Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2011

Disclosure Summary Of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies Text Block

2.Significant Accounting Policies Update

Industry Regulation

In applying regulatory accounting principles, we capitalize or defer certain costs and revenues as regulatory assets and liabilities. At June 30, 2011 and 2010 and at December 31, 2010, the amounts deferred as regulatory assets and liabilities were as follows:

			Regulatory Assets
			June 30,		June 30,		December 31,
Thousands			2011		2010		2010
Current:
	Unrealized loss on derivatives(1)	$	25,986	$	34,463	$	38,437
	Pension and other postretirement benefit liabilities(2)		10,988		7,502		10,988
	Other(3)		22,792		14,839		3,289
Total current		$	59,766	$	56,804	$	52,714
Non-current:
	Unrealized loss on derivatives(1)	$	9,202	$	16,917	$	17,022
	Income tax asset		70,241		75,515		72,341
	Pension and other postretirement benefit liabilities(2)		112,743		106,089		118,248
	Environmental costs(4)		120,285		109,324		114,311
	Other(3)		13,610		21,352		26,975
Total non-current		$	326,081	$	329,197	$	348,897

			Regulatory Liabilities
			June 30,		June 30,		December 31,
Thousands			2011		2010		2010
Current:
	Gas costs payable	$	17,538	$	23,416	$	15,583
	Unrealized gain on derivatives(1)		4,433		1,495		2,245
	Other(3)		3,813		4,613		-
Total current		$	25,784	$	29,524	$	17,828
Non-current:
	Gas costs payable	$	3,023	$	2,218	$	2,297
	Unrealized gain on derivatives(1)		1,042		453		628
	Accrued asset removal costs		259,593		246,839		252,941
	Other(3)		2,045		2,075		2,165
Total non-current		$	265,703	$	251,585	$	258,031

• Unrealized gain or loss on derivatives does not earn a rate of return or a carrying charge.  These amounts are recoverable through utility rates as part of the Purchased Gas Adjustment mechanism when realized at settlement.
• Certain pension and other postretirement benefit liabilitiesof the utility are approved for regulatory deferral, including the approval of a pension cost balancing account to defer the effects of higher and lower pension expenses in future years.  Such amounts are recoverable in rates, including an interest component, when recognized in pension expense or net periodic benefit cost (see Note 9).
• Other primarily consists of deferrals and amortizations under other approved regulatory mechanisms.  The accounts being amortized typically earn a rate of return or carrying charge.
• Environmental costs are related to certainutility sites that are approved for regulatory deferral.  In Oregon we earn the utility's authorized rate of return as a deferred carrying charge on deferred account balances.

Revenue Recognition

Utility and non-utility revenues, which are derived primarily from the sale, transportation or storage of natural gas, are recognized upon the delivery of gas commodity or service to customers. Since 2007, utility net operating revenues have also included the recognition of a regulatory adjustment for income taxes paid pursuant to a legislative rule (commonly referred to as SB 408) in effect for certain gas and electric utilities in Oregon. Under SB 408, we were required to automatically implement a rate refund, or a rate surcharge, to utility customers on an annual basis. The refund or surcharge amount was based on the difference between income taxes paid and income taxes authorized to be collected in customer rates. We recorded the refund, or surcharge, each quarter from 2007 through 2010 based on the annual amount to be recognized. However, on May 24, 2011, SB 408 was repealed when the Oregon Governor signed Senate Bill 967 (SB 967) into law. SB 967, requires utilitiesto eliminate amounts accrued under SB 408 for the 2010 and 2011 tax years, thereby denying recovery by NW Naturalof the surcharge related to 2010, which resulted in a one-time pre-tax charge of $7.4 million (or 17 cents per share) in the second quarter of 2011.With respect to the first quarter of 2011, there was substantial uncertainty surrounding the continuation of the legal requirements of SB 408 as of March 31, 2011, and accordingly we did not record an accrual for the estimated refund or surcharge so no amounts were required to be written off for 2011.

Pension Expense

Net periodic pension cost consists of service costs, interest costs, the expected returns on plan assets, and the amortization of actuarial gains and losses. Effective January 1, 2011, we began deferring a portion of our net periodic pension cost to a regulatory account on the balance sheet pursuant to OPUC approval of to defer certain pension expenses above or below the amount set in rates. See Note 9 for further information.As of June 30, 2011, the total amount deferred was $2.7 million.

New Accounting Standards

Adopted Standards

Fair Value Disclosures.In January 2010, the Financial Accounting Standards Board (FASB) issued authoritative guidance on new fair value measurements and disclosures.  This guidance requires additional disclosures for fair value measurements that use significant assumptions not observable in active markets (i.e. level 3 valuations), including a rollforward schedule. These changes were effective for periods beginning after December 15, 2010; however, we elected to early adopt these disclosure requirements, as shown in Note 9 in our 2010 Form 10-K. The adoption of this standard did not have a material effect on our financial statement disclosures.

Recent Accounting Pronouncements

Fair Value Measurement. In May 2011, the FASB issued amendments to the authoritative guidance on fair value measurement. The amendments are primarily related to disclosure requirements,which go into effect for periods beginning after December 15, 2011. Early implementation is not allowed and we are currently assessing the impact on our financial statement disclosures.

Comprehensive Income. In June 2011, the FASB issued authoritative guidance on the presentation of comprehensive income within the financial statements. An entity can elect to present items of net income and other comprehensive income in one continuous statement — referred to as the statement of comprehensive income — or in two separate, but consecutive, statements. These changes are effective for periods beginning after December 15, 2011 and early implementation is not permitted. We intend to present net income and other comprehensive income in one continuous statement.