Segment Information

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

We primarily operate in two reportable business segments: local gas distribution and gas storage. We also have other investments and business activities not specifically related to one of these two reporting segments, which are aggregated and reported as other. We refer to our local gas distribution business as the utility, and our gas storage segment and other as non-utility. Our utility segment also includes the utility portion of our Mist underground storage facility and our North Mist gas storage expansion in Oregon and NWN Gas Reserves, which is a wholly-owned subsidiary of Energy Corp. Our gas storage segment includes NWN Gas Storage, which is a wholly-owned subsidiary of NWN Energy, Gill Ranch, which is a wholly-owned subsidiary of NWN Gas Storage, the non-utility portion of Mist, and all third-party asset management services. Other includes NNG Financial and NWN Energy's equity investment in TWH, which is pursuing development of a cross-Cascades transmission pipeline project. See Note 4 in the 2016 Form 10-K for further discussion of our segments.

Inter-segment transactions were immaterial for the periods presented. The following table presents summary financial information concerning the reportable segments:

	Three Months Ended June 30,
In thousands	Utility		Gas Storage		Other			Total
2017
Operating revenues	$	130,095	$	6,088	$	55		$	136,238
Depreciation and amortization	19,894		1,461		—			21,355
Income (loss) from operations	11,860		1,599		(302		)	13,157
Net income (loss)	2,137		756		(164		)	2,729
Capital expenditures	54,265		1,129		—			55,394
2016
Operating revenues	$	92,135	$	6,992	$	56		$	99,183
Depreciation and amortization	18,961		1,452		—			20,413
Income from operations	9,714		2,879		13			12,606
Net income	507		1,439		73			2,019
Capital expenditures	31,295		804		—			32,099

	Six Months Ended June 30,
In thousands	Utility		Gas Storage		Other			Total
2017
Operating revenues	$	422,821	$	10,629	$	111		$	433,561
Depreciation and amortization	39,518		2,922		—			42,440
Income (loss) from operations	87,683		2,205		(503		)	89,385
Net income (loss)	42,329		817		(107		)	43,039
Capital expenditures	93,119		1,199		—			94,318
Total assets at June 30, 2017	2,792,011		256,396		16,747			3,065,154
2016
Operating revenues	$	342,239	$	12,361	$	112		$	354,712
Depreciation and amortization	37,721		3,086		—			40,807
Income from operations	82,009		4,605		64			86,678
Net income	36,359		2,175		126			38,660
Capital expenditures	60,472		1,681		—			62,153
Total assets at June 30, 2016	2,663,817		263,498		15,829			2,943,144
Total assets at December 31, 2016	2,806,627		256,333		16,841			3,079,801

Utility Margin

Utility margin is a financial measure consisting of utility operating revenues, which are reduced by revenue taxes, the associated cost of gas, and environmental recovery revenues. The cost of gas purchased for utility customers is generally a pass-through cost in the amount of revenues billed to regulated utility customers. Environmental recovery revenues represent collections received from customers through our environmental recovery mechanism in Oregon. These collections are offset by the amortization of environmental liabilities, which is presented as environmental remediation expense in our operating expenses. By subtracting cost of gas and environmental remediation expense from utility operating revenues, utility margin provides a key metric used by our chief operating decision maker in assessing the performance of the utility segment. The gas storage segment and other emphasize growth in operating revenues as opposed to margin because they do not incur a product cost (i.e. cost of gas sold) like the utility and, therefore, use operating revenues and net income to assess performance.

The following table presents additional segment information concerning utility margin:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands	2017		2016		2017		2016
Utility margin calculation:
Utility operating revenues (1)	$	130,095	$	92,135	$	422,821	$	342,239
Less: Utility cost of gas	53,005		20,871		196,616		129,282
Environmental remediation expense	2,611		1,893		9,565		6,922
Utility margin	$	74,479	$	69,371	$	216,640	$	206,035

⁽¹⁾   Utility operating revenues include environmental recovery revenues, which are collections received from customers through our environmental recovery mechanism in Oregon, offset by environmental remediation expense.