August 2025 (Order). The Order provides for an annual revenue requirement across three years, beginning on August 1, 2026.
Previous wording
The incremental revenue requirement for each year is based off of the following assumptions:
Current wording
The incremental revenue requirement for each year is based upon the following assumptions:
Previous wording
In September 2025, NW Natural filed its annual PGAs and received OPUC and WUTC approval in October. The PGA rate changes became effective on October 31, 2025, in Oregon and on November 1, 2025, in Washington. Rates vary between states due to different rate structures, rate mechanisms and hedging policies.
Current wording
In September 2026, NW Natural filed its annual PGAs and received OPUC and WUTC approval in October. The PGA rate changes became effective on October 31, 2026, for residential customers in Oregon and on November 1, 2026, for non-residential customers in Oregon and all customers in Washington. Rates vary between states due to different rate structures, rate mechanisms and hedging policies.
Previous wording
Each year, NW Natural hedges gas prices on a portion of NW Natural's annual sales requirement based on normal weather, including both physical and financial hedges. As of June 30, 2026, NW Natural's forecasted sales volume was hedged at approximately 79% in total for the 2025-26 gas year, including 64% in financial hedges and 15% in physical gas supplies. The total hedged was approximately 84% in Oregon and 33% in Washington.
Current wording
Each year, NW Natural hedges gas prices on a portion of NW Natural's annual sales requirement based on normal weather, including both physical and financial hedges. As of September 30, 2026, NW Natural's forecasted sales volume was hedged at approximately 79% in total for the 2026-27 gas year, including 64% in financial hedges and 15% in physical gas supplies. The total hedged was approximately 83% in Oregon and 44% in Washington.
Previous wording
For the subsequent two gas years, NW Natural is hedged in total between 26% and 47% for annual requirements. Hedge levels are subject to change based on actual load volumes, which depend to a certain extent on weather, economic conditions, and estimated gas reserve production. Also, gas storage inventory levels may increase or decrease with storage expansion, changes in storage contracts with third parties, variations in the heat content of the gas, and/or storage recall by NW Natural. We will continue to monitor gas prices as we fill storage and look at hedging plans for future gas years. Gas purchases and hedges entered into for the upcoming PGA year will be included in the Company’s PGA filings in Oregon and Washington.
Current wording
For the subsequent two gas years, NW Natural is hedged in total between 15% and 33% for annual requirements. Hedge levels are subject to change based on actual load volumes, which depend to a certain extent on weather, economic conditions, and estimated gas reserve production. Also, gas storage inventory levels may increase or decrease with storage expansion, changes in storage contracts with third parties, variations in the heat content of the gas, and/or storage recall by NW Natural. We will continue to monitor gas prices as we fill storage and look at hedging plans for future gas years. Gas purchases and hedges entered into for the upcoming PGA year will be included in the Company’s PGA filings in Oregon and Washington.
Previous wording
EARNINGS TEST REVIEW. NW Natural is subject to an annual earnings review in Oregon to determine if the NW Natural business is earning above its authorized ROE threshold. If NW Natural 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 before earnings sharing applies. 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 2024-25 and 2025-26 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 years 2023, 2024, and 2025, the ROE threshold was 10.40%. NW Natural filed the 2025 earnings test in April 2026, indicating no customer credit adjustment based on results, which was approved by the OPUC in June 2026. Through Q2 2026, NW Natural does not expect a customer credit adjustment for 2026 based on preliminary results of the earnings test.
Current wording
OREGON EARNINGS TEST REVIEW. NW Natural is subject to an annual earnings review in Oregon to determine if the NW Natural business is earning above its authorized ROE threshold. If NW Natural 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 before earnings sharing applies. 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 2026-27 and 2025-26 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%, for 2025 the threshold was 10.43%, and for 2026, the ROE threshold was 10.50%. NW Natural filed the 2025 earnings test in April 2026, indicating no customer credit adjustment based on results, which was approved by the OPUC in June 2026. Through Q3 2026, NW Natural does not expect a customer credit adjustment for 2026 based on preliminary results of the earnings test.
Previous wording
Investments in RNG facilities are recovered through an automatic adjustment clause that allows recovery of NW Natural's investments in RNG projects, including operating costs, to be added to rates annually on October 31, following a prudence review. The RNG recovery mechanism allows NW Natural to defer for recovery or credit the differences between the forecasted and actual costs of the RNG projects, subject to an earnings test that includes deadbands at 50 basis points below and above NW Natural's authorized ROE. NW Natural has two investments that the OPUC has approved for recovery in rates. NW Natural filed the 2025 earnings test in April 2026, indicating no customer credit adjustment based on results, which was approved by the OPUC in June 2026. Through Q2 2026, NW Natural does not expect a customer credit adjustment for 2026 based on preliminary results of the earnings test. For RNG procurement contracts, NW Natural seeks recovery of the costs along with the PGA, subject to a prudence review.
Current wording
Investments in RNG facilities are recovered through an automatic adjustment clause that allows recovery of NW Natural's investments in RNG projects, including operating costs, to be added to rates annually on October 31, following a prudence review. The RNG recovery mechanism allows NW Natural to defer for recovery or credit the differences between the forecasted and actual costs of the RNG projects, subject to an earnings test that includes deadbands at 50 basis points below and above NW Natural's authorized ROE. NW Natural has one investment that the OPUC has approved for recovery in rates. NW Natural filed the 2025 earnings test in April 2026, indicating no customer credit adjustment based on results, which was approved by the OPUC in June 2026. Through Q3 2026, NW Natural does not expect a customer credit adjustment for 2026 based on preliminary results of the earnings test. For RNG procurement contracts, NW Natural seeks recovery of the costs along with the PGA, subject to a prudence review.
Previous wording
ENVIRONMENTAL COST DEFERRAL AND RECOVERY. NW Natural has authorizations in Oregon and Washington to defer costs related to remediation of properties that are owned or were previously owned by NW Natural. In Oregon, a Site Remediation and Recovery Mechanism (SRRM) is currently in place to recover prudently incurred costs allocable to Oregon customers, subject to an earnings test. Effective beginning November 1, 2019, the WUTC authorized an Environmental Cost Recovery Mechanism (ECRM) for recovery of prudently incurred costs allocable to Washington customers.
Current wording
ENVIRONMENTAL COST DEFERRAL AND RECOVERY. NW Natural has authorizations in Oregon and Washington to defer costs related to remediation of properties that are owned or were previously owned by NW Natural. In Oregon, a Site Remediation and Recovery Mechanism (SRRM) is currently in place to recover prudently incurred costs allocable to Oregon customers, subject to an earnings test. In Washington, an Environmental Cost Recovery Mechanism (ECRM) is currently in place to recover prudently incurred costs allocable to Washington customers.
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Current report — wording carried from elsewhere
•$7.7 million increase in interest expense due primarily to higher long-term debt from first mortgage bonds issued in December 2025 and September 2026; and
Current report — wording carried from elsewhere
NINE MONTHS ENDED SEPTEMBER 30, 2026 COMPARED TO SEPTEMBER 30, 2025. The primary factors contributing to the $1.7 million decrease in net income were as follows:
Current report — wording carried from elsewhere
Under the ECRM, NW Natural is permitted to recover environmental remediation expenses allocable to Washington customers. These expenses represent 3.32% of costs associated with remediation of sites that historically served both Oregon and
Current report — wording carried from elsewhere
•$12.7 million increase in net income.
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Previous report — wording carried elsewhere
•The increase in net income was primarily driven by new NW Natural rates in Oregon, effective October 31, 2025, organic customer growth, the acquisition of Pines in June 2025, and the implementation of House Bill 4384 in July 2025. These benefits were partially offset by increases from continued investment in our utility systems that resulted in higher interest and depreciation expenses.
Previous report — wording carried elsewhere
Key financial highlights for NW Natural include:
Previous report — wording carried elsewhere
THREE MONTHS ENDED JUNE 30, 2026 COMPARED TO JUNE 30, 2025.
Previous report — wording carried elsewhere
•$6.4 million increase in depreciation expense due to additional capital investments; and
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•$2.0 million increase in operations and maintenance expenses due primarily to higher payroll and benefit costs and the acquisition of Pines.
Previous report — wording carried elsewhere
•$3.1 million increase in operations and maintenance expenses primarily due to higher payroll and benefit costs, software and technology costs, and acquisitions; partially offset by
Previous report — wording carried elsewhere
New rates became effective on August 1, 2026.
Previous report — wording carried elsewhere
•$19.1 million increase in cash used by accounts payable;
Previous report — wording carried elsewhere
•$17.7 million increase in cash provided by changes in regulatory accounts.