Oregon | 93-0256722 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
PART 1. | FINANCIAL INFORMATION | Page |
Unaudited Consolidated Financial Statements: | ||
PART II. | OTHER INFORMATION | |
• | plans, projections and predictions; |
• | objectives, goals or strategies; |
• | assumptions, generalizations and estimates; |
• | ongoing continuation of past practices or patterns; |
• | future events or performance; |
• | trends; |
• | risks; |
• | timing and cyclicality; |
• | earnings and dividends; |
• | capital expenditures and allocation; |
• | capital or organizational structure, including restructuring as a holding company; |
• | climate change and our role in a low-carbon future; |
• | growth; |
• | customer rates; |
• | labor relations and workforce succession; |
• | commodity costs; |
• | gas reserves; |
• | operational and financial performance and costs; |
• | energy policy, infrastructure and preferences; |
• | public policy approach and involvement; |
• | efficacy of derivatives and hedges; |
• | liquidity, financial positions, and planned securities issuances; |
• | valuations; |
• | project and program development, expansion, or investment; |
• | business development efforts, including acquisitions and integration thereof; |
• | asset dispositions and outcomes thereof; |
• | pipeline capacity, demand, location, and reliability; |
• | adequacy of property rights and headquarter development; |
• | technology implementation and cybersecurity practices; |
• | competition; |
• | procurement and development of gas supplies; |
• | estimated expenditures; |
• | costs of compliance; |
• | credit exposures; |
• | rate or regulatory outcomes, recovery or refunds; |
• | impacts or changes of laws, rules and regulations; |
• | tax liabilities or refunds, including effects of tax reform; |
• | levels and pricing of gas storage contracts and gas storage markets; |
• | outcomes, timing and effects of potential claims, litigation, regulatory actions, and other administrative matters; |
• | projected obligations, expectations and treatment with respect to retirement plans; |
• | availability, adequacy, and shift in mix, of gas supplies; |
• | effects of new or anticipated changes in critical accounting policies or estimates; |
• | approval and adequacy of regulatory deferrals; |
• | effects and efficacy of regulatory mechanisms; and |
• | environmental, regulatory, litigation and insurance costs and recoveries, and timing thereof. |
NORTHWEST NATURAL GAS COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
In thousands, except per share data | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Operating revenues | $ | 124,567 | $ | 134,476 | $ | 388,202 | $ | 430,200 | ||||||||
Operating expenses: | ||||||||||||||||
Cost of gas | 42,053 | 53,005 | 150,159 | 196,616 | ||||||||||||
Operations and maintenance | 38,028 | 34,997 | 77,551 | 72,443 | ||||||||||||
Environmental remediation | 1,882 | 2,611 | 6,506 | 9,565 | ||||||||||||
General taxes | 7,729 | 7,204 | 17,203 | 15,883 | ||||||||||||
Revenue taxes | 4,780 | — | 17,209 | — | ||||||||||||
Depreciation and amortization | 21,147 | 20,224 | 42,022 | 40,177 | ||||||||||||
Other operating expenses | 679 | — | 1,532 | — | ||||||||||||
Total operating expenses | 116,298 | 118,041 | 312,182 | 334,684 | ||||||||||||
Income from operations | 8,269 | 16,435 | 76,020 | 95,516 | ||||||||||||
Other income (expense), net | 7 | (340 | ) | (827 | ) | (763 | ) | |||||||||
Interest expense, net | 8,771 | 9,473 | 18,045 | 19,103 | ||||||||||||
Income (loss) before income taxes | (495 | ) | 6,622 | 57,148 | 75,650 | |||||||||||
Income tax (benefit) expense | (156 | ) | 2,547 | 15,476 | 30,178 | |||||||||||
Net income (loss) from continuing operations | (339 | ) | 4,075 | 41,672 | 45,472 | |||||||||||
Loss from discontinued operations, net of tax | (659 | ) | (1,346 | ) | (1,133 | ) | (2,433 | ) | ||||||||
Net income (loss) | (998 | ) | 2,729 | 40,539 | 43,039 | |||||||||||
Other comprehensive income: | ||||||||||||||||
Amortization of non-qualified employee benefit plan liability, net of taxes of $56 and $88 for the three months ended and $111 and $177 for the six months ended June 30, 2018 and 2017, respectively | 153 | 137 | 307 | 273 | ||||||||||||
Comprehensive income (loss) | $ | (845 | ) | $ | 2,866 | $ | 40,846 | $ | 43,312 | |||||||
Average common shares outstanding: | ||||||||||||||||
Basic | 28,791 | 28,648 | 28,772 | 28,641 | ||||||||||||
Diluted | 28,791 | 28,717 | 28,825 | 28,722 | ||||||||||||
Earnings (loss) from continuing operations per share of common stock: | ||||||||||||||||
Basic | $ | (0.01 | ) | $ | 0.14 | $ | 1.45 | $ | 1.58 | |||||||
Diluted | (0.01 | ) | 0.14 | 1.45 | 1.58 | |||||||||||
Loss from discontinued operations per share of common stock: | ||||||||||||||||
Basic | $ | (0.02 | ) | $ | (0.04 | ) | $ | (0.04 | ) | $ | (0.08 | ) | ||||
Diluted | (0.02 | ) | (0.04 | ) | (0.04 | ) | (0.08 | ) | ||||||||
Earnings (loss) per share of common stock: | ||||||||||||||||
Basic | $ | (0.03 | ) | $ | 0.10 | $ | 1.41 | $ | 1.50 | |||||||
Diluted | (0.03 | ) | 0.10 | 1.41 | 1.50 | |||||||||||
Dividends declared per share of common stock | 0.4725 | 0.4700 | 0.9450 | 0.9400 |
NORTHWEST NATURAL GAS COMPANY CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||||||||
June 30, | June 30, | December 31, | ||||||||||
In thousands | 2018 | 2017 | 2017 | |||||||||
Assets: | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 8,755 | $ | 20,854 | $ | 3,472 | ||||||
Accounts receivable | 31,512 | 30,778 | 66,236 | |||||||||
Accrued unbilled revenue | 13,995 | 13,896 | 62,381 | |||||||||
Allowance for uncollectible accounts | (657 | ) | (845 | ) | (956 | ) | ||||||
Regulatory assets | 41,092 | 37,504 | 45,781 | |||||||||
Derivative instruments | 2,044 | 1,530 | 1,735 | |||||||||
Inventories | 43,109 | 57,264 | 47,577 | |||||||||
Gas reserves | 16,579 | 16,072 | 15,704 | |||||||||
Other current assets | 11,672 | 13,028 | 24,949 | |||||||||
Discontinued operations current assets (Note 15) | 12,743 | 1,923 | 3,057 | |||||||||
Total current assets | 180,844 | 192,004 | 269,936 | |||||||||
Non-current assets: | ||||||||||||
Property, plant, and equipment | 3,298,856 | 3,098,112 | 3,204,635 | |||||||||
Less: Accumulated depreciation | 984,998 | 942,558 | 960,477 | |||||||||
Total property, plant, and equipment, net | 2,313,858 | 2,155,554 | 2,244,158 | |||||||||
Gas reserves | 75,362 | 92,020 | 84,053 | |||||||||
Regulatory assets | 339,177 | 348,284 | 356,608 | |||||||||
Derivative instruments | 1,077 | 162 | 1,306 | |||||||||
Other investments | 64,854 | 68,885 | 66,363 | |||||||||
Other non-current assets | 11,588 | 3,164 | 6,505 | |||||||||
Discontinued operations non-current assets (Note 15) | — | 205,081 | 10,817 | |||||||||
Total non-current assets | 2,805,916 | 2,873,150 | 2,769,810 | |||||||||
Total assets | $ | 2,986,760 | $ | 3,065,154 | $ | 3,039,746 |
NORTHWEST NATURAL GAS COMPANY CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||||||||
June 30, | June 30, | December 31, | ||||||||||
In thousands | 2018 | 2017 | 2017 | |||||||||
Liabilities and equity: | ||||||||||||
Current liabilities: | ||||||||||||
Short-term debt | $ | 47,100 | $ | — | $ | 54,200 | ||||||
Current maturities of long-term debt | 74,785 | 61,991 | 96,703 | |||||||||
Accounts payable | 70,551 | 95,126 | 111,021 | |||||||||
Taxes accrued | 6,916 | 6,906 | 18,883 | |||||||||
Interest accrued | 6,652 | 5,966 | 6,773 | |||||||||
Regulatory liabilities | 34,275 | 28,041 | 34,013 | |||||||||
Derivative instruments | 11,744 | 4,734 | 18,722 | |||||||||
Other current liabilities | 32,935 | 31,015 | 39,942 | |||||||||
Discontinued operations current liabilities (Note 15) | 12,922 | 1,303 | 1,593 | |||||||||
Total current liabilities | 297,880 | 235,082 | 381,850 | |||||||||
Long-term debt | 683,895 | 658,118 | 683,184 | |||||||||
Deferred credits and other non-current liabilities: | ||||||||||||
Deferred tax liabilities | 281,028 | 577,176 | 270,526 | |||||||||
Regulatory liabilities | 602,294 | 359,205 | 586,093 | |||||||||
Pension and other postretirement benefit liabilities | 218,061 | 219,718 | 223,333 | |||||||||
Derivative instruments | 3,913 | 3,466 | 4,649 | |||||||||
Other non-current liabilities | 140,163 | 134,793 | 135,292 | |||||||||
Discontinued operations - non-current liabilities (Note 15) | — | 12,167 | 12,043 | |||||||||
Total deferred credits and other non-current liabilities | 1,245,459 | 1,306,525 | 1,231,936 | |||||||||
Commitments and contingencies (Note 14) | ||||||||||||
Equity: | ||||||||||||
Common stock - no par value; authorized 100,000 shares; issued and outstanding 28,800, 28,662, and 28,736 at June 30, 2018 and 2017, and December 31, 2017, respectively | 452,195 | 444,058 | 448,865 | |||||||||
Retained earnings | 315,462 | 428,049 | 302,349 | |||||||||
Accumulated other comprehensive loss | (8,131 | ) | (6,678 | ) | (8,438 | ) | ||||||
Total equity | 759,526 | 865,429 | 742,776 | |||||||||
Total liabilities and equity | $ | 2,986,760 | $ | 3,065,154 | $ | 3,039,746 |
NORTHWEST NATURAL GAS COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||
Six Months Ended June 30, | ||||||||
In thousands | 2018 | 2017 | ||||||
Operating activities: | ||||||||
Net Income | $ | 40,539 | $ | 43,039 | ||||
Adjustments to reconcile net income to cash provided by operations: | ||||||||
Depreciation and amortization | 42,022 | 40,177 | ||||||
Regulatory amortization of gas reserves | 7,816 | 8,031 | ||||||
Deferred income taxes | 11,227 | 22,170 | ||||||
Qualified defined benefit pension plan expense | 2,876 | 2,615 | ||||||
Contributions to qualified defined benefit pension plans | (5,570 | ) | (7,250 | ) | ||||
Deferred environmental expenditures, net | (7,330 | ) | (6,817 | ) | ||||
Amortization of environmental remediation | 6,506 | 9,565 | ||||||
Regulatory revenue deferral from the TCJA | 9,212 | — | ||||||
Other | 810 | 1,128 | ||||||
Changes in assets and liabilities: | ||||||||
Receivables, net | 79,332 | 85,250 | ||||||
Inventories | 4,803 | (3,501 | ) | |||||
Income taxes | (11,967 | ) | (5,243 | ) | ||||
Accounts payable | (26,613 | ) | (21,849 | ) | ||||
Interest accrued | (121 | ) | — | |||||
Deferred gas costs | 4,787 | 15,325 | ||||||
Other, net | 3,623 | 8,243 | ||||||
Discontinued operations | 700 | 3,348 | ||||||
Cash provided by operating activities | 162,652 | 194,231 | ||||||
Investing activities: | ||||||||
Capital expenditures | (102,370 | ) | (94,333 | ) | ||||
Other | 195 | (404 | ) | |||||
Discontinued operations | (283 | ) | 15 | |||||
Cash used in investing activities | (102,458 | ) | (94,722 | ) | ||||
Financing activities: | ||||||||
Repurchases related to stock-based compensation | — | (2,034 | ) | |||||
Proceeds from stock options exercised | 45 | 1,309 | ||||||
Long-term debt retired | (22,000 | ) | — | |||||
Change in short-term debt | (7,100 | ) | (53,300 | ) | ||||
Cash dividend payments on common stock | (25,577 | ) | (26,919 | ) | ||||
Other | (279 | ) | (1,232 | ) | ||||
Cash used in financing activities | (54,911 | ) | (82,176 | ) | ||||
Increase in cash and cash equivalents | 5,283 | 17,333 | ||||||
Cash and cash equivalents, beginning of period | 3,472 | 3,521 | ||||||
Cash and cash equivalents, end of period | $ | 8,755 | $ | 20,854 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Interest paid, net of capitalization | $ | 17,117 | $ | 18,011 | ||||
Income taxes paid | 13,347 | 9,081 |
• | NW Natural Energy, LLC (NWN Energy); |
◦ | NW Natural Gas Storage, LLC (NWN Gas Storage); |
▪ | Gill Ranch Storage, LLC (Gill Ranch), which is presented as a discontinued operation; |
• | Northwest Energy Corporation (Energy Corp); |
◦ | NWN Gas Reserves LLC (NWN Gas Reserves); |
• | NNG Financial Corporation (NNG Financial); |
• | NW Natural Water Company, LLC (NWN Water); |
◦ | FWC Merger Sub, Inc.; |
◦ | Cascadia Water, LLC (Cascadia); |
• | Northwest Natural Holding Company (NWN Holding); and |
◦ | NWN Merger Sub, Inc. (NWN Holdco Sub). |
Regulatory Assets | ||||||||||||
June 30, | December 31, | |||||||||||
In thousands | 2018 | 2017 | 2017 | |||||||||
Current: | ||||||||||||
Unrealized loss on derivatives(1) | $ | 11,744 | $ | 4,625 | $ | 18,712 | ||||||
Gas costs | 273 | 859 | 154 | |||||||||
Environmental costs(2) | 5,594 | 6,724 | 6,198 | |||||||||
Decoupling(3) | 10,232 | 12,136 | 11,227 | |||||||||
Income taxes | 2,217 | 4,378 | 2,218 | |||||||||
Other(4) | 11,032 | 8,782 | 7,272 | |||||||||
Total current | $ | 41,092 | $ | 37,504 | $ | 45,781 | ||||||
Non-current: | ||||||||||||
Unrealized loss on derivatives(1) | $ | 3,913 | $ | 3,466 | $ | 4,649 | ||||||
Pension balancing(5) | 67,527 | 55,358 | 60,383 | |||||||||
Income taxes | 19,267 | 36,591 | 19,991 | |||||||||
Pension and other postretirement benefit liabilities | 171,186 | 176,136 | 179,824 | |||||||||
Environmental costs(2) | 65,156 | 64,008 | 72,128 | |||||||||
Gas costs | 28 | 87 | 84 | |||||||||
Decoupling(3) | 1,636 | 1,993 | 3,970 | |||||||||
Other(4) | 10,464 | 10,645 | 15,579 | |||||||||
Total non-current | $ | 339,177 | $ | 348,284 | $ | 356,608 |
Regulatory Liabilities | ||||||||||||
June 30, | December 31, | |||||||||||
In thousands | 2018 | 2017 | 2017 | |||||||||
Current: | ||||||||||||
Gas costs | $ | 20,906 | $ | 15,708 | $ | 14,886 | ||||||
Unrealized gain on derivatives(1) | 1,938 | 1,459 | 1,674 | |||||||||
Decoupling(3) | 2,153 | 134 | 322 | |||||||||
Other(4) | 9,278 | 10,740 | 17,131 | |||||||||
Total current | $ | 34,275 | $ | 28,041 | $ | 34,013 | ||||||
Non-current: | ||||||||||||
Gas costs | $ | 3,460 | $ | 2,719 | $ | 4,630 | ||||||
Unrealized gain on derivatives(1) | 1,077 | 162 | 1,306 | |||||||||
Decoupling(3) | 410 | — | 957 | |||||||||
Income taxes(6) | 222,734 | — | 213,306 | |||||||||
Accrued asset removal costs(7) | 370,245 | 350,828 | 360,929 | |||||||||
Other(4) | 4,368 | 5,496 | 4,965 | |||||||||
Total non-current | $ | 602,294 | $ | 359,205 | $ | 586,093 |
(1) | Unrealized gains or losses on derivatives are non-cash items and therefore, do not earn a rate of return or a carrying charge. These amounts are recoverable through utility rates as part of the annual Purchased Gas Adjustment (PGA) mechanism when realized at settlement. |
(2) | Refer to footnote (3) per the Deferred Regulatory Asset table in Note 14 for a description of environmental costs. |
(3) | This deferral represents the margin adjustment resulting from differences between actual and expected volumes. |
(4) | Balances consist of deferrals and amortizations under approved regulatory mechanisms and typically earn a rate of return or carrying charge. |
(5) | Refer to footnote (1) of the Net Periodic Benefit Cost table in Note 8 for information regarding the deferral of pension expenses. |
(6) | This balance represents estimated amounts associated with the Tax Cuts and Jobs Act. See Note 9. |
(7) | Estimated costs of removal on certain regulated properties are collected through rates. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
In thousands, except per share data | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income (loss) from continuing operations | $ | (339 | ) | $ | 4,075 | $ | 41,672 | $ | 45,472 | |||||||
Average common shares outstanding - basic | 28,791 | 28,648 | 28,772 | 28,641 | ||||||||||||
Additional shares for stock-based compensation plans (See Note 6) | — | 69 | 53 | 81 | ||||||||||||
Average common shares outstanding - diluted | 28,791 | 28,717 | 28,825 | 28,722 | ||||||||||||
Earnings (loss) from continuing operations per share of common stock - basic | $ | (0.01 | ) | $ | 0.14 | $ | 1.45 | $ | 1.58 | |||||||
Earnings (loss) from continuing operations per share of common stock - diluted | $ | (0.01 | ) | $ | 0.14 | $ | 1.45 | $ | 1.58 | |||||||
Additional information: | ||||||||||||||||
Antidilutive shares | 53 | 32 | 10 | 21 |
Three Months Ended June 30, | ||||||||||||
In thousands | Utility | Other | Total | |||||||||
2018 | ||||||||||||
Operating revenues | $ | 118,515 | $ | 6,052 | $ | 124,567 | ||||||
Depreciation and amortization | 20,766 | 381 | 21,147 | |||||||||
Income from operations | 4,545 | 3,724 | 8,269 | |||||||||
Net income (loss) from continuing operations | (2,970 | ) | 2,631 | (339 | ) | |||||||
Capital expenditures | 43,801 | 1,239 | 45,040 | |||||||||
2017 | ||||||||||||
Operating revenues | $ | 130,095 | $ | 4,381 | $ | 134,476 | ||||||
Depreciation and amortization | 19,894 | 330 | 20,224 | |||||||||
Income from operations | 13,158 | 3,277 | 16,435 | |||||||||
Net income from continuing operations | 2,137 | 1,938 | 4,075 | |||||||||
Capital expenditures | 54,265 | 1,142 | 55,407 |
Six Months Ended June 30, | ||||||||||||
In thousands | Utility | Other | Total | |||||||||
2018 | ||||||||||||
Operating revenues | $ | 376,448 | $ | 11,754 | $ | 388,202 | ||||||
Depreciation and amortization | 41,309 | 713 | 42,022 | |||||||||
Income from operations | 69,301 | 6,719 | 76,020 | |||||||||
Net income from continuing operations | 36,913 | 4,759 | 41,672 | |||||||||
Capital expenditures | 100,695 | 1,675 | 102,370 | |||||||||
Total assets at June 30, 2018(1) | 2,907,724 | 66,293 | 2,974,017 | |||||||||
2017 | ||||||||||||
Operating revenues | $ | 422,821 | $ | 7,379 | $ | 430,200 | ||||||
Depreciation and amortization | 39,518 | 659 | 40,177 | |||||||||
Income from operations | 90,285 | 5,231 | 95,516 | |||||||||
Net income from continuing operations | 42,329 | 3,143 | 45,472 | |||||||||
Capital expenditures | 93,119 | 1,214 | 94,333 | |||||||||
Total assets at June 30, 2017(1) | 2,792,011 | 66,139 | 2,858,150 | |||||||||
Total assets at December 31, 2017(1) | 2,961,326 | 64,546 | 3,025,872 |
(1) | Total assets exclude assets related to discontinued operations of $12.7 million, $207.0 million, and $13.9 million as of June 30, 2018, June 30, 2017, and December 31, 2017, respectively. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
In thousands | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Utility margin calculation: | ||||||||||||||||
Utility operating revenues | $ | 118,515 | $ | 130,095 | $ | 376,448 | $ | 422,821 | ||||||||
Less: Utility cost of gas | 42,107 | 53,005 | 150,271 | 196,616 | ||||||||||||
Environmental remediation expense | 1,882 | 2,611 | 6,506 | 9,565 | ||||||||||||
Revenue taxes(1) | 4,780 | — | 17,209 | — | ||||||||||||
Utility margin | $ | 69,746 | $ | 74,479 | $ | 202,462 | $ | 216,640 |
(1) | The change in presentation of revenue taxes was a result of the adoption of ASU 2014-09 "Revenue From Contracts with Customers" and all related amendments on January 1, 2018. This change had no impact on utility margin results as revenue taxes were previously presented net in utility operating revenue. For additional information, see Note 2. |
Three months ended June 30, 2018 | ||||||||||||
In thousands | Utility | Other | Total | |||||||||
Local gas distribution revenue | $ | 114,725 | $ | — | $ | 114,725 | ||||||
Gas storage revenue, net | — | 2,736 | 2,736 | |||||||||
Asset management revenue, net | — | 2,140 | 2,140 | |||||||||
Appliance retail center revenue | — | 1,176 | 1,176 | |||||||||
Revenue from contracts with customers | 114,725 | 6,052 | 120,777 | |||||||||
Alternative revenue | 3,663 | — | 3,663 | |||||||||
Leasing revenue | 127 | — | 127 | |||||||||
Total operating revenues | $ | 118,515 | $ | 6,052 | $ | 124,567 |
Six months ended June 30, 2018 | ||||||||||||
In thousands | Utility | Other | Total | |||||||||
Local gas distribution revenue | $ | 372,954 | $ | — | $ | 372,954 | ||||||
Gas storage revenue, net | — | 5,314 | 5,314 | |||||||||
Asset management revenue, net | — | 3,719 | 3,719 | |||||||||
Appliance retail center revenue | — | 2,721 | 2,721 | |||||||||
Revenue from contracts with customers | 372,954 | 11,754 | 384,708 | |||||||||
Alternative revenue | 3,291 | — | 3,291 | |||||||||
Leasing revenue | 203 | — | 203 | |||||||||
Total operating revenues | $ | 376,448 | $ | 11,754 | $ | 388,202 |
June 30, | December 31, | |||||||||||
In thousands | 2018 | 2017 | 2017 | |||||||||
Gross long-term debt | $ | 764,700 | $ | 726,700 | $ | 786,700 | ||||||
Unamortized debt issuance costs | (6,020 | ) | (6,591 | ) | (6,813 | ) | ||||||
Carrying amount | $ | 758,680 | $ | 720,109 | $ | 779,887 | ||||||
Estimated fair value(1) | $ | 792,623 | $ | 791,885 | $ | 853,339 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
Pension Benefits | Other Postretirement Benefits | Pension Benefits | Other Postretirement Benefits | |||||||||||||||||||||||||||||
In thousands | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
Service cost | $ | 1,807 | $ | 1,870 | $ | 79 | $ | 99 | $ | 3,614 | $ | 3,740 | $ | 159 | $ | 197 | ||||||||||||||||
Interest cost | 4,183 | 4,472 | 241 | 274 | 8,366 | 8,944 | 482 | 548 | ||||||||||||||||||||||||
Expected return on plan assets | (5,150 | ) | (5,112 | ) | — | — | (10,301 | ) | (10,225 | ) | — | — | ||||||||||||||||||||
Amortization of prior service costs | 10 | 31 | (117 | ) | (117 | ) | 21 | 63 | (234 | ) | (234 | ) | ||||||||||||||||||||
Amortization of net actuarial loss | 4,524 | 3,622 | 112 | 139 | 9,047 | 7,243 | 222 | 277 | ||||||||||||||||||||||||
Net periodic benefit cost | 5,374 | 4,883 | 315 | 395 | 10,747 | 9,765 | 629 | 788 | ||||||||||||||||||||||||
Amount allocated to construction | (685 | ) | (1,558 | ) | (28 | ) | (135 | ) | (1,367 | ) | (3,079 | ) | (55 | ) | (267 | ) | ||||||||||||||||
Amount deferred to regulatory balancing account(1) | (2,747 | ) | (1,508 | ) | — | — | (5,503 | ) | (3,035 | ) | — | — | ||||||||||||||||||||
Net amount charged to expense | $ | 1,942 | $ | 1,817 | $ | 287 | $ | 260 | $ | 3,877 | $ | 3,651 | $ | 574 | $ | 521 |
(1) | The deferral of defined benefit pension plan expenses above or below the amount set in rates was approved by the OPUC, with recovery of these deferred amounts through the implementation of a balancing account. The balancing account includes the expectation of higher net periodic benefit costs than costs recovered in rates in the near-term with lower net periodic benefit costs than costs recovered in rates expected in future years. Deferred pension expense balances include accrued interest at the utility’s authorized rate of return, with the equity portion of the interest recognized when amounts are collected in rates. See Note 2 in the 2017 Form 10-K. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
In thousands | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Beginning balance | $ | (8,284 | ) | $ | (6,815 | ) | $ | (8,438 | ) | $ | (6,951 | ) | ||||
Amounts reclassified from AOCL: | ||||||||||||||||
Amortization of actuarial losses | 209 | 225 | 418 | 450 | ||||||||||||
Total reclassifications before tax | 209 | 225 | 418 | 450 | ||||||||||||
Tax (benefit) expense | (56 | ) | (88 | ) | (111 | ) | (177 | ) | ||||||||
Total reclassifications for the period | 153 | 137 | 307 | 273 | ||||||||||||
Ending balance | $ | (8,131 | ) | $ | (6,678 | ) | $ | (8,131 | ) | $ | (6,678 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
Dollars in thousands | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Income taxes at statutory rates (federal and state) | $ | (135 | ) | $ | 2,603 | $ | 15,233 | $ | 29,912 | |||||||
Increase (decrease): | ||||||||||||||||
Differences required to be flowed-through by regulatory commissions | (14 | ) | 66 | 835 | 1,584 | |||||||||||
Other, net | (7 | ) | (122 | ) | (592 | ) | (1,318 | ) | ||||||||
Total provision for income taxes on continuing operations | $ | (156 | ) | $ | 2,547 | $ | 15,476 | $ | 30,178 | |||||||
Effective tax rate for continuing operations | 31.5 | % | 38.5 | % | 27.1 | % | 39.9 | % |
June 30, | December 31, | |||||||||||
In thousands | 2018 | 2017 | 2017 | |||||||||
Utility plant in service | $ | 3,035,089 | $ | 2,901,791 | $ | 2,975,217 | ||||||
Utility construction work in progress | 192,496 | 127,383 | 159,924 | |||||||||
Less: Accumulated depreciation | 966,766 | 925,589 | 942,879 | |||||||||
Utility plant, net | 2,260,819 | 2,103,585 | 2,192,262 | |||||||||
Non-utility plant in service | 65,743 | 63,964 | 65,372 | |||||||||
Non-utility construction work in progress | 5,528 | 4,974 | 4,122 | |||||||||
Less: Accumulated depreciation | 18,232 | 16,969 | 17,598 | |||||||||
Non-utility plant, net (1) | 53,039 | 51,969 | 51,896 | |||||||||
Total property, plant, and equipment | $ | 2,313,858 | $ | 2,155,554 | $ | 2,244,158 | ||||||
Capital expenditures in accrued liabilities (2) | $ | 22,112 | $ | 42,574 | $ | 34,761 |
(1) | Previously reported non-utility balances were restated due to the assets and liabilities associated with Gill Ranch now being classified as discontinued operations assets and liabilities on the consolidated balance sheets. See Note 15 for further discussion. |
(2) | Previously reported capital expenditures in accrued liabilities were restated due to the assets and liabilities associated with Gill Ranch now being classified as discontinued operations assets and liabilities on the consolidated balance sheets. Capital expenditures in accrued liabilities related to Gill Ranch were approximately $0.3 million, $0.1 million, and $0.2 million as of June 30, 2018, June 30, 2017, and December 31, 2017, respectively. |
June 30, | December 31, | |||||||||||
In thousands | 2018 | 2017 | 2017 | |||||||||
Gas reserves, current | $ | 16,579 | $ | 16,072 | $ | 15,704 | ||||||
Gas reserves, non-current | 170,958 | 171,464 | 171,832 | |||||||||
Less: Accumulated amortization | 95,596 | 79,444 | 87,779 | |||||||||
Total gas reserves(1) | 91,941 | 108,092 | 99,757 | |||||||||
Less: Deferred taxes on gas reserves | 20,381 | 31,074 | 22,712 | |||||||||
Net investment in gas reserves | $ | 71,560 | $ | 77,018 | $ | 77,045 |
(1) | Our net investment in additional wells included in total gas reserves was $5.5 million, $6.3 million and $5.8 million at June 30, 2018 and 2017 and December 31, 2017, respectively. |
June 30, | December 31, | |||||||||||
In thousands | 2018 | 2017 | 2017 | |||||||||
Natural gas (in therms): | ||||||||||||
Financial | 473,900 | 490,780 | 429,100 | |||||||||
Physical | 724,450 | 495,751 | 520,268 | |||||||||
Foreign exchange | $ | 7,804 | $ | 7,788 | $ | 7,669 |
Three Months Ended June 30, | ||||||||||||||||
2018 | 2017 | |||||||||||||||
In thousands | Natural gas commodity | Foreign exchange | Natural gas commodity | Foreign exchange | ||||||||||||
Benefit (expense) to cost of gas | $ | 2,658 | $ | (56 | ) | $ | (5,172 | ) | $ | 216 | ||||||
Operating revenues | 391 | — | (109 | ) | — | |||||||||||
Amounts deferred to regulatory accounts on balance sheet | (2,915 | ) | 56 | 5,263 | (216 | ) | ||||||||||
Total gain (loss) in pre-tax earnings | $ | 134 | $ | — | $ | (18 | ) | $ | — |
Six Months Ended June 30, | ||||||||||||||||
2018 | 2017 | |||||||||||||||
In thousands | Natural gas commodity | Foreign exchange | Natural gas commodity | Foreign exchange | ||||||||||||
Benefit (expense) to cost of gas | $ | (3,089 | ) | $ | (210 | ) | $ | (16,515 | ) | $ | 224 | |||||
Operating revenues | 164 | — | (1,277 | ) | — | |||||||||||
Amounts deferred to regulatory accounts on balance sheet | 2,980 | 210 | 17,347 | (224 | ) | |||||||||||
Total gain (loss) in pre-tax earnings | $ | 55 | $ | — | $ | (445 | ) | $ | — |
Credit Rating Downgrade Scenarios | ||||||||||||||||||||
In thousands | (Current Ratings) A+/A3 | BBB+/Baa1 | BBB/Baa2 | BBB-/Baa3 | Speculative | |||||||||||||||
With Adequate Assurance Calls | $ | — | $ | — | $ | — | $ | (3,605 | ) | $ | (11,211 | ) | ||||||||
Without Adequate Assurance Calls | — | — | — | (3,605 | ) | (6,987 | ) |
Current Liabilities | Non-Current Liabilities | |||||||||||||||||||||||
June 30, | December 31, | June 30, | December 31, | |||||||||||||||||||||
In thousands | 2018 | 2017 | 2017 | 2018 | 2017 | 2017 | ||||||||||||||||||
Portland Harbor site: | ||||||||||||||||||||||||
Gasco/Siltronic Sediments | $ | 2,174 | $ | 1,485 | $ | 2,683 | $ | 45,330 | $ | 43,376 | $ | 45,346 | ||||||||||||
Other Portland Harbor | 1,444 | 1,435 | 1,949 | 3,871 | 3,906 | 4,163 | ||||||||||||||||||
Gasco/Siltronic Upland site | 9,947 | 9,441 | 13,422 | 45,578 | 49,319 | 47,835 | ||||||||||||||||||
Central Service Center site | 25 | 31 | 25 | — | — | — | ||||||||||||||||||
Front Street site | 906 | 829 | 1,009 | 10,683 | 10,788 | 10,757 | ||||||||||||||||||
Oregon Steel Mills | — | — | — | 179 | 179 | 179 | ||||||||||||||||||
Total | $ | 14,496 | $ | 13,221 | $ | 19,088 | $ | 105,641 | $ | 107,568 | $ | 108,280 |
June 30, | December 31, | |||||||||||
In thousands | 2018 | 2017 | 2017 | |||||||||
Deferred costs and interest (1) | $ | 46,862 | $ | 50,131 | $ | 45,546 | ||||||
Accrued site liabilities (2) | 119,712 | 120,485 | 126,950 | |||||||||
Insurance proceeds and interest | (95,824 | ) | (99,884 | ) | (94,170 | ) | ||||||
Total regulatory asset deferral(1) | $ | 70,750 | $ | 70,732 | $ | 78,326 | ||||||
Current regulatory assets(3) | 5,594 | 6,724 | 6,198 | |||||||||
Long-term regulatory assets(3) | 65,156 | 64,008 | 72,128 |
(1) | Includes pre-review and post-review deferred costs, amounts currently in amortization, and interest, net of amounts collected from customers. |
(2) | Excludes 3.32% of the Front Street site liability, or $0.4 million in 2018 and $0.4 million in 2017, as the OPUC only allows recovery of 96.68% of costs for those sites allocable to Oregon, including those that historically served only Oregon customers. |
(3) | Environmental costs relate to specific sites approved for regulatory deferral by the OPUC and WUTC. In Oregon, we earn a carrying charge on cash amounts paid, whereas amounts accrued but not yet paid do not earn a carrying charge until expended. We also accrue a carrying charge on insurance proceeds for amounts owed to customers. In Washington, a carrying charge related to deferred amounts will be determined in a future proceeding. Current environmental costs represent remediation costs management expects to collect from customers in the next 12 months. Amounts included in this estimate are still subject to a prudence and earnings test review by the OPUC and do not include the $5.0 million tariff rider. The amounts allocable to Oregon are recoverable through utility rates, subject to an earnings test. |
June 30, | December 31, | |||||||||||
In thousands | 2018 | 2017 | 2017 | |||||||||
Assets: | ||||||||||||
Accounts receivable | $ | 497 | $ | 1,130 | $ | 2,126 | ||||||
Inventories | 646 | 402 | 396 | |||||||||
Other current assets | 413 | 391 | 535 | |||||||||
Property, plant, and equipment | 10,948 | 235,556 | 10,816 | |||||||||
Less: Accumulated depreciation | 6 | 30,526 | — | |||||||||
Other non-current assets | 245 | 51 | 1 | |||||||||
Discontinued operations - current assets (1) | 12,743 | 1,923 | 3,057 | |||||||||
Discontinued operations - non-current assets (1) | — | 205,081 | 10,817 | |||||||||
Total discontinued operations assets | $ | 12,743 | $ | 207,004 | $ | 13,874 | ||||||
Liabilities: | ||||||||||||
Accounts payable | $ | 572 | $ | 635 | $ | 1,287 | ||||||
Other current liabilities | 436 | 668 | 306 | |||||||||
Other non-current liabilities | 11,914 | 12,167 | 12,043 | |||||||||
Discontinued operations - current liabilities (1) | 12,922 | 1,303 | 1,593 | |||||||||
Discontinued operations - non-current liabilities (1) | — | 12,167 | 12,043 | |||||||||
Total discontinued operations liabilities | $ | 12,922 | $ | 13,470 | $ | 13,636 |
(1) | The total assets and liabilities of Gill Ranch are classified as current as of June 30, 2018 because it is probable that the sale will be completed within one year. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
In thousands, except per share data | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues | $ | 1,006 | $ | 1,762 | $ | 2,083 | $ | 3,361 | ||||||||
Expenses: | ||||||||||||||||
Operations and maintenance | 1,554 | 2,251 | 2,590 | 3,921 | ||||||||||||
Depreciation and amortization | 108 | 1,131 | 218 | 2,263 | ||||||||||||
Other expenses and interest | 239 | 604 | 814 | 1,196 | ||||||||||||
Total expenses | 1,901 | 3,986 | 3,622 | 7,380 | ||||||||||||
Loss from discontinued operations before income taxes | (895 | ) | (2,224 | ) | (1,539 | ) | (4,019 | ) | ||||||||
Income tax benefit | 236 | 878 | 406 | 1,586 | ||||||||||||
Loss from discontinued operations, net of tax | $ | (659 | ) | $ | (1,346 | ) | $ | (1,133 | ) | $ | (2,433 | ) | ||||
Loss from discontinued operations per share of common stock: | ||||||||||||||||
Basic | $ | (0.02 | ) | $ | (0.04 | ) | $ | (0.04 | ) | $ | (0.08 | ) | ||||
Diluted | $ | (0.02 | ) | $ | (0.04 | ) | $ | (0.04 | ) | $ | (0.08 | ) |
• | NW Natural Energy, LLC (NWN Energy); |
• | NW Natural Gas Storage, LLC (NWN Gas Storage); |
• | Gill Ranch Storage, LLC (Gill Ranch), which is presented as a discontinued operation; |
• | NNG Financial Corporation (NNG Financial); |
• | Northwest Energy Corporation (Energy Corp); |
• | NWN Gas Reserves LLC (NWN Gas Reserves); |
• | NW Natural Water Company, LLC (NWN Water); |
• | FWC Merger Sub, Inc.; |
• | Cascadia Water, LLC; |
• | Northwest Natural Holding Company (NWN Holding); and |
• | NWN Merger Sub, Inc. (NWN Holdco Sub). |
• | added nearly 12,000 customers during the past twelve months for a growth rate of 1.6% at June 30, 2018; |
• | invested $102.4 million in our distribution system and facilities for growth and reliability; |
• | continued constructing major elements of our North Mist Gas Storage Expansion Project and continue to target in-service during the fourth quarter of 2018; |
• | reached agreement on key items in the Oregon general rate case and filed an all-party settlement with the Commission; |
• | advanced our regulated water strategy with plans to acquire two small utilities in Washington state; and |
• | signed an agreement to sell our interest in the Gill Ranch natural gas storage facility located in California. |
Three Months Ended June 30, | ||||||||||||||||||
2018 | 2017 | $ | ||||||||||||||||
In thousands, except per share data | Amount | Per Share | Amount | Per Share | Change | |||||||||||||
Net income (loss) from continuing operations | $ | (339 | ) | $ | (0.01 | ) | $ | 4,075 | $ | 0.14 | $ | (4,414 | ) | |||||
Loss from discontinued operations, net of tax | (659 | ) | (0.02 | ) | (1,346 | ) | (0.04 | ) | 687 | |||||||||
Consolidated net income (loss) | $ | (998 | ) | $ | (0.03 | ) | $ | 2,729 | $ | 0.10 | $ | (3,727 | ) | |||||
Utility margin | $ | 69,746 | $ | 74,479 | $ | (4,733 | ) |
• | a $4.7 million decrease in utility margin due to the regulatory revenue deferral associated with the TCJA and warmer than average weather in 2018 compared to cooler than average weather in 2017, partially offset by customer growth; and |
• | a $3.0 million increase in operations and maintenance expense largely from payroll and benefits due to additional headcount and general salary increases; partially offset by |
• | a $2.7 million decrease in income tax expense due to changes in pre-tax income and the benefit from the decline of the U.S. federal corporate income tax rate to 21% in 2018 from 35% in the prior period. See additional discussion regarding "TCJA Timing Variance" below. |
Six Months Ended June 30, | ||||||||||||||||||
2018 | 2017 | $ | ||||||||||||||||
In thousands, except per share data | Amount | Per Share | Amount | Per Share | Change | |||||||||||||
Net income from continuing operations | $ | 41,672 | $ | 1.45 | $ | 45,472 | $ | 1.58 | $ | (3,800 | ) | |||||||
Loss from discontinued operations, net of tax | (1,133 | ) | (0.04 | ) | (2,433 | ) | (0.08 | ) | 1,300 | |||||||||
Consolidated net income | $ | 40,539 | $ | 1.41 | $ | 43,039 | $ | 1.50 | $ | (2,500 | ) | |||||||
Utility margin | $ | 202,462 | $ | 216,640 | $ | (14,178 | ) |
• | a $14.2 million decrease in utility margin due to a regulatory revenue deferral associated with the TCJA and colder than average weather in 2017, partially offset by customer growth; and |
• | a $5.1 million increase in operations and maintenance expense largely from payroll and benefits due to additional headcount and general salary increases as well as higher professional service costs; partially offset by |
• | a $14.7 million decrease in income tax expense due to the benefit from the decline of the U.S. federal corporate income tax rate to 21% in 2018 from 35% in the prior period, as well as changes in pre-tax income. See additional discussion regarding "TCJA Timing Variance" below. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
Per common share | 2018 | 2017 | 2018 | 2017 | QTR Change | YTD Change | ||||||||||||||||||
Dividends paid | $ | 0.4725 | $ | 0.4700 | $ | 0.9450 | $ | 0.9400 | $ | 0.0025 | $ | 0.0050 |
Oregon | Washington | |
Authorized Rate Structure: | ||
ROE | 9.5% | 10.1% |
ROR | 7.8% | 8.4% |
Debt/Equity Ratio | 50%/50% | 49%/51% |
Key Regulatory Mechanisms: | ||
PGA | X | X |
Gas Cost Incentive Sharing | X | |
Decoupling | X | |
WARM | X | |
Environmental Cost Deferral | X | X |
SRRM | X | |
Pension Balancing | X | |
Interstate Storage and Optimization Sharing | X | X |
• | Pre-review - This class of costs represents remediation spend that has not yet been deemed prudent by the OPUC. Carrying costs on these remediation expenses are recorded at our authorized cost of capital. We anticipate the prudence review for annual costs and approval of the earnings test prescribed by the OPUC to occur by the third quarter of the following year. |
• | Post-review - This class of costs represents remediation spend that has been deemed prudent and allowed after applying the earnings test, but is not yet included in amortization. We earn a carrying cost on these amounts at a rate equal to the five-year treasury rate plus 100 basis points. |
• | Amortization - This class of costs represents amounts included in current customer rates for collection and is generally calculated as one-fifth of the post-review deferred balance. We earn a carrying cost equal to the amortization rate determined annually by the OPUC, which approximates a short-term borrowing rate. We included $7.4 million and $10.0 million of deferred remediation expense approved by the OPUC for collection during the 2017-18 and 2016-17 PGA years, respectively. |
Annual spend |
Less: $5.0 million base rate rider |
Prior year carry-over(1) |
$5.0 million insurance + interest on insurance |
Total deferred annual spend subject to earnings test |
Less: over-earnings adjustment, if any |
Add: deferred interest on annual spend(2) |
Total amount transferred to post-review |
(1) | Prior year carry-over results when the prior year amount transferred to post-review is negative. The negative amount is carried over to offset annual spend in the following year. |
(2) | Deferred interest is added to annual spend to the extent the spend is recoverable. |
• | capital structure of 50% debt and 50% equity; |
• | return on equity of 9.4%; |
• | cost of capital of 7.317%; and |
• | rate base of $1.192 billion, or an increase of $306 million since the last rate case. |
• | the impact of the TCJA on our accumulated deferred income tax and tax expense during the period prior to the date the new rates take effect, which is expected to be November 1, 2018; |
• | matters relating to the future operation and timing of rate recovery of amounts reflected in the pension balancing account; and |
• | the sharing of revenues produced by optimization of certain assets and interstate storage operations. |
Three Months Ended June 30, | Six Months Ended June 30, | QTR Change | YTD Change | |||||||||||||||||||||
Dollars and therms in thousands, except EPS data | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Utility net income (loss) | $ | (2,970 | ) | $ | 2,137 | $ | 36,913 | $ | 42,329 | $ | (5,107 | ) | $ | (5,416 | ) | |||||||||
EPS - utility segment | $ | (0.10 | ) | $ | 0.07 | $ | 1.28 | $ | 1.47 | $ | (0.17 | ) | $ | (0.19 | ) | |||||||||
Gas sold and delivered (in therms) | 217,393 | 234,643 | 624,346 | 702,282 | (17,250 | ) | (77,936 | ) | ||||||||||||||||
Utility margin(1) | $ | 69,746 | $ | 74,479 | $ | 202,462 | $ | 216,640 | $ | (4,733 | ) | $ | (14,178 | ) |
• | a $4.7 million decrease in utility margin due to: |
• | a $2.8 million decrease due to a regulatory revenue deferral associated with the decline of the U.S. federal corporate income tax rate to 21% in 2018 from 35% in the prior period until customer rates can be reset to reflect the lower tax rate, offset by |
• | a $0.7 million increase from customer growth. |
• | The majority of the remaining decrease was due to 38% warmer than average weather in 2018, compared to 14% colder than average weather in the prior period. |
• | a $2.5 million increase in operations and maintenance expense largely from payroll and benefits due to additional headcount and general salary increases; partially offset by |
• | a $2.8 million decrease in income tax expense largely due to changes in pre-tax income. |
• | a $14.2 million decrease in utility margin due to: |
• | a $9.2 million decrease due to a regulatory revenue deferral associated with the decline of the U.S. federal corporate income tax rate to 21% in 2018 from 35% in the prior period until customer rates can be reset to reflect the lower tax rate, offset by |
• | a $2.3 million increase from customer growth. |
• | The majority of the remaining decrease was due to 24% colder than average weather in the prior period. |
• | a $3.7 million increase in operations and maintenance expense largely from payroll and benefits due to additional headcount and general salary increases as well as higher professional service costs; and |
• | a $2.7 million increase in other expenses and income primarily related to higher depreciation and property taxes; partially offset by |
• | a $15.1 million decrease in income tax expense due to the decline of the U.S. federal corporate income tax rate to 21% in 2018 compared to 35% in the prior period and changes in pre-tax income. |
Three Months Ended June 30, | Six Months Ended June 30, | Favorable/ (Unfavorable) | ||||||||||||||||||||||
In thousands, except degree day and customer data | 2018 | 2017 | 2018 | 2017 | QTR Change | YTD Change | ||||||||||||||||||
Utility volumes (therms): | ||||||||||||||||||||||||
Residential and commercial sales | 103,637 | 113,869 | 381,656 | 441,392 | (10,232 | ) | (59,736 | ) | ||||||||||||||||
Industrial sales and transportation | 113,756 | 120,774 | 242,690 | 260,890 | (7,018 | ) | (18,200 | ) | ||||||||||||||||
Total utility volumes sold and delivered | 217,393 | 234,643 | 624,346 | 702,282 | (17,250 | ) | (77,936 | ) | ||||||||||||||||
Utility operating revenues: | ||||||||||||||||||||||||
Residential and commercial sales | $ | 106,526 | $ | 117,296 | $ | 352,110 | $ | 397,573 | $ | (10,770 | ) | $ | (45,463 | ) | ||||||||||
Industrial sales and transportation | 13,403 | 14,791 | 30,792 | 33,694 | (1,388 | ) | (2,902 | ) | ||||||||||||||||
Other revenues | (1,414 | ) | 1,168 | (6,454 | ) | 2,543 | (2,582 | ) | (8,997 | ) | ||||||||||||||
Less: Revenue taxes(1) | — | 3,160 | — | 10,989 | 3,160 | 10,989 | ||||||||||||||||||
Total utility operating revenues | 118,515 | 130,095 | 376,448 | 422,821 | (11,580 | ) | (46,373 | ) | ||||||||||||||||
Less: Cost of gas | 42,107 | 53,005 | 150,271 | 196,616 | 10,898 | 46,345 | ||||||||||||||||||
Less: Environmental remediation expense | 1,882 | 2,611 | 6,506 | 9,565 | 729 | 3,059 | ||||||||||||||||||
Less: Revenue taxes(1) | 4,780 | — | 17,209 | — | (4,780 | ) | (17,209 | ) | ||||||||||||||||
Utility margin | $ | 69,746 | $ | 74,479 | $ | 202,462 | $ | 216,640 | $ | (4,733 | ) | $ | (14,178 | ) | ||||||||||
Utility margin:(2) | ||||||||||||||||||||||||
Residential and commercial sales | $ | 64,036 | $ | 65,965 | $ | 192,490 | $ | 197,005 | $ | (1,929 | ) | $ | (4,515 | ) | ||||||||||
Industrial sales and transportation | 7,038 | 7,565 | 15,342 | 16,257 | (527 | ) | (915 | ) | ||||||||||||||||
Miscellaneous revenues | 1,079 | 1,165 | 2,437 | 2,538 | (86 | ) | (101 | ) | ||||||||||||||||
Gain (loss) from gas cost incentive sharing | 128 | (113 | ) | 1,008 | 838 | 241 | 170 | |||||||||||||||||
Other margin adjustments(5) | (2,535 | ) | (103 | ) | (8,815 | ) | 2 | (2,432 | ) | (8,817 | ) | |||||||||||||
Utility margin | $ | 69,746 | $ | 74,479 | $ | 202,462 | $ | 216,640 | $ | (4,733 | ) | $ | (14,178 | ) | ||||||||||
Degree days(3) | ||||||||||||||||||||||||
Average(4) | 311 | 311 | 1,627 | 1,627 | — | — | ||||||||||||||||||
Actual | 193 | 356 | 1,449 | 2,023 | (46 | )% | (28 | )% | ||||||||||||||||
Percent colder (warmer) than average weather | (38 | )% | 14 | % | (11 | )% | 24 | % | ||||||||||||||||
As of June 30, | ||||||||||||||||||||||||
Customers - end of period: | 2018 | 2017 | Change | Growth | ||||||||||||||||||||
Residential customers | 673,479 | 662,376 | 11,103 | 1.7% | ||||||||||||||||||||
Commercial customers | 68,160 | 67,580 | 580 | 0.9% | ||||||||||||||||||||
Industrial customers | 1,028 | 1,012 | 16 | 1.6% | ||||||||||||||||||||
Total number of customers | 742,667 | 730,968 | 11,699 | 1.6% |
(1) | The change in presentation of revenue taxes was a result of the adoption of ASU 2014-09 "Revenue From Contracts with Customers" and all related amendments on January 1, 2018. This change had no impact on utility margin results. For additional information, see Note 2. |
(2) | Amounts reported as margin for each category of customers are total operating revenues less cost of gas, environmental remediation expense, and revenue tax expense. |
(3) | Heating degree days are units of measure reflecting temperature-sensitive consumption of natural gas, calculated by subtracting the average of a day's high and low temperatures from 59 degrees Fahrenheit. |
(4) | Average weather represents the 25-year average of heating degree days, over the period 1986 - 2010, as determined in our 2012 Oregon general rate case. |
(5) | Other margin adjustments include the $2.8 million and $9.2 million regulatory revenue deferral for the three and six months ended June 30, 2018, respectively, associated from the decline of the U.S. federal corporate income tax rate. |
Three Months Ended June 30, | Six Months Ended June 30, | QTR Change | YTD Change | |||||||||||||||||||||
In thousands | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Volumes (therms): | ||||||||||||||||||||||||
Residential sales | 60,914 | 68,697 | 238,885 | 278,347 | (7,783 | ) | (39,462 | ) | ||||||||||||||||
Commercial sales | 42,723 | 45,172 | 142,771 | 163,045 | (2,449 | ) | (20,274 | ) | ||||||||||||||||
Total volumes | 103,637 | 113,869 | 381,656 | 441,392 | (10,232 | ) | (59,736 | ) | ||||||||||||||||
Operating revenues: | ||||||||||||||||||||||||
Residential sales | $ | 69,644 | $ | 76,558 | $ | 236,231 | $ | 265,126 | $ | (6,914 | ) | $ | (28,895 | ) | ||||||||||
Commercial sales | 36,882 | 40,738 | 115,879 | 132,447 | (3,856 | ) | (16,568 | ) | ||||||||||||||||
Total operating revenues | $ | 106,526 | $ | 117,296 | $ | 352,110 | $ | 397,573 | $ | (10,770 | ) | $ | (45,463 | ) | ||||||||||
Utility margin: | ||||||||||||||||||||||||
Residential: | ||||||||||||||||||||||||
Sales | $ | 41,607 | $ | 45,043 | $ | 132,136 | $ | 150,370 | $ | (3,436 | ) | $ | (18,234 | ) | ||||||||||
Alternative Revenue: | ||||||||||||||||||||||||
Weather normalization | 1,142 | (730 | ) | 2,985 | (11,780 | ) | 1,872 | 14,765 | ||||||||||||||||
Decoupling | 1,259 | 921 | (1,150 | ) | (1,133 | ) | 338 | (17 | ) | |||||||||||||||
Amortization of alternative revenue | 268 | — | 1,051 | — | 268 | 1,051 | ||||||||||||||||||
Total residential utility margin | 44,276 | 45,234 | 135,022 | 137,457 | (958 | ) | (2,435 | ) | ||||||||||||||||
Commercial: | ||||||||||||||||||||||||
Sales | 18,766 | 18,125 | 57,063 | 58,231 | 641 | (1,168 | ) | |||||||||||||||||
Alternative Revenue: | ||||||||||||||||||||||||
Weather normalization | 411 | (222 | ) | 1,004 | (4,511 | ) | 633 | 5,515 | ||||||||||||||||
Decoupling | 2,123 | 2,829 | 4,717 | 5,828 | (706 | ) | (1,111 | ) | ||||||||||||||||
Amortization of alternative revenue | (1,540 | ) | — | (5,316 | ) | — | (1,540 | ) | (5,316 | ) | ||||||||||||||
Total commercial utility margin | 19,760 | 20,732 | 57,468 | 59,548 | (972 | ) | (2,080 | ) | ||||||||||||||||
Total utility margin | $ | 64,036 | $ | 65,966 | $ | 192,490 | $ | 197,005 | $ | (1,930 | ) | $ | (4,515 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | QTR Change | YTD Change | |||||||||||||||||||||
In thousands | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Volumes (therms): | ||||||||||||||||||||||||
Industrial - firm sales | 7,858 | 7,637 | 17,866 | 18,013 | 221 | (147 | ) | |||||||||||||||||
Industrial - firm transportation | 38,368 | 38,897 | 83,744 | 87,626 | (529 | ) | (3,882 | ) | ||||||||||||||||
Industrial - interruptible sales | 12,375 | 13,204 | 27,980 | 30,181 | (829 | ) | (2,201 | ) | ||||||||||||||||
Industrial - interruptible transportation | 55,155 | 61,036 | 113,100 | 125,070 | (5,881 | ) | (11,970 | ) | ||||||||||||||||
Total volumes | 113,756 | 120,774 | 242,690 | 260,890 | (7,018 | ) | (18,200 | ) | ||||||||||||||||
Utility margin: | ||||||||||||||||||||||||
Industrial - firm and interruptible sales | $ | 2,468 | $ | 2,775 | $ | 5,705 | $ | 6,115 | $ | (307 | ) | $ | (410 | ) | ||||||||||
Industrial - firm and interruptible transportation | 4,570 | 4,790 | 9,637 | 10,142 | (220 | ) | (505 | ) | ||||||||||||||||
Industrial - sales and transportation | $ | 7,038 | $ | 7,565 | $ | 15,342 | $ | 16,257 | $ | (527 | ) | $ | (915 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | QTR Change | YTD Change | |||||||||||||||||||||
Dollars and therms in thousands | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Cost of gas | $ | 42,107 | $ | 53,005 | $ | 150,271 | $ | 196,616 | $ | (10,898 | ) | $ | (46,345 | ) | ||||||||||
Volumes sold (therms)(1) | 123,870 | 134,710 | 427,502 | 489,586 | (10,840 | ) | (62,084 | ) | ||||||||||||||||
Average cost of gas (cents per therm) | $ | 0.34 | $ | 0.39 | $ | 0.35 | $ | 0.40 | $ | (0.05 | ) | $ | (0.05 | ) | ||||||||||
Gain (loss) from gas cost incentive sharing(2) | $ | 128 | $ | (113 | ) | $ | 1,008 | $ | 838 | $ | 241 | $ | 170 |
(1) | This calculation excludes volumes delivered to industrial transportation customers. |
(2) | For additional information regarding our gas cost incentive sharing mechanism, see Part II, Item 7 "Results of Operations—Regulatory Matters—Rate Mechanisms—Gas Reserves" in our 2017 Form 10-K. |
Three Months Ended June 30, | Six Months Ended June 30, | QTR Change | YTD Change | |||||||||||||||||||||
In thousands, except EPS data | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Other net income | $ | 2,631 | $ | 1,938 | $ | 4,759 | $ | 3,143 | $ | 693 | $ | 1,616 | ||||||||||||
EPS - other | $ | 0.09 | $ | 0.07 | $ | 0.17 | $ | 0.11 | $ | 0.02 | $ | 0.06 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
In thousands | 2018 | 2017 | 2018 | 2017 | QTR Change | YTD Change | ||||||||||||||||||
Operations and maintenance | $ | 38,028 | $ | 34,997 | $ | 77,551 | $ | 72,443 | $ | 3,031 | $ | 5,108 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
In thousands | 2018 | 2017 | 2018 | 2017 | QTR Change | YTD Change | ||||||||||||||||||
Depreciation and amortization | $ | 21,147 | $ | 20,224 | $ | 42,022 | $ | 40,177 | $ | 923 | $ | 1,845 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
In thousands | 2018 | 2017 | 2018 | 2017 | QTR Change | YTD Change | ||||||||||||||||||
Other income (expense), net | $ | 7 | $ | (340 | ) | $ | (827 | ) | $ | (763 | ) | $ | 347 | $ | (64 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
In thousands | 2018 | 2017 | 2018 | 2017 | QTR Change | YTD Change | ||||||||||||||||||
Interest expense, net | $ | 8,771 | $ | 9,473 | $ | 18,045 | $ | 19,103 | $ | (702 | ) | $ | (1,058 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
In thousands | 2018 | 2017 | 2018 | 2017 | QTR Change | YTD Change | ||||||||||||||||||
Income tax expense (benefit) | $ | (156 | ) | $ | 2,547 | $ | 15,476 | $ | 30,178 | $ | (2,703 | ) | $ | (14,702 | ) |
June 30, | December 31, | ||||||||
2018 | 2017 | 2017 | |||||||
Common stock equity | 48.5 | % | 54.6 | % | 47.1 | % | |||
Long-term debt | 43.7 | 41.5 | 43.3 | ||||||
Short-term debt, including current maturities of long-term debt | 7.8 | 3.9 | 9.6 | ||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % |
In millions | |||
Lender rating, by category | Loan Commitment | ||
AA/Aa | $ | 201 | |
A/A1 | 99 | ||
Total | $ | 300 |
S&P | Moody's | |||
Commercial paper (short-term debt) | A-1 | P-2 | ||
Senior secured (long-term debt) | AA- | A1 | ||
Senior unsecured (long-term debt) | n/a | A3 | ||
Corporate credit rating | A+ | n/a | ||
Ratings outlook | Stable | Negative |
Six Months Ended June 30, | ||||||||||||
In thousands | 2018 | 2017 | YTD Change | |||||||||
Cash provided by operating activities | $ | 162,652 | $ | 194,231 | $ | (31,579 | ) |
• | a net decrease of $2.4 million from changes in working capital related to receivables, inventories, and accounts payable reflecting warmer than average weather in 2018 compared to the prior period; |
• | a decrease of $10.5 million in cash flow benefits from changes in deferred gas cost balances due to a decrease in natural gas prices compared to the prior year; and |
• | an increase of $4.3 million of cash outflow due to $13.3 million of income taxes paid in 2018 compared to $9.1 million in the prior period; |
Six Months Ended June 30, | ||||||||||||
In thousands | 2018 | 2017 | YTD Change | |||||||||
Total cash used in investing activities | $ | (102,458 | ) | $ | (94,722 | ) | $ | (7,736 | ) | |||
Capital expenditures supporting continuing operations | (102,370 | ) | (94,333 | ) | (8,037 | ) |
• | $650 to $700 million of core utility capital expenditures that will support continued customer growth, distribution system maintenance and improvements, technology investments, and utility gas storage facility maintenance; |
• | $60 to $70 million related to planned upgrades and refurbishments to utility storage facilities and resource centers; and |
• | $20 to $30 million of additional investments to complete the North Mist gas storage facility expansion in 2018. |
Six Months Ended June 30, | ||||||||||||
In thousands | 2018 | 2017 | YTD Change | |||||||||
Total cash used in financing activities | $ | (54,911 | ) | $ | (82,176 | ) | $ | 27,265 | ||||
Change in short-term debt | (7,100 | ) | (53,300 | ) | 46,200 | |||||||
Change in long-term debt | (22,000 | ) | — | (22,000 | ) |
• | regulatory accounting; |
• | revenue recognition; |
• | derivative instruments and hedging activities; |
• | pensions and postretirement benefits; |
• | income taxes; |
• | environmental contingencies; and |
• | impairment of long-lived assets. |
Issuer Purchases of Equity Securities | ||||||||||||||
Period | Total Number of Shares Purchased(1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2) | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(2) | ||||||||||
Balance forward | 2,124,528 | $ | 16,732,648 | |||||||||||
04/01/18-04-30/18 | — | $ | — | — | — | |||||||||
05/01/18-05/31/18 | 7,342 | 59.76 | — | — | ||||||||||
06/01/18-06/30/18 | — | — | — | — | ||||||||||
Total | 7,342 | 59.76 | 2,124,528 | $ | 16,732,648 |
(1) | During the quarter ended June 30, 2018, no shares of our common stock were purchased on the open market to meet the requirements of our Dividend Reinvestment and Direct Stock Purchase Plan. However, 7,342 shares of our common stock were purchased on the open market to meet the requirements of our share-based programs. During the quarter ended June 30, 2018, no shares of our common stock were accepted as payment for stock option exercises pursuant to our Restated Stock Option Plan. |
(2) | During the quarter ended June 30, 2018, no shares of our common stock were repurchased pursuant to our Board-Approved share repurchase program. In May 2018, we received Board Approval to extend the repurchase program through May 2019. For more information on this program, refer to Note 5 in our 2017 Form 10-K. |
Exhibit Index | |
Exhibit Number | Document |
101. | The following materials from Northwest Natural Gas Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Statements of Income; (ii) Consolidated Balance Sheets; (iii) Consolidated Statements of Cash Flows; and (iv) Related notes. |
Dated: | August 7, 2018 | ||
/s/ Brody J. Wilson | |||
Brody J. Wilson | |||
Principal Accounting Officer Vice President, Treasurer, Chief Accounting Officer and Controller |
Page | ||
Article I DEFINITIONS | ||
Section 1.1 | Certain Definitions | |
Section 1.2 | Interpretation | |
Article II PURCHASE PRICE; CLOSING | ||
Section 2.1 | Purchase Price | |
Section 2.2 | Purchase Price Adjustments | |
Section 2.3 | Closing | |
Section 2.4 | Buyer Deliveries | |
Section 2.5 | Deliveries of Seller | |
Article III REPRESENTATIONS AND WARRANTIES RELATING TO SELLER | ||
Section 3.1 | Due Organization and Power of Seller | |
Section 3.2 | Authorization and Validity of Agreement | |
Section 3.3 | Non-Contravention | |
Section 3.4 | LLC Interests | |
Section 3.5 | Actions, Orders and Approvals | |
Section 3.6 | Litigation | |
Section 3.7 | Finders; Brokers | |
Article IV REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY | ||
Section 4.1 | Due Organization of the Company; No Subsidiaries | |
Section 4.2 | Financial Statements | |
Section 4.3 | Absence of Changes | |
Section 4.4 | Real Property. | |
Section 4.5 | Contracts | |
Section 4.6 | Litigation | |
Section 4.7 | Compliance with Laws; Permits. | |
Section 4.8 | Tax Matters | |
Section 4.9 | Employee Benefit Plans | |
Section 4.10 | Environmental Matters | |
Section 4.11 | Insurance | |
Section 4.12 | Affiliate Transactions | |
Section 4.13 | Finders; Brokers |
Page | ||
Section 4.14 | Gas in Inventory; Liability for Gas | |
Section 4.15 | Wells | |
Section 4.16 | Facility Capacity, Injection Rate, Withdrawal Rate | |
Section 4.17 | CPUC Compliance | |
Section 4.18 | Intellectual Property | |
Section 4.19 | Bank Accounts | |
Section 4.20 | Title to Personal Properties | |
Section 4.21 | Condition and Sufficiency of Assets | |
Section 4.22 | Labor Relations; Employment Matters | |
Section 4.23 | No Other Representations or Warranties | |
Article V REPRESENTATIONS RELATING TO BUYER | ||
Section 5.1 | Due Organization and Power of Buyer | |
Section 5.2 | Authorization and Validity of Agreement | |
Section 5.3 | Non-Contravention | |
Section 5.4 | Actions, Orders and Approvals | |
Section 5.5 | Litigation | |
Section 5.6 | Independent Decision | |
Section 5.7 | Purchase for Investment | |
Section 5.8 | Financial Capacity; No Financing Condition | |
Section 5.9 | Finders; Brokers | |
Section 5.10 | No Other Representations or Warranties | |
Article VI AGREEMENTS OF BUYER AND SELLER | ||
Section 6.1 | Operation of the Business | |
Section 6.2 | Investigation of Business; Confidentiality | |
Section 6.3 | Efforts; Cooperation; No Inconsistent Action | |
Section 6.4 | Public Disclosures | |
Section 6.5 | Access to Records and Personnel | |
Section 6.6 | Employee Matters | |
Section 6.7 | Non-Solicitation | |
Section 6.8 | Amendments of Disclosure Schedules | |
Section 6.9 | Intercompany Liabilities; Support Obligations | |
Section 6.10 | Insurance and Indemnities | |
Section 6.11 | Notice of Certain Events | |
Section 6.12 | Casualty Loss and Condemnation |
Page | ||
Section 6.13 | Exclusivity | |
Article VII CONDITIONS | ||
Section 7.1 | Conditions Precedent to Obligations of Buyer and Seller | |
Section 7.2 | Conditions Precedent to Obligation of Seller | |
Section 7.3 | Conditions Precedent to Obligation of Buyer | |
Article VIII TERMINATION | ||
Section 8.1 | Termination Events | |
Section 8.2 | Effect of Termination | |
Section 8.3 | Deposit | |
Article IX SURVIVAL; INDEMNIFICATION | ||
Section 9.1 | Survival | |
Section 9.2 | Indemnification by Seller | |
Section 9.3 | Indemnification by Buyer | |
Section 9.4 | Other Indemnification Matters | |
Article X TAX MATTERS | ||
Section 10.1 | Tax Indemnification | |
Section 10.2 | Preparation and Filing of Tax Returns | |
Section 10.3 | Procedures Relating to Indemnification of Tax Claims | |
Section 10.4 | Tax Refunds and Credits | |
Section 10.5 | Tax Treatment of Payments | |
Section 10.6 | Transfer Taxes | |
Section 10.7 | Purchase Price Allocation | |
Section 10.8 | Termination of Tax Sharing Agreements | |
Article XI MISCELLANEOUS | ||
Section 11.1 | Notices | |
Section 11.2 | Expenses | |
Section 11.3 | Non-Assignability | |
Section 11.4 | Amendment; Waiver | |
Section 11.5 | No Third Party Beneficiaries | |
Section 11.6 | Governing Law | |
Section 11.7 | Consent to Jurisdiction | |
Section 11.8 | Entire Agreement | |
Section 11.9 | Severability | |
Section 11.10 | Counterparts |
Page | ||
Section 11.11 | Further Assurances | |
Section 11.12 | Schedules, Annexes and Exhibits | |
Section 11.13 | Waiver of Jury Trial | |
Section 11.14 | Time | |
Section 11.15 | Limitation on Damages | |
Section 11.16 | No Affiliate Liability | |
Section 11.17 | Role of Seller’s Legal Counsel; Waiver of Conflicts and Privilege | |
Section 11.18 | Specific Performance |
Schedule 1.1 | Net Working Capital |
Schedule 1.1(a) | EBITDA Methodology |
Schedule 1.1(c)(i) | CapEx Budget |
Schedule 1.1(c)(ii) | OpEx Budget |
Schedule 3.4 | Restrictions Affecting the LLC Interests |
Schedule 3.5 | Governmental Approvals and Third Party Approvals (Seller) |
Schedule 3.6 | Litigation Affecting Seller |
Schedule 4.1 | Subsidiaries |
Schedule 4.2 | Financial Statements |
Schedule 4.2(b) | Company Accounting Controls |
Schedule 4.2(c) | Indebtedness |
Schedule 4.3 | Absence of Certain Changes |
Schedule 4.4(a) | Property Use Agreements |
Schedule 4.4(b) | Liens Affecting Real Property |
Schedule 4.4(c) | Property Use Agreement Exceptions |
Schedule 4.4(d) | Existing Title Opinions |
Schedule 4.5 | Disclosed Contracts/Exceptions |
Schedule 4.6 | Litigation Affecting the Company |
Schedule 4.7(a) | Compliance with Laws |
Schedule 4.7(b) | Permits |
Schedule 4.8 | Tax Matters |
Schedule 4.9 | Employee Benefit Plans/Liabilities |
Schedule 4.10 | Environmental Matters |
Schedule 4.10(c) | Environmental Assessments |
Schedule 4.11 | Insurance |
Schedule 4.12 | Affiliate Transactions |
Schedule 4.14(b) | Gas in Inventory; Liability for Gas |
Schedule 4.14(d) | Exceptions |
Schedule 4.15 | Wells |
Schedule 4.18 | Intellectual Property |
Schedule 4.19 | Bank Accounts |
Schedule 4.20 | Title to Personal Properties |
Schedule 4.21 | Condition and Sufficiency of Assets |
Schedule 4.22(a) | Labor Relations |
Schedule 4.22(b) | Site Employees |
Schedule 5.4 | Governmental Approvals and Third Party Approvals (Buyer) |
Schedule 5.5 | Litigation Affecting Buyer |
Schedule 6.1 | Operation of the Business |
Schedule 6.7 | Non-Solicitation of Employees |
Schedule 6.9(b) | Support Obligations |
Schedule 6.9(c) | Exceptions |
Schedule 10.7 | Purchase Price Allocation |
EXHIBIT A | Escrow Agreement |
EXHIBIT B | License Agreement |
EXHIBIT C | Form of Assignment |
EXHIBIT D | Transition Services Agreement |
By: | /s/ David Weber | |
Name: | David Weber | |
Title: | President |
By: | /s/ John F. Thrash | |
Name: | John F. Thrash | |
Title: | Director | |
By: | /s/ John P. Rigas | |
Name: | John P. Rigas | |
Title: | Director |
Between: | NW Natural Gas Storage, LLC 220 NW 2nd Avenue Portland, Oregon 97209 Facsimile: Attention: MardiLyn Saathoff “Seller” |
In the case of Seller: | Stoel Rives LLP 760 SW Ninth Avenue, Suite 3000 Portland, Oregon 97205 Facsimile: Attn: James M. Kearney Email: |
In the case of Buyer: | Orrick, Herrington & Sutcliffe LLP 51 West 52nd Street New York, New York 10019 Facsimile: Attn: R. King Milling Email: |
BUYER: | SENSA Holdings LLC |
By_____________________ Name: Title: | |
SELLER: | NW Natural Gas Storage, LLC _____________________ David Weber, President |
ESCROW AGENT: | U.S. Bank National Association |
By_____________________ Name: Cheryl Nelson Title: Vice President |
1010 | Acceptance Fee (One Time Fee) The acceptance fee includes the administrative review of documents, initial set-up of the account, and other reasonably required services up to and including the Closing. This is a one-time fee, payable at Closing. U.S. Bank Corporate Trust Services reserves the right to refer any or all escrow documents for legal review before execution. Legal fees (billed on an hourly basis) and expenses for this service will be billed to, and paid by, the customer. If appropriate and upon request by the customer, U.S. Bank Corporate Trust Services will provide advance estimates of these legal fees. | $1,000 | ||
04460 | Escrow Agent (One Time Fee) One time administration fee for performance of the routine duties of the escrow agent associated with the management of the account. Administration fees are payable in advance. | $1,500 |
Reimbursement of expenses associated with the performance of our duties, including but not limited to publications, legal counsel after the initial close, travel expenses and filing fees. | At Cost |
Extraordinary services are duties or responsibilities of an unusual nature, including termination, but not provided for in the governing documents or otherwise set forth in this schedule. A reasonable charge will be assessed based on the nature of the service and the responsibility involved. At our option, these charges will be billed at a flat fee or at our hourly rate then in effect. |
1. | Authorized Representative/ | |||
Specimen Signature: | ||||
[Name, Title] | ||||
Phone: | ||||
2. | Authorized Representative/ | |||
Specimen Signature: | ||||
[Name, Title] | ||||
Phone: | ||||
3. | Authorized Representative/ | |||
Specimen Signature: | ||||
[Name, Title] | ||||
Phone: |
1. | Authorized Representative/ | |||
Specimen Signature: | ||||
[Name, Title] | ||||
Phone: | ||||
2. | Authorized Representative/ | |||
Specimen Signature: | ||||
[Name, Title] | ||||
Phone: | ||||
3. | Authorized Representative/ | |||
Specimen Signature: | ||||
[Name, Title] | ||||
Phone: |
1. | License. |
(d) | Licensee may not grant sublicenses under this License Agreement. |
2. | Term. |
3. | Recordkeeping. |
4. | Intellectual Property Prosecution. |
5. | Warranties and Obligations. |
6. | Marking and Samples. |
7. | Termination. |
8. | Post-Termination Rights. |
9. | Infringements. |
10. | Publicity and Confidentiality. |
11. | Indemnity; Insurance. |
12. | Notice. |
13. | Governing Law; Consent to Jurisdiction. |
14. | Non-Assignability. |
15. | Waiver. |
16. | Severability. |
17. | Counterparts. |
18. | Entire Agreement. |
By: | ||
Name: | ||
Title: |
By: | ||
Name: | ||
Title: |
By: | ||
Name: | David Weber | |
Title: | President |
By: | ||
Name: | John F. Thrash | |
Title: | Director | |
By: | ||
Name: | John P. Rigas | |
Title: | Director |
By: | ||
Name: | ||
Title: |
By: | ||
Name: | David Weber | |
Title: | President |
Name | Title | Hourly Rate |
Twelve Months Ended | Six Months Ended | |||||||||||||||||||||||||||
Year Ended December 31, | June 30, | June 30, | ||||||||||||||||||||||||||
In thousands, except share data | 2017 | 2016 | 2015 | 2014 | 2013 | 2018 | 2018 | |||||||||||||||||||||
Fixed Charges, as defined: | ||||||||||||||||||||||||||||
Interest on Long-Term Debt | $ | 36,809 | $ | 34,508 | $ | 37,918 | $ | 40,066 | $ | 40,825 | 36,720 | $ | 18,378 | |||||||||||||||
Other Interest | 2,274 | 3,404 | 3,173 | 2,718 | 2,709 | 2,604 | 1,379 | |||||||||||||||||||||
Amortization of Debt Discount and Expense | 2,017 | 1,671 | 1,760 | 1,963 | 1,877 | 2,032 | 1,017 | |||||||||||||||||||||
Capitalized Interest | 2,598 | — | — | — | — | 4,846 | 2,248 | |||||||||||||||||||||
Interest Portion of Rentals | 2,574 | 2,048 | 1,976 | 2,302 | 1,910 | 2,291 | 1,006 | |||||||||||||||||||||
Total Fixed Charges, as defined | $ | 46,272 | $ | 41,631 | $ | 44,827 | $ | 47,049 | $ | 47,321 | 48,493 | $ | 24,028 | |||||||||||||||
Earnings, as defined: | ||||||||||||||||||||||||||||
Net Income from continuing operations(1) | $ | 72,073 | $ | 62,419 | $ | 60,026 | $ | 66,006 | $ | 61,970 | $ | 68,273 | $ | 41,672 | ||||||||||||||
Taxes on Income from continuing operations(1) | 41,008 | 43,011 | 39,907 | 46,268 | 42,787 | 26,306 | 15,476 | |||||||||||||||||||||
Fixed Charges, as above | 46,272 | 41,631 | 44,827 | 47,049 | 47,321 | 48,493 | 24,028 | |||||||||||||||||||||
Total Earnings, as defined | $ | 159,353 | $ | 147,061 | $ | 144,760 | $ | 159,323 | $ | 152,078 | $ | 143,072 | $ | 81,176 | ||||||||||||||
Ratios of Earnings to Fixed Charges | 3.44 | 3.53 | 3.23 | 3.39 | 3.21 | 2.95 | 3.38 |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 27, 2018 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Central Index Key | 0000073020 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Registrant Name | NORTHWEST NATURAL GAS CO | |
Entity Voluntary Filers | No | |
Entity Well Known Season Issuer | Yes | |
Entity Common Stock, Shares Outstanding (in shares) | 28,800,482 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 |
Consolidated Statements of Comprehensive Income (Unaudited) - Parenthetical - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Statement [Abstract] | ||||
Other Comprehensive (Income) Loss, Defined Benefit Plan, Reclassification Adjustment from AOCI, Tax | $ 56 | $ 88 | $ 111 | $ 177 |
Consolidated Balance Sheets (Unaudited) - Parenthetical - shares shares in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
---|---|---|---|
Statement of Financial Position [Abstract] | |||
Common stock, shares outstanding (in shares) | 28,800 | 28,736 | 28,662 |
Common stock, shares authorized (in shares) | 100,000 | 100,000 | 100,000 |
Common stock, shares issued (in shares) | 28,800 | 28,736 | 28,662 |
Organization and Principles of Consolidation |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||
Organization and Principles of Consolidation | 1. ORGANIZATION AND PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements represent the consolidated results of Northwest Natural Gas Company (NW Natural or the Company) and all companies we directly or indirectly control, either through majority ownership or otherwise. Our regulated local gas distribution business, referred to as the utility segment, is our core operating business and serves residential, commercial, and industrial customers in Oregon and southwest Washington. The other category primarily includes the non-utility portion of our Mist gas storage facility that provides storage services for utilities, gas marketers, electric generators, and large industrial users from facilities located in Oregon. In addition, we have investments and other non-utility activities reported as other. Our core utility business assets and operating activities are largely included in the parent company, NW Natural. Our direct and indirect wholly-owned subsidiaries include:
Investments in corporate joint ventures and partnerships we do not directly or indirectly control, and for which we are not the primary beneficiary, include NWN Energy's investment in Trail West Holdings, LLC (TWH), which is accounted for under the equity method, and NNG Financial's investment in Kelso-Beaver Pipeline. NW Natural and its affiliated companies are collectively referred to herein as NW Natural. The consolidated financial statements are presented after elimination of all intercompany balances and transactions. In this report, the term “utility” is used to describe our regulated gas distribution business, and the term “non-utility” is used to describe the non-utility portion of our Mist gas storage facility and other non-utility investments and business activities. Information presented in these interim consolidated financial statements is unaudited, but includes all material adjustments management considers necessary for a fair statement of the results for each period reported including normal recurring accruals. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our 2017 Annual Report on Form 10-K (2017 Form 10-K), taking into consideration the changes mentioned below in this Note 1 and in Notes 4 and 15. A significant part of our business is of a seasonal nature; therefore, results of operations for interim periods are not necessarily indicative of full year results. During the second quarter of 2018, we moved forward with our long-term strategic plans, which include a shift away from our merchant gas storage business. In June 2018, NWN Gas Storage, our wholly-owned subsidiary, entered into a Purchase and Sale Agreement that provides for the sale of all of the membership interests in its wholly-owned subsidiary, Gill Ranch, subject to various regulatory approvals and closing conditions. We have concluded that the pending sale of Gill Ranch qualifies as assets and liabilities held for sale and discontinued operations. As such, for all periods presented, the results of Gill Ranch have been presented as a discontinued operation on the consolidated statements of comprehensive income and cash flows, and the assets and liabilities associated with Gill Ranch have been classified as discontinued operations assets and liabilities on the consolidated balance sheets. See Note 15 for additional information. Additionally, we reevaluated our reportable segments and concluded that the remaining gas storage activities no longer meet the requirements to be separately reported as a segment. The non-utility portion of our Mist gas storage facility is now reported as other, and all prior periods reflect this change. See Note 4, which provides segment information. These reclassifications had no effect on our prior year's consolidated results of operations, financial condition, or cash flows. Our notes to the consolidated financial statements reflect the activity of our continuing operations for all periods presented, unless otherwise noted. Note 15 provides information regarding our discontinued operations. |
Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies | 2. SIGNIFICANT ACCOUNTING POLICIES Our significant accounting policies are described in Note 2 of the 2017 Form 10-K. There were no material changes to those accounting policies during the six months ended June 30, 2018 other than those incorporated in Note 5 and Note 15 relating to revenue and discontinued operations, respectively. The following are current updates to certain critical accounting policy estimates and new accounting standards. Industry Regulation In applying regulatory accounting principles, we capitalize or defer certain costs and revenues as regulatory assets and liabilities pursuant to orders of the Oregon Public Utilities Commission (OPUC) or Washington Utilities and Transportation Commission (WUTC), which provide for the recovery of revenues or expenses from, or refunds to, utility customers in future periods, including a return or a carrying charge in certain cases. Amounts deferred as regulatory assets and liabilities were as follows:
We believe all costs incurred and deferred at June 30, 2018 are prudent. We annually review all regulatory assets and liabilities for recoverability and more often if circumstances warrant. If we should determine that all or a portion of these regulatory assets or liabilities no longer meet the criteria for continued application of regulatory accounting, then we would be required to write-off the net unrecoverable balances in the period such determination is made. New Accounting Standards We consider the applicability and impact of all accounting standards updates (ASUs) issued by the Financial Accounting Standards Board (FASB). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations. Recently Adopted Accounting Pronouncements STOCK COMPENSATION. On May 10, 2017, the FASB issued ASU 2017-09, "Stock Compensation - Scope of Modification Accounting." The purpose of the amendment is to provide clarity, reduce diversity in practice, and reduce the cost and complexity when applying the guidance in Topic 718, related to a change to the terms or conditions of a share-based payment award. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The amendments in this update were effective for us beginning January 1, 2018, and will be applied prospectively to any award modified on or after the adoption date. The adoption did not have a material impact to our financial statements or disclosures. RETIREMENT BENEFITS. On March 10, 2017, the FASB issued ASU 2017-07, "Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post Retirement Benefit Cost." The ASU requires entities to disaggregate current service cost from the other components of net periodic benefit cost and present it with other current compensation costs for related employees in the income statement. Additionally, the other components of net periodic benefit costs are to be presented elsewhere in the income statement and outside of income from operations, if that subtotal is presented. Only the service cost component of the net periodic benefit cost is eligible for capitalization. The amendments in this update were effective for us beginning January 1, 2018. Upon adoption, the ASU required that changes to the income statement presentation of net periodic benefit cost be applied retrospectively, while changes to amounts capitalized must be applied prospectively. As such, the interest cost, expected return on assets, amortization of prior service costs, and other costs have been reclassified from operations and maintenance expense to other income (expense), net on our consolidated statement of comprehensive income for the three and six months ended June 30, 2017. We did not elect the practical expedient which would have allowed us to reclassify amounts disclosed previously in the pension and other postretirement benefits footnote disclosure as the basis for applying retrospective presentation. As mentioned above, on a prospective basis, the other components of net periodic benefit cost will not be eligible for capitalization, however, they will continue to be included in our pension regulatory balancing mechanism. The retrospective presentation requirement related to the other components of net periodic benefit cost affected the operations and maintenance expense and other income (expense), net lines on our consolidated statement of comprehensive income. For the three months and six months ended June 30, 2017, $1.3 million and $2.6 million of expense was reclassified from operations and maintenance expense and included in other income (expense), net, respectively. STATEMENT OF CASH FLOWS. On August 26, 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments." The ASU adds guidance pertaining to the classification of certain cash receipts and payments on the statement of cash flows. The purpose of the amendment is to clarify issues that have been creating diversity in practice. The amendments in this standard were effective for us beginning January 1, 2018, and the adoption did not have a material impact to our financial statements or disclosures as our historical practices and presentation were consistent with the directives of this ASU. FINANCIAL INSTRUMENTS. On January 5, 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities." The ASU enhances the reporting model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation, and disclosure. The new standard was effective for us beginning January 1, 2018, and the adoption did not have a material impact to our financial statements or disclosures. REVENUE RECOGNITION. On May 28, 2014, the FASB issued ASU 2014-09 "Revenue From Contracts with Customers." The underlying principle of the guidance requires entities to recognize revenue depicting the transfer of goods or services to customers at amounts the entity is expected to be entitled to in exchange for those goods or services. The ASU also prescribes a five-step approach to revenue recognition: (1) identify the contract(s) with the customer; (2) identify the separate performance obligations in the contract(s); (3) determine the transaction price; (4) allocate the transaction price to separate performance obligations; and (5) recognize revenue when, or as, each performance obligation is satisfied. The guidance also requires additional disclosures, both qualitative and quantitative, regarding the nature, amount, timing and uncertainty of revenue and cash flows. The new accounting standard and all related amendments were effective for us beginning January 1, 2018. We applied the accounting standard to all contracts using the modified retrospective method. The new standard is primarily reflected in our consolidated statement of comprehensive income and Note 5. The implementation of the new revenue standard did not result in changes to how we currently recognize revenue, and therefore, we did not have a cumulative effect or adjustment to the opening balance of retained earnings. The implementation did result in changes to our disclosures and presentation of revenue and expenses. The comparative information for prior years has not been restated. There is no material impact to our financial results and no significant changes to our control environment due to the adoption of the new revenue standard on an ongoing basis. As previously discussed, the adoption of the new revenue standard did not impact our consolidated balance sheet or statement of cash flows but did result in changes to the presentation of our consolidated statements of comprehensive income. Had the adoption of the new revenue standard not occurred, our operating revenues for the three and six months ended June 30, 2018 would have been $119.8 million and $371.0 million, compared to the reported amounts of $124.6 million and $388.2 million under the new revenue standard, respectively. Similarly, absent the impact of the new revenue standard, our operating expenses would have been $111.5 million and $295.0 million, compared to the reported amounts of $116.3 million and $312.2 million under the new revenue standard for the three and six months ended June 30, 2018, respectively. The effect of the change was an increase in both operating revenues and operating expenses of $4.8 million and $17.2 million for the three and six months ended June 30, 2018, respectively, due to the change in presentation of revenue taxes. As part of the adoption of the new revenue standard, we evaluated the presentation of revenue taxes under the new guidance and across our peer group and concluded that the gross presentation of revenue taxes provides the greatest level of consistency and transparency. Prior to the adoption of the new revenue standard, a portion of revenue taxes was presented net in operating revenues and a portion was recorded directly on the balance sheet. During the three and six months ended June 30, 2018, we recognized $4.8 million and $17.2 million in revenue taxes in operating revenues and operating expenses, respectively. In comparison, for the three and six months ended June 30, 2017, we recognized $5.6 million and $19.3 million in revenue taxes, of which $3.2 million and $11.0 million were recorded in operating revenues and $2.4 million and $8.3 million were recorded on the balance sheet, respectively. The change in presentation of revenue taxes had no impact on utility margin, net income or earnings per share. Recently Issued Accounting Pronouncements ACCUMULATED OTHER COMPREHENSIVE INCOME. On February 14, 2018, the FASB issued ASU 2018-02, "Income Statement—Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." This update was issued in response to concerns from certain stakeholders regarding the current requirements under U.S. GAAP that deferred tax assets and liabilities are adjusted for a change in tax laws or rates, and the effect is to be included in income from continuing operations in the period of the enactment date. This requirement is also applicable to items in accumulated other comprehensive income where the related tax effects were originally recognized in other comprehensive income. The adjustment of deferred taxes due to the new corporate income tax rate enacted through the Tax Cuts and Jobs Act (TCJA) on December 22, 2017 recognized in income from continuing operations causes the tax effects of items within accumulated other comprehensive income (referred to as stranded tax effects) to not reflect the appropriate tax rate. The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the TCJA and require certain disclosures about stranded tax effects. The amendments in this update are effective for us beginning January 1, 2019, and should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the federal corporate income tax rate in the TCJA is recognized. The reclassification allowed in this update is elective, and we are currently assessing whether we will make the reclassification. This update is not expected to have a material impact on our financial condition. DERIVATIVES AND HEDGING. On August 28, 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities." The purpose of the amendment is to more closely align hedge accounting with companies’ risk management strategies. The ASU amends the accounting for risk component hedging, the hedged item in fair value hedges of interest rate risk, and amounts excluded from the assessment of hedge effectiveness. The guidance also amends the recognition and presentation of the effect of hedging instruments and includes other simplifications of hedge accounting. The amendments in this update are effective for us beginning January 1, 2019. Early adoption is permitted. The amended presentation and disclosure guidance is required prospectively. We are currently assessing the effect of this standard on our financial statements and disclosures. LEASES. On February 25, 2016, the FASB issued ASU 2016-02, "Leases," which revises the existing lease accounting guidance. Pursuant to the new standard, lessees will be required to recognize all leases, including operating leases that are greater than 12 months at lease commencement, on the balance sheet and record corresponding right-of-use assets and lease liabilities. Lessor accounting will remain substantially the same under the new standard. Quantitative and qualitative disclosures are also required for users of the financial statements to have a clear understanding of the nature of our leasing activities. On November 29, 2017, the FASB proposed an additional practical expedient that would allow entities to apply the transition requirements on the effective date of the standard. Additionally, on January 25, 2018, the FASB issued ASU 2018-01, "Land Easement Practical Expedient for Transition to Topic 842", to address the costs and complexity of applying the transition provisions of the new lease standard to land easements. This ASU provides an optional practical expedient to not evaluate existing or expired land easements that were not previously accounted for as leases under the current lease guidance. The standard and associated ASUs are effective for us beginning January 1, 2019. We are currently assessing our lease population and material contracts to determine the effect of this standard on our financial statements and disclosures. Refer to Note 14 of the 2017 Form 10-K for our current lease commitments. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share Text Block | 3. EARNINGS PER SHARE Basic earnings per share are computed using net income and the weighted average number of common shares outstanding for each period presented. Diluted earnings per share are computed in the same manner, except using the weighted average number of common shares outstanding plus the effects of the assumed exercise of stock options and the payment of estimated stock awards from other stock-based compensation plans that are outstanding at the end of each period presented. Antidilutive stock awards are excluded from the calculation of diluted earnings per common share. Diluted earnings (loss) from continuing operations per share are calculated as follows:
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Segment Information |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information Text Block | 4. SEGMENT INFORMATION We primarily operate in one reportable business segment, which is our local gas distribution business and which is referred to as the utility segment. During the second quarter of 2018, we moved forward with our long-term strategic plans, which include a shift away from our merchant gas storage business, by entering into a Purchase and Sale Agreement that provides for the sale of all of the membership interests in Gill Ranch, subject to various regulatory approvals and closing conditions. As such, we reevaluated our reportable segments and concluded that the gas storage activities no longer meet the requirements of a reportable segment. Our ongoing, non-utility gas storage activities, which include our interstate storage and optimization activities at our Mist gas storage facility, are now reported as other. We also have other investments and business activities not specifically related to our utility segment, which are aggregated and reported as other. We refer to our local gas distribution business as the utility and all other activities as non-utility. Local Gas Distribution Our local gas distribution segment is a regulated utility principally engaged in the purchase, sale, and delivery of natural gas and related services to customers in Oregon and southwest Washington. As a regulated utility, we are responsible for building and maintaining a safe and reliable pipeline distribution system, purchasing sufficient gas supplies from producers and marketers, contracting for firm and interruptible transportation of gas over interstate pipelines to bring gas from the supply basins into our service territory, and re-selling the gas to customers subject to rates, terms, and conditions approved by the OPUC or WUTC. Gas distribution also includes taking customer-owned gas and transporting it from interstate pipeline connections, or city gates, to the customers’ end-use facilities for a fee, which is approved by the OPUC or WUTC. As of December 31, 2017, approximately 89% of our customers are located in Oregon and 11% in Washington. On an annual basis, residential and commercial customers typically account for around 60% of our utility’s total volumes delivered and 90% of our utility’s margin. Industrial customers largely account for the remaining volumes and utility margin. A small amount of utility margin is also derived from miscellaneous services, gains or losses from an incentive gas cost sharing mechanism, and other service fees. Industrial sectors we serve include: pulp, paper, and other forest products; the manufacture of electronic, electrochemical and electrometallurgical products; the processing of farm and food products; the production of various mineral products; metal fabrication and casting; the production of machine tools, machinery, and textiles; the manufacture of asphalt, concrete, and rubber; printing and publishing; nurseries; government and educational institutions; and electric generation. In addition to our local gas distribution business, our utility segment also includes the utility portion of our Mist underground storage facility, our North Mist gas storage expansion in Oregon, and NWN Gas Reserves, which is a wholly-owned subsidiary of Energy Corp. Other We have non-utility investments and other business activities, which are aggregated and reported as other. Other includes NWN Gas Storage, a wholly-owned subsidiary of NWN Energy, and the non-utility portion of our Mist facility in Oregon and third-party asset management services. Earnings from non-utility assets at our Mist facility are primarily related to firm storage capacity revenues. Earnings from the Mist facility also include revenue, net of amounts shared with utility customers, from management of utility assets at Mist and upstream pipeline capacity when not needed to serve utility customers. Under the Oregon sharing mechanism, we retain 80% of the pre-tax income from these services when the costs of the capacity have not been included in utility rates, or 33% of the pre-tax income when the costs have been included in utility rates. The remaining 20% and 67%, respectively, are recorded to a deferred regulatory account for crediting back to utility customers. Other also includes NNG Financial, non-utility appliance retail center operations, NWN Water, which is pursuing investments in the water sector itself and through its wholly-owned subsidiaries FWC Merger Sub, Inc. and Cascadia, NWN Energy's equity investment in TWH, which is pursuing development of a cross-Cascades transmission pipeline project and NWN Holding, which is pursuing the holding company reorganization of NW Natural through its wholly-owned subsidiary NWN Holdco Sub. All prior period amounts have been retrospectively adjusted to reflect the change in our reportable segments and the designation of Gill Ranch as a discontinued operation. Inter-segment transactions were immaterial for the periods presented. The following table presents summary financial information concerning the reportable segments of our continuing operations. See Note 15 for information regarding our discontinued operation, Gill Ranch Storage.
Utility Margin Utility margin is a financial measure used by our chief operating decision maker (CODM) consisting of utility operating revenues, reduced by the associated cost of gas, environmental recovery revenues, and revenue taxes. 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. Revenue taxes are collected from our utility customers and remitted to our taxing authorities. The collections from customers are offset by the expense recognition of the obligation to the taxing authority. By subtracting cost of gas, environmental remediation expense, and revenue taxes from utility operating revenues, utility margin provides a key metric used by our CODM in assessing the performance of the utility segment. The following table presents additional segment information concerning utility margin:
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Revenue Revenue |
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Revenue from Contract with Customer [Text Block] | 5. REVENUE The following table presents our disaggregated revenue from continuing operations:
Revenue is recognized when our obligation to our customer is satisfied and in the amount we expect to receive in exchange for transferring goods or providing services. Our revenue from contracts with customers contain one performance obligation that is generally satisfied over time, using the output method based on time elapsed, due to the continuous nature of the service provided. The transaction price is determined per a set price agreed upon in the contract or dependent on regulatory tariffs. Customer accounts are settled on a monthly basis or paid at time of sale and based on historical experience. It is probable that we will collect substantially all of the consideration to which we are entitled to receive. We do not have any material contract assets as our net accounts receivable and accrued unbilled revenue balances are unconditional and only involve the passage of time until such balances are billed and collected. We do not have any material contract liabilities. Revenue-based taxes are primarily franchise taxes, which are collected from utility customers and remitted to taxing authorities. Beginning January 1, 2018, revenue taxes are included in operating revenues with an equal and offsetting expense recognized in operating expenses in the consolidated statement of comprehensive income. Utility Segment Local gas distribution revenue. Our primary source of revenue is providing natural gas to the customers in our service territory, which include residential, commercial, industrial and transportation customers. Gas distribution revenue is generally recognized over time upon delivery of the gas commodity or service to the customer, and the amount of consideration we receive and recognize as revenue is dependent on the Oregon and Washington tariffs. Customer accounts are to be paid in full each month, and there is no right of return or warranty for services provided. Revenues include firm and interruptible sales and transportation services, franchise taxes recovered from the customer, late payment fees, service fees, and accruals for gas delivered but not yet billed (accrued unbilled revenue). Our accrued unbilled revenue balance is based on estimates of deliveries during the period from the last meter reading and management judgment is required for a number of factors used in this calculation, including customer use and weather factors. We applied the significant financing practical expedient and we have not adjusted the consideration we expect to receive from our utility customers for the effects of a significant financing component as all payment arrangements are settled annually. Due to the election of the right to invoice practical expedient, we do not disclose the value of unsatisfied performance obligations as of June 30, 2018. Alternative revenue. Our weather normalization mechanism (WARM) and decoupling mechanism are considered to be alternative revenue programs. Alternative revenue programs are considered to be contracts between us and our regulator and are excluded from revenue from contracts with customers. Leasing revenue. Leasing revenue primarily consists of rental revenue for small leases of our utility-owned property to third parties. The transactions are accounted for as operating leases and the revenue is recognized on a straight-line basis over the term of the lease agreement. Lease revenue is excluded from revenue from contracts with customers. Other Gas storage revenue. Our gas storage activity includes the non-utility portion of our Mist facility, which is used to store natural gas for customers. Gas storage revenue is generally recognized over time as the gas storage service is provided to the customer and the amount of consideration we receive and recognize as revenue is dependent on set rates defined per the storage agreements. Noncash consideration in the form of dekatherms of natural gas is received as consideration for providing gas injection services to our gas storage customers. This noncash consideration is measured at fair value using the average spot rate. Customer accounts are generally paid in full each month, and there is no right of return or warranty for services provided. Revenues include firm and interruptible storage services, net of the profit sharing amount refunded to our utility customers. Asset management revenue. Asset management revenue is generally recognized over time using a straight-line approach over the term of each contract, and the amount of consideration we receive and recognize as revenue is dependent on a variable pricing model. Variable revenues earned above guaranteed amounts are estimated and recognized at the end of each period using the most likely amount approach. Revenues include the optimization of the storage assets and pipeline capacity provided, net of the profit sharing amount refunded to our utility customers. Asset management accounts are settled on a monthly basis. As of June 30, 2018, unrecognized revenue for the fixed component of the transaction price related to our gas storage and asset management revenue was approximately $43.4 million. Of this amount, approximately $8.1 million will be recognized during the remainder of 2018, $10.2 million in 2019, $8.5 million in 2020, $7.5 million in 2021, $4.3 million in 2022 and $4.8 million thereafter. Appliance retail center revenue. We own and operate an appliance store that is open to the public, where customers can purchase natural gas home appliances. Revenue from the sale of appliances is recognized at the point in time in which the appliance is transferred to the third party responsible for delivery and installation services and when the customer has legal title to the appliance. It is required that the sale be paid for in full prior to transfer of legal title. The amount of consideration we receive and recognize as revenue varies with changes in marketing incentives and discounts that we offer to our customers. |
Stock-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | 6. STOCK-BASED COMPENSATION Our stock-based compensation plans are designed to promote stock ownership in NW Natural by employees and officers. These compensation plans include a Long Term Incentive Plan (LTIP), an Employee Stock Purchase Plan (ESPP), and a Restated Stock Option Plan. For additional information on our stock-based compensation plans, see Note 6 in the 2017 Form 10-K and the updates provided below. Long Term Incentive Plan Performance Shares LTIP performance shares incorporate a combination of market, performance, and service-based factors. During the six months ended June 30, 2018, no performance-based shares were granted under the LTIP for accounting purposes. In February 2018, the 2018 LTIP was awarded to participants; however, the agreement allows for one of the performance factors to remain variable until the first quarter of the third year of the award period. As the performance factor will not be approved until the first quarter of 2020, there is not a mutual understanding of the award’s key terms and conditions between the Company and the participants as of June 30, 2018 and therefore no expense was recognized for the 2018 award. We will calculate the grant date fair value and recognize expense once the final performance factor has been approved. For the 2018 LTIP, award share payouts range from a threshold of 0% to a maximum of 200% based on achievement of pre-established goals. The performance criteria for the 2018 performance shares consists of a three-year Return on Invested Capital (ROIC) threshold that must be satisfied and a cumulative EPS factor, which can be modified by a total shareholder return factor (TSR modifier) relative to the performance of the Russell 2500 Utilities Index over the three-year performance period. If the target was achieved for the 2018 award, we would grant 34,702 shares in the first quarter of 2020. As of June 30, 2018, there was $2.1 million of unrecognized compensation cost associated with the 2016 and 2017 LTIP grants, which is expected to be recognized through 2019. Restricted Stock Units During the six months ended June 30, 2018, 26,087 RSUs were granted under the LTIP with a weighted-average grant date fair value of $55.16 per share. Generally, the RSUs awarded are forfeitable and include a performance-based threshold as well as a vesting period of four years from the grant date. Generally, an RSU obligates us, upon vesting, to issue the RSU holder one share of common stock plus a cash payment equal to the total amount of dividends paid per share between the grant date and vesting date of that portion of the RSU. The fair value of an RSU is equal to the closing market price of our common stock on the grant date. As of June 30, 2018, there was $3.3 million of unrecognized compensation cost from grants of RSUs, which is expected to be recognized over a period extending through 2022. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | 7. DEBT Short-Term Debt At June 30, 2018, we had short-term debt of $47.1 million, which was comprised entirely of commercial paper. The carrying cost of our commercial paper approximates fair value using Level 2 inputs. See Note 2 in the 2017 Form 10-K for a description of the fair value hierarchy. At June 30, 2018, our commercial paper had a maximum remaining maturity of 12 days and average remaining maturity of 7 days. Long-Term Debt At June 30, 2018, we had long-term debt of $758.7 million, which included $6.0 million of unamortized debt issuance costs. Utility long-term debt consists of first mortgage bonds (FMBs) with maturity dates ranging from 2018 through 2047, interest rates ranging from 1.545% to 9.05%, and a weighted average coupon rate of 4.728%. In March 2018, we retired $22.0 million of FMBs with a coupon rate of 6.60%. Fair Value of Long-Term Debt Our outstanding debt does not trade in active markets. We estimate the fair value of our long-term debt using utility companies with similar credit ratings, terms, and remaining maturities to our long-term debt that actively trade in public markets. These valuations are based on Level 2 inputs as defined in the fair value hierarchy. See Note 2 in the 2017 Form 10-K for a description of the fair value hierarchy. The following table provides an estimate of the fair value of our long-term debt, including current maturities of long-term debt, using market prices in effect on the valuation date:
(1) Estimated fair value does not include unamortized debt issuance costs. |
Pension and Other Postretirement Benefit Costs |
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Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Other Postretirement Benefit Costs | 8. PENSION AND OTHER POSTRETIREMENT BENEFIT COSTS We recognize the service cost component of net periodic benefit cost for our pension and other postretirement benefit plans in operations and maintenance expense in our consolidated statements of comprehensive income. The other non-service cost components are recognized in other income (expense), net in our consolidated statements of comprehensive income. The following table provides the components of net periodic benefit cost for our pension and other postretirement benefit plans:
The following table presents amounts recognized in accumulated other comprehensive loss (AOCL) and the changes in AOCL related to our non-qualified employee benefit plans:
Employer Contributions to Company-Sponsored Defined Benefit Pension Plans For the six months ended June 30, 2018, we made cash contributions totaling $5.6 million to our qualified defined benefit pension plans. We expect further plan contributions of $10.0 million during the remainder of 2018. Defined Contribution Plan The Retirement K Savings Plan is a qualified defined contribution plan under Internal Revenue Code Sections 401(a) and 401(k). Employer contributions totaled $3.5 million and $2.8 million for the six months ended June 30, 2018 and 2017, respectively. See Note 8 in the 2017 Form 10-K for more information concerning these retirement and other postretirement benefit plans. |
Income Tax |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax | 9. INCOME TAX An estimate of annual income tax expense is made each interim period using estimates for annual pre-tax income, regulatory flow-through adjustments, tax credits, and other items. The estimated annual effective tax rate is applied to year-to-date, pre-tax income to determine income tax expense for the interim period consistent with the annual estimate. The effective income tax rate varied from the combined federal and state statutory tax rates due to the following:
The effective income tax rate for the three and six months ended June 30, 2018 compared to the same periods in 2017 decreased primarily as a result of the TCJA and lower pre-tax income. See "U.S. Federal TCJA Matters" below and Note 9 in the 2017 Form 10-K for more detail on income taxes and effective tax rates. The IRS Compliance Assurance Process (CAP) examination of the 2016 tax year was completed during the first quarter of 2018. There were no material changes to the return as filed. The 2017 tax year is subject to examination under CAP and the 2018 tax year CAP application has been accepted by the IRS. U.S. Federal TCJA Matters On December 22, 2017, the TCJA was enacted and permanently lowered the U.S. federal corporate income tax rate to 21% from the previous maximum rate of 35%, effective for our tax year beginning January 1, 2018. The TCJA includes specific provisions related to regulated public utilities that provide for the continued deductibility of interest expense and the elimination of bonus depreciation for property acquired and placed in service after September 27, 2017. Under pre-TCJA law, business interest expense was generally deductible in the determination of taxable income. The TCJA imposes a new limitation on the deductibility of net business interest expense in excess of approximately 30% of adjusted taxable income. Taxpayers operating in the trade or business of public regulated utilities are excluded from these new interest expense limitations. There is ongoing uncertainty with regards to the application of the new interest expense limitation to our non-regulated operations. See Note 9 in the 2017 Form 10-K. The TCJA generally provides for immediate full expensing for qualified property acquired and placed in service after September 27, 2017 and before January 1, 2023. This would generally provide for accelerated cost recovery for capital investments. However, the definition of qualified property excludes property used in the trade or business of a public regulated utility. The definition of utility trade or business is the same as that used by the TCJA with respect to the imposition of the net interest expense limitation discussed above. As a result, ongoing uncertainty exists with respect to the application of full expensing to our non-regulated activities, and the availability of bonus depreciation for utility assets acquired before September 28, 2017 and placed in service after September 27, 2017. See Note 9 in the 2017 Form 10-K. At June 30, 2018 and December 31, 2017, we had an estimated regulatory liability of $213.3 million for the change in regulated utility deferred taxes as a result of the TCJA, which included a gross-up for income taxes of $56.5 million. It is possible that this estimated balance may increase or decrease in the future as additional authoritative interpretation of the TCJA becomes available, or as a result of regulatory guidance from the OPUC or WUTC. We anticipate that until such time that customers receive the direct benefit of this regulatory liability, the balance, net of the additional gross-up for income taxes, will continue to provide an indirect benefit to customers by reducing the utility rate base which is a component of customer rates. It is not yet certain when the final resolution of these regulatory proceedings will occur, and as result, this regulatory liability is classified as long-term. Utility rates in effect include an allowance to provide for the recovery of the anticipated provision for income taxes incurred as a result of providing regulated services. As a result of the newly enacted 21% federal corporate income tax rate, we are recording an additional regulatory liability in 2018 reflecting the estimated net reduction in our provision for income taxes. This revenue deferral is based on the estimated net benefit to customers using forecasted regulated utility earnings, considering average weather and associated volumes, and includes a gross-up for income taxes. As of June 30, 2018, a regulatory liability of $9.4 million has been recorded including accrued interest to reflect this estimated revenue deferral. |
Property, Plant and Equipment |
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Public Utilities, Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant, and Equipment | 10. PROPERTY, PLANT, AND EQUIPMENT The following table sets forth the major classifications of our property, plant, and equipment and accumulated depreciation of our continuing operations:
Build-to-suit Assets In October 2017, we entered into a 20-year operating lease agreement commencing in 2020 for our new headquarters location in Portland, Oregon. Our existing headquarters lease expires in 2020. Our search and evaluation process focused on seismic preparedness, safety, reliability, least cost to our customers, and a continued commitment to our employees and the communities we serve. The lease was analyzed in consideration of build-to-suit lease accounting guidance, and we concluded that we are the accounting owner of the asset during construction. As a result, we have recognized $7.6 million and $0.5 million in property, plant and equipment and an obligation in other non-current liabilities for the same amount in our consolidated balance sheet at June 30, 2018 and December 31, 2017, respectively. In 2019, pursuant to the new lease standard issued by the FASB, we expect to de-recognize the associated build-to-suit asset and liability. See Note 14 in our 2017 Form 10-K. |
Gas Reserves |
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Gas Reserves [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gas Reserves | 11. GAS RESERVES We have invested approximately $188 million through our gas reserves program in the Jonah Field located in Wyoming as of June 30, 2018. Gas reserves are stated at cost, net of regulatory amortization, with the associated deferred tax benefits recorded as liabilities in the consolidated balance sheets. Our investment in gas reserves provides long-term price protection for utility customers through the original agreement with Encana Oil & Gas (USA) Inc. under which we invested approximately $178 million and the amended agreement with Jonah Energy LLC under which an approximate additional $10 million was invested. The cost of gas, including a carrying cost for the rate base investment, is included in our annual Oregon PGA filing, which allows us to recover these costs through customer rates. Our investment under the original agreement, less accumulated amortization and deferred taxes, earns a rate of return. Gas produced from the additional wells is included in our Oregon PGA at a fixed rate of $0.4725 per therm, which approximates the 10-year hedge rate plus financing costs at the inception of the investment. The following table outlines our net gas reserves investment:
Our investment is included in our consolidated balance sheets under gas reserves with our maximum loss exposure limited to our investment balance. |
Investments |
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Investments [Abstract] | |
Investments | 12. INVESTMENTS Investments in Gas Pipeline Trail West Pipeline, LLC (TWP), a wholly-owned subsidiary of TWH, is pursuing the development of a new gas transmission pipeline that would provide an interconnection with our utility distribution system. NWN Energy, a wholly-owned subsidiary of NW Natural, owns 50% of TWH, and 50% is owned by TransCanada American Investments Ltd., an indirect wholly-owned subsidiary of TransCanada Corporation. Variable Interest Entity (VIE) Analysis TWH is a VIE, with our investment in TWP reported under equity method accounting. We have determined we are not the primary beneficiary of TWH’s activities as we only have a 50% share of the entity, and there are no stipulations that allow us a disproportionate influence over it. Our investments in TWH and TWP are included in other investments in our balance sheet. If we do not develop this investment, our maximum loss exposure related to TWH is limited to our equity investment balance, less our share of any cash or other assets available to us as a 50% owner. Our investment balance in TWH was $13.4 million at June 30, 2018 and 2017 and December 31, 2017. See Note 12 in our 2017 Form 10-K. Other Investments Other investments include financial investments in life insurance policies, which are accounted for at cash surrender value, net of policy loans. See Note 12 in our 2017 Form 10-K. |
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | 13. DERIVATIVE INSTRUMENTS We enter into financial derivative contracts to hedge a portion of our utility’s natural gas sales requirements. These contracts include swaps, options and combinations of option contracts. We primarily use these derivative financial instruments to manage commodity price variability. A small portion of our derivative hedging strategy involves foreign currency exchange contracts. We enter into these financial derivatives, up to prescribed limits, primarily to hedge price variability related to our physical gas supply contracts as well as to hedge spot purchases of natural gas. The foreign currency forward contracts are used to hedge the fluctuation in foreign currency exchange rates for pipeline demand charges paid in Canadian dollars. In the normal course of business, we also enter into indexed-price physical forward natural gas commodity purchase contracts and options to meet the requirements of utility customers. These contracts qualify for regulatory deferral accounting treatment. We also enter into exchange contracts related to the third-party asset management of our gas portfolio, some of which are derivatives that do not qualify for hedge accounting or regulatory deferral, but are subject to our regulatory sharing agreement. These derivatives are recognized in operating revenues, net of amounts shared with utility customers. Notional Amounts The following table presents the absolute notional amounts related to open positions on our derivative instruments:
Purchased Gas Adjustment (PGA) Derivatives entered into by the utility for the procurement or hedging of natural gas for future gas years generally receive regulatory deferral accounting treatment. In general, our commodity hedging for the current gas year is completed prior to the start of the gas year, and hedge prices are reflected in our weighted-average cost of gas in the PGA filing. Hedge contracts entered into after the start of the PGA period are subject to our PGA incentive sharing mechanism in Oregon. We entered the 2017-18 and 2016-17 gas year with our forecasted sales volumes hedged at 49% and 48% in financial swap and option contracts, and 26% and 27% in physical gas supplies, respectively. Hedge contracts entered into prior to our PGA filing, in September 2017, were included in the PGA for the 2017-18 gas year. Hedge contracts entered into after our PGA filing, and related to subsequent gas years, may be included in future PGA filings and qualify for regulatory deferral. Unrealized and Realized Gain/Loss The following table reflects the income statement presentation for the unrealized gains and losses from our derivative instruments:
UNREALIZED GAIN/LOSS. Outstanding derivative instruments related to regulated utility operations are deferred in accordance with regulatory accounting standards. The cost of foreign currency forward and natural gas derivative contracts are recognized immediately in the cost of gas; however, costs above or below the amount embedded in the current year PGA are subject to a regulatory deferral tariff and therefore, are recorded as a regulatory asset or liability. REALIZED GAIN/LOSS. We realized net losses of $4.7 million and $13.7 million for the three and six months ended June 30, 2018, respectively, from the settlement of natural gas financial derivative contracts. Whereas, we realized net gains of $0.3 million and remained flat for the three and six months ended June 30, 2017, respectively. Realized gains and losses are recorded in cost of gas, deferred through our regulatory accounts, and amortized through customer rates in the following year. Credit Risk Management of Financial Derivatives Instruments No collateral was posted with or by our counterparties as of June 30, 2018 or 2017. We attempt to minimize the potential exposure to collateral calls by counterparties to manage our liquidity risk. Counterparties generally allow a certain credit limit threshold before requiring us to post collateral against loss positions. Given our counterparty credit limits and portfolio diversification, we were not subject to collateral calls in 2018 or 2017. Our collateral call exposure is set forth under credit support agreements, which generally contain credit limits. We could also be subject to collateral call exposure where we have agreed to provide adequate assurance, which is not specific as to the amount of credit limit allowed, but could potentially require additional collateral in the event of a material adverse change. Based upon current commodity financial swap and option contracts outstanding, which reflect unrealized losses of $14.3 million at June 30, 2018, we have estimated the level of collateral demands, with and without potential adequate assurance calls, using current gas prices and various credit downgrade rating scenarios for NW Natural as follows:
Our financial derivative instruments are subject to master netting arrangements; however, they are presented on a gross basis in our consolidated balance sheets. We and our counterparties have the ability to set-off obligations to each other under specified circumstances. Such circumstances may include a defaulting party, a credit change due to a merger affecting either party, or any other termination event. If netted by counterparty, our physical and financial derivative position would result in an asset of $2.5 million and a liability of $15.0 million as of June 30, 2018, an asset of $0.9 million and a liability of $7.4 million as of June 30, 2017, and an asset of $2.9 million and a liability of $23.3 million as of December 31, 2017. We are exposed to derivative credit and liquidity risk primarily through securing fixed price natural gas commodity swaps to hedge the risk of price increases for our natural gas purchases made on behalf of customers. See Note 13 in our 2017 Form 10-K for additional information. Fair Value In accordance with fair value accounting, we include non-performance risk in calculating fair value adjustments. This includes a credit risk adjustment based on the credit spreads of our counterparties when we are in an unrealized gain position, or on our own credit spread when we are in an unrealized loss position. The inputs in our valuation models include natural gas futures, volatility, credit default swap spreads and interest rates. Additionally, our assessment of non-performance risk is generally derived from the credit default swap market and from bond market credit spreads. The impact of the credit risk adjustments for all outstanding derivatives was immaterial to the fair value calculation at June 30, 2018. Using significant other observable or Level 2 inputs, the net fair value was a liability of $12.5 million, $6.5 million, and $20.3 million as of June 30, 2018 and 2017, and December 31, 2017, respectively. No Level 3 inputs were used in our derivative valuations, and there were no transfers between Level 1 or Level 2 during the six months ended June 30, 2018 and 2017. See Note 2 in the 2017 Form 10-K. |
Environmental Matters |
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Environmental Remediation Obligations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Environmental Matters | 14. ENVIRONMENTAL MATTERS We own, or previously owned, properties that may require environmental remediation or action. We estimate the range of loss for environmental liabilities based on current remediation technology, enacted laws and regulations, industry experience gained at similar sites and an assessment of the probable level of involvement and financial condition of other potentially responsible parties (PRPs). When amounts are prudently expended related to site remediation, of those sites described herein, we have a recovery mechanism in place to collect 96.68% of remediation costs from Oregon customers, and we are allowed to defer environmental remediation costs allocated to customers in Washington annually until they are reviewed for prudence at a subsequent proceeding. Our sites are subject to the remediation process prescribed by the Environmental Protection Agency (EPA) and the Oregon Department of Environmental Quality (ODEQ). The process begins with a remedial investigation (RI) to determine the nature and extent of contamination and then a risk assessment (RA) to establish whether the contamination at the site poses unacceptable risks to humans and the environment. Next, a feasibility study (FS) or an engineering evaluation/cost analysis (EE/CA) evaluates various remedial alternatives. It is at this point in the process when we are able to estimate a range of remediation costs and record a reasonable potential remediation liability, or make an adjustment to our existing liability. From this study, the regulatory agency selects a remedy and issues a Record of Decision (ROD). After a ROD is issued, we would seek to negotiate a consent decree or consent judgment for designing and implementing the remedy. We would have the ability to further refine estimates of remediation liabilities at that time. Remediation may include treatment of contaminated media such as sediment, soil and groundwater, removal and disposal of media, institutional controls such as legal restrictions on future property use, or natural recovery. Following construction of the remedy, the EPA and ODEQ also have requirements for ongoing maintenance, monitoring and other post-remediation care that may continue for many years. Where appropriate and reasonably known, we will provide for these costs in our remediation liabilities described below. Due to the numerous uncertainties surrounding the course of environmental remediation and the preliminary nature of several site investigations, in some cases, we may not be able to reasonably estimate the high end of the range of possible loss. In those cases, we have disclosed the nature of the possible loss and the fact that the high end of the range cannot be reasonably estimated where a range of potential loss is available. Unless there is an estimate within the range of possible losses that is more likely than other cost estimates within that range, we record the liability at the low end of this range. It is likely changes in these estimates and ranges will occur throughout the remediation process for each of these sites due to our continued evaluation and clarification concerning our responsibility, the complexity of environmental laws and regulations and the determination by regulators of remediation alternatives. In addition to remediation costs, we could also be subject to Natural Resource Damages (NRD) claims. We will assess the likelihood and probability of each claim and recognize a liability if deemed appropriate. Refer to "Other Portland Harbor" below. Environmental Sites The following table summarizes information regarding liabilities related to environmental sites, which are recorded in other current liabilities and other noncurrent liabilities in the balance sheet:
PORTLAND HARBOR SITE. The Portland Harbor is an EPA listed Superfund site that is approximately 10 miles long on the Willamette River and is adjacent to NW Natural's Gasco uplands sites. We are one of over one hundred PRPs to the Superfund site. In January 2017, the EPA issued its Record of Decision, which selects the remedy for the clean-up of the Portland Harbor site (Portland Harbor ROD). The Portland Harbor ROD estimates the present value total cost at approximately $1.05 billion with an accuracy between -30% and +50% of actual costs. Our potential liability is a portion of the costs of the remedy for the entire Portland Harbor Superfund site. The cost of that remedy is expected to be allocated among more than 100 PRPs. In addition, we are actively pursuing clarification and flexibility under the ROD in order to better understand our obligation under the clean-up. We are also participating in a non-binding allocation process with the other PRPs in an effort to resolve our potential liability. The Portland Harbor ROD does not provide any additional clarification around allocation of costs among PRPs and, as a result of issuance of the Portland Harbor ROD, we have not modified any of our recorded liabilities at this time. We manage our liability related to the Superfund site as two distinct remediation projects, the Gasco/Siltronic Sediments and Other Portland Harbor projects. Gasco/Siltronic Sediments. In 2009, NW Natural and Siltronic Corporation entered into a separate Administrative Order on Consent with the EPA to evaluate and design specific remedies for sediments adjacent to the Gasco uplands and Siltronic uplands sites. We submitted a draft EE/CA to the EPA in May 2012 to provide the estimated cost of potential remedial alternatives for this site. At this time, the estimated costs for the various sediment remedy alternatives in the draft EE/CA for the additional studies and design work needed before the cleanup can occur, and for regulatory oversight throughout the clean-up range from $47.5 million to $350 million. We have recorded a liability of $47.5 million for the sediment clean-up, which reflects the low end of the range. At this time, we believe sediments at this site represent the largest portion of our liability related to the Portland Harbor site discussed above. Other Portland Harbor. While we still believe liabilities associated with the Gasco/Siltronic sediments site represent our largest exposure, we do have other potential exposures associated with the Portland Harbor ROD, including NRD costs and harborwide clean-up costs (including downstream petroleum contamination), for which allocations among the PRPs have not yet been determined. The Company and other parties have signed a cooperative agreement with the Portland Harbor Natural Resource Trustee council to participate in a phased NRD assessment to estimate liabilities to support an early restoration-based settlement of NRD claims. One member of this Trustee council, the Yakama Nation, withdrew from the council in 2009, and in 2017, filed suit against the Company and 29 other parties seeking remedial costs and NRD assessment costs associated with the Portland Harbor, set forth in the complaint. The complaint seeks recovery of alleged costs totaling $0.3 million in connection with the selection of a remedial action for the Portland Harbor as well as declaratory judgment for unspecified future remedial action costs and for costs to assess the injury, loss or destruction of natural resources resulting from the release of hazardous substances at and from the Portland Harbor site. The Yakama Nation has filed two amended complaints addressing certain pleading defects and dismissing the State of Oregon. We have recorded a liability for NRD claims which is at the low end of the range of the potential liability; the high end of the range cannot be reasonably estimated at this time. The NRD liability is not included in the aforementioned range of costs provided in the Portland Harbor ROD. GASCO UPLANDS SITE. A predecessor of NW Natural, Portland Gas and Coke Company, owned a former gas manufacturing plant that was closed in 1958 (Gasco site) and is adjacent to the Portland Harbor site described above. The Gasco site has been under investigation by us for environmental contamination under the ODEQ Voluntary Clean-Up Program (VCP). It is not included in the range of remedial costs for the Portland Harbor site noted above. We manage the Gasco site in two parts, the uplands portion and the groundwater source control action. We submitted a revised Remedial Investigation Report for the uplands to ODEQ in May 2007. In March 2015, ODEQ approved the RA, enabling us to begin work on the FS in 2016. We have recognized a liability for the remediation of the uplands portion of the site which is at the low end of the range of potential liability; the high end of the range cannot be reasonably estimated at this time. In September 2013, we completed construction of a groundwater source control system, including a water treatment station, at the Gasco site. We have estimated the cost associated with the ongoing operation of the system and have recognized a liability which is at the low end of the range of potential cost. We cannot estimate the high end of the range at this time due to the uncertainty associated with the duration of running the water treatment station, which is highly dependent on the remedy determined for both the upland portion as well as the final remedy for our Gasco sediment exposure. OTHER SITES. In addition to those sites above, we have environmental exposures at three other sites: Central Service Center, Front Street and Oregon Steel Mills. We may have exposure at other sites that have not been identified at this time. Due to the uncertainty of the design of remediation, regulation, timing of the remediation and in the case of the Oregon Steel Mills site, pending litigation, liabilities for each of these sites have been recognized at their respective low end of the range of potential liability; the high end of the range could not be reasonably estimated at this time. Central Service Center site. We are currently performing an environmental investigation of the property under ODEQ's Independent Cleanup Pathway. This site is on ODEQ's list of sites with confirmed releases of hazardous substances, and cleanup is necessary. Front Street site. The Front Street site was the former location of a gas manufacturing plant we operated (the former Portland Gas Manufacturing site, or PGM). At ODEQ’s request, we conducted a sediment and source control investigation and provided findings to ODEQ. In December 2015, we completed a FS on the former Portland Gas Manufacturing site. In July 2017, ODEQ issued the PGM ROD. The ROD specifies the selected remedy, which requires a combination of dredging, capping, treatment, and natural recovery. In addition, the selected remedy also requires institutional controls and long-term inspection and maintenance. We revised the liability in the second quarter of 2017 to incorporate the estimated undiscounted cost of approximately $10.5 million for the selected remedy. Further, we have recognized an additional liability of $1.1 million for additional studies and design costs as well as regulatory oversight throughout the clean-up. We plan to complete the remedial design in 2018 and expect to construct the remedy details during 2019. Oregon Steel Mills site. Refer to the “Legal Proceedings,” below. Site Remediation and Recovery Mechanism (SRRM) We have an SRRM through which we track and have the ability to recover past deferred and future prudently incurred environmental remediation costs allocable to Oregon, subject to an earnings test, for those sites identified therein. See Note 15 in the 2017 Form 10-K for a description of the SRRM collection process. The following table presents information regarding the total regulatory asset deferred:
ENVIRONMENTAL EARNINGS TEST. To the extent the utility earns at or below its authorized Return on Equity (ROE), remediation expenses and interest in excess of the $5.0 million tariff rider and $5.0 million insurance proceeds are recoverable through the SRRM. To the extent the utility earns more than its authorized ROE in a year, the utility is required to cover environmental expenses and interest on expenses greater than the $10.0 million with those earnings that exceed its authorized ROE. Under the 2015 Order, the OPUC stated they would revisit the deferral and amortization of future remediation expenses, as well as the treatment of remaining insurance proceeds three years from the original Order, or earlier if we gain greater certainty about our future remediation costs, to consider whether adjustments to the mechanism may be appropriate. As it has been three years from the 2015 Order, we filed an update with the OPUC in March 2018 and recommended no changes. WASHINGTON DEFERRAL. In Washington, cost recovery and carrying charges on amounts deferred for costs associated with services provided to Washington customers will be determined in a future proceeding. Legal Proceedings NW Natural is subject to claims and litigation arising in the ordinary course of business. Although the final outcome of any of these legal proceedings cannot be predicted with certainty, including the matter described below, we do not expect that the ultimate disposition of any of these matters will have a material effect on our financial condition, results of operations or cash flows. See also Part II, Item 1, “Legal Proceedings". OREGON STEEL MILLS SITE. See Note 15 in the 2017 Form 10-K. For additional information regarding other commitments and contingencies, see Note 14 in the 2017 Form 10-K. |
Discontinued Operations Discontinued Operations (Notes) |
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Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | 15. DISCONTINUED OPERATIONS On June 20, 2018, NWN Gas Storage, our wholly owned subsidiary, entered into a Purchase and Sale Agreement (the Agreement) that provides for the sale by NWN Gas Storage of all of the membership interests in Gill Ranch. Gill Ranch owns a 75% interest in the natural gas storage facility located near Fresno, California known as the Gill Ranch Gas Storage Facility. Pacific Gas and Electric Company (PG&E) owns the remaining 25% interest in the Gill Ranch Gas Storage Facility. The Agreement provides for an initial cash purchase price of $25.0 million (subject to a working capital adjustment), plus potential additional payments to NWN Gas Storage of up to $26.5 million in the aggregate if Gill Ranch achieves certain economic performance levels for the first three full gas storage years (April 1 of one year through March 31 of the following year) occurring after the closing and the remaining portion of the gas storage year during which the closing occurs. We expect the transaction to close within 12 months of signing and in 2019. The closing of the transaction is subject to approval by the California Public Utilities Commission (CPUC) and other customary closing conditions. As a result of our strategic shift away from merchant gas storage and the significance of Gill Ranch's financial results in 2017, we have concluded that the pending sale of Gill Ranch qualifies as assets and liabilities held for sale and discontinued operations. As such, the assets and liabilities associated with Gill Ranch have been classified as discontinued operations assets and discontinued operations liabilities, respectively, and, the results of Gill Ranch are presented separately, net of tax, as discontinued operations from the results of continuing operations for all periods presented. The expenses included in the results of discontinued operations are the direct operating expenses incurred by Gill Ranch that may be reasonably segregated from the costs of our continuing operations. The following table presents the carrying amounts of the major components of Gill Ranch that are classified as discontinued operations assets and liabilities on our consolidated balance sheets:
The following table presents the operating results of Gill Ranch, which was reported within our gas storage segment historically, and is presented net of tax on our consolidated statements of comprehensive income:
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Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |
Industry Regulation Text Block | Industry Regulation In applying regulatory accounting principles, we capitalize or defer certain costs and revenues as regulatory assets and liabilities pursuant to orders of the Oregon Public Utilities Commission (OPUC) or Washington Utilities and Transportation Commission (WUTC), which provide for the recovery of revenues or expenses from, or refunds to, utility customers in future periods, including a return or a carrying charge in certain cases. |
New Accounting Standards Text Block | New Accounting Standards We consider the applicability and impact of all accounting standards updates (ASUs) issued by the Financial Accounting Standards Board (FASB). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on our consolidated financial position or results of operations. Recently Adopted Accounting Pronouncements STOCK COMPENSATION. On May 10, 2017, the FASB issued ASU 2017-09, "Stock Compensation - Scope of Modification Accounting." The purpose of the amendment is to provide clarity, reduce diversity in practice, and reduce the cost and complexity when applying the guidance in Topic 718, related to a change to the terms or conditions of a share-based payment award. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The amendments in this update were effective for us beginning January 1, 2018, and will be applied prospectively to any award modified on or after the adoption date. The adoption did not have a material impact to our financial statements or disclosures. RETIREMENT BENEFITS. On March 10, 2017, the FASB issued ASU 2017-07, "Improving the Presentation of Net Periodic Pension Cost and Net Periodic Post Retirement Benefit Cost." The ASU requires entities to disaggregate current service cost from the other components of net periodic benefit cost and present it with other current compensation costs for related employees in the income statement. Additionally, the other components of net periodic benefit costs are to be presented elsewhere in the income statement and outside of income from operations, if that subtotal is presented. Only the service cost component of the net periodic benefit cost is eligible for capitalization. The amendments in this update were effective for us beginning January 1, 2018. Upon adoption, the ASU required that changes to the income statement presentation of net periodic benefit cost be applied retrospectively, while changes to amounts capitalized must be applied prospectively. As such, the interest cost, expected return on assets, amortization of prior service costs, and other costs have been reclassified from operations and maintenance expense to other income (expense), net on our consolidated statement of comprehensive income for the three and six months ended June 30, 2017. We did not elect the practical expedient which would have allowed us to reclassify amounts disclosed previously in the pension and other postretirement benefits footnote disclosure as the basis for applying retrospective presentation. As mentioned above, on a prospective basis, the other components of net periodic benefit cost will not be eligible for capitalization, however, they will continue to be included in our pension regulatory balancing mechanism. The retrospective presentation requirement related to the other components of net periodic benefit cost affected the operations and maintenance expense and other income (expense), net lines on our consolidated statement of comprehensive income. For the three months and six months ended June 30, 2017, $1.3 million and $2.6 million of expense was reclassified from operations and maintenance expense and included in other income (expense), net, respectively. STATEMENT OF CASH FLOWS. On August 26, 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments." The ASU adds guidance pertaining to the classification of certain cash receipts and payments on the statement of cash flows. The purpose of the amendment is to clarify issues that have been creating diversity in practice. The amendments in this standard were effective for us beginning January 1, 2018, and the adoption did not have a material impact to our financial statements or disclosures as our historical practices and presentation were consistent with the directives of this ASU. FINANCIAL INSTRUMENTS. On January 5, 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities." The ASU enhances the reporting model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation, and disclosure. The new standard was effective for us beginning January 1, 2018, and the adoption did not have a material impact to our financial statements or disclosures. REVENUE RECOGNITION. On May 28, 2014, the FASB issued ASU 2014-09 "Revenue From Contracts with Customers." The underlying principle of the guidance requires entities to recognize revenue depicting the transfer of goods or services to customers at amounts the entity is expected to be entitled to in exchange for those goods or services. The ASU also prescribes a five-step approach to revenue recognition: (1) identify the contract(s) with the customer; (2) identify the separate performance obligations in the contract(s); (3) determine the transaction price; (4) allocate the transaction price to separate performance obligations; and (5) recognize revenue when, or as, each performance obligation is satisfied. The guidance also requires additional disclosures, both qualitative and quantitative, regarding the nature, amount, timing and uncertainty of revenue and cash flows. The new accounting standard and all related amendments were effective for us beginning January 1, 2018. We applied the accounting standard to all contracts using the modified retrospective method. The new standard is primarily reflected in our consolidated statement of comprehensive income and Note 5. The implementation of the new revenue standard did not result in changes to how we currently recognize revenue, and therefore, we did not have a cumulative effect or adjustment to the opening balance of retained earnings. The implementation did result in changes to our disclosures and presentation of revenue and expenses. The comparative information for prior years has not been restated. There is no material impact to our financial results and no significant changes to our control environment due to the adoption of the new revenue standard on an ongoing basis. As previously discussed, the adoption of the new revenue standard did not impact our consolidated balance sheet or statement of cash flows but did result in changes to the presentation of our consolidated statements of comprehensive income. Had the adoption of the new revenue standard not occurred, our operating revenues for the three and six months ended June 30, 2018 would have been $119.8 million and $371.0 million, compared to the reported amounts of $124.6 million and $388.2 million under the new revenue standard, respectively. Similarly, absent the impact of the new revenue standard, our operating expenses would have been $111.5 million and $295.0 million, compared to the reported amounts of $116.3 million and $312.2 million under the new revenue standard for the three and six months ended June 30, 2018, respectively. The effect of the change was an increase in both operating revenues and operating expenses of $4.8 million and $17.2 million for the three and six months ended June 30, 2018, respectively, due to the change in presentation of revenue taxes. As part of the adoption of the new revenue standard, we evaluated the presentation of revenue taxes under the new guidance and across our peer group and concluded that the gross presentation of revenue taxes provides the greatest level of consistency and transparency. Prior to the adoption of the new revenue standard, a portion of revenue taxes was presented net in operating revenues and a portion was recorded directly on the balance sheet. During the three and six months ended June 30, 2018, we recognized $4.8 million and $17.2 million in revenue taxes in operating revenues and operating expenses, respectively. In comparison, for the three and six months ended June 30, 2017, we recognized $5.6 million and $19.3 million in revenue taxes, of which $3.2 million and $11.0 million were recorded in operating revenues and $2.4 million and $8.3 million were recorded on the balance sheet, respectively. The change in presentation of revenue taxes had no impact on utility margin, net income or earnings per share. Recently Issued Accounting Pronouncements ACCUMULATED OTHER COMPREHENSIVE INCOME. On February 14, 2018, the FASB issued ASU 2018-02, "Income Statement—Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." This update was issued in response to concerns from certain stakeholders regarding the current requirements under U.S. GAAP that deferred tax assets and liabilities are adjusted for a change in tax laws or rates, and the effect is to be included in income from continuing operations in the period of the enactment date. This requirement is also applicable to items in accumulated other comprehensive income where the related tax effects were originally recognized in other comprehensive income. The adjustment of deferred taxes due to the new corporate income tax rate enacted through the Tax Cuts and Jobs Act (TCJA) on December 22, 2017 recognized in income from continuing operations causes the tax effects of items within accumulated other comprehensive income (referred to as stranded tax effects) to not reflect the appropriate tax rate. The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the TCJA and require certain disclosures about stranded tax effects. The amendments in this update are effective for us beginning January 1, 2019, and should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the federal corporate income tax rate in the TCJA is recognized. The reclassification allowed in this update is elective, and we are currently assessing whether we will make the reclassification. This update is not expected to have a material impact on our financial condition. DERIVATIVES AND HEDGING. On August 28, 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities." The purpose of the amendment is to more closely align hedge accounting with companies’ risk management strategies. The ASU amends the accounting for risk component hedging, the hedged item in fair value hedges of interest rate risk, and amounts excluded from the assessment of hedge effectiveness. The guidance also amends the recognition and presentation of the effect of hedging instruments and includes other simplifications of hedge accounting. The amendments in this update are effective for us beginning January 1, 2019. Early adoption is permitted. The amended presentation and disclosure guidance is required prospectively. We are currently assessing the effect of this standard on our financial statements and disclosures. LEASES. On February 25, 2016, the FASB issued ASU 2016-02, "Leases," which revises the existing lease accounting guidance. Pursuant to the new standard, lessees will be required to recognize all leases, including operating leases that are greater than 12 months at lease commencement, on the balance sheet and record corresponding right-of-use assets and lease liabilities. Lessor accounting will remain substantially the same under the new standard. Quantitative and qualitative disclosures are also required for users of the financial statements to have a clear understanding of the nature of our leasing activities. On November 29, 2017, the FASB proposed an additional practical expedient that would allow entities to apply the transition requirements on the effective date of the standard. Additionally, on January 25, 2018, the FASB issued ASU 2018-01, "Land Easement Practical Expedient for Transition to Topic 842", to address the costs and complexity of applying the transition provisions of the new lease standard to land easements. This ASU provides an optional practical expedient to not evaluate existing or expired land easements that were not previously accounted for as leases under the current lease guidance. The standard and associated ASUs are effective for us beginning January 1, 2019. We are currently assessing our lease population and material contracts to determine the effect of this standard on our financial statements and disclosures. Refer to Note 14 of the 2017 Form 10-K for our current lease commitments. |
Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Regulatory Assets | Amounts deferred as regulatory assets and liabilities were as follows:
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Schedule of Regulatory Liabilities |
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | Diluted earnings (loss) from continuing operations per share are calculated as follows:
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Segment Reporting (Tables) |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following table presents summary financial information concerning the reportable segments of our continuing operations. See Note 15 for information regarding our discontinued operation, Gill Ranch Storage.
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Utility Margin | The following table presents additional segment information concerning utility margin:
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Revenue Revenue (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue [Table Text Block] | The following table presents our disaggregated revenue from continuing operations:
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Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | The following table provides an estimate of the fair value of our long-term debt, including current maturities of long-term debt, using market prices in effect on the valuation date:
(1) Estimated fair value does not include unamortized debt issuance costs. |
Pension and Other Postretirement Benefit Costs (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | The following table provides the components of net periodic benefit cost for our pension and other postretirement benefit plans:
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Schedule of Amounts Recognized in Other Comprehensive Income (Loss) | The following table presents amounts recognized in accumulated other comprehensive loss (AOCL) and the changes in AOCL related to our non-qualified employee benefit plans:
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Income Tax (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation | The effective income tax rate varied from the combined federal and state statutory tax rates due to the following:
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Property, Plant and Equipment (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Public Utilities, Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Public Utility Property, Plant, and Equipment | The following table sets forth the major classifications of our property, plant, and equipment and accumulated depreciation of our continuing operations:
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Gas Reserves (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gas Reserves [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gas Reserves | The following table outlines our net gas reserves investment:
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Derivative Instruments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Notional Amounts of Outstanding Derivative Positions | The following table presents the absolute notional amounts related to open positions on our derivative instruments:
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Income Statement Presentation of Derivative Instruments | The following table reflects the income statement presentation for the unrealized gains and losses from our derivative instruments:
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Table of Estimated Collateral Calls Table | Based upon current commodity financial swap and option contracts outstanding, which reflect unrealized losses of $14.3 million at June 30, 2018, we have estimated the level of collateral demands, with and without potential adequate assurance calls, using current gas prices and various credit downgrade rating scenarios for NW Natural as follows:
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Environmental Matters (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Environmental Remediation Obligations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Environmental Loss Contingencies by Site | Environmental Sites The following table summarizes information regarding liabilities related to environmental sites, which are recorded in other current liabilities and other noncurrent liabilities in the balance sheet:
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Environmental Regulatory Table | The following table presents information regarding the total regulatory asset deferred:
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Discontinued Operations Discontinued Operations (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Statement - Discontinued Operations [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations [Table Text Block] | The following table presents the operating results of Gill Ranch, which was reported within our gas storage segment historically, and is presented net of tax on our consolidated statements of comprehensive income:
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Balance Sheet - Assets Held for Sale [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposal Groups, Including Discontinued Operations [Table Text Block] | The following table presents the carrying amounts of the major components of Gill Ranch that are classified as discontinued operations assets and liabilities on our consolidated balance sheets:
|
Significant Accounting Policies Retirement Benefits ASU 2017-07 (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operations and maintenance | $ 38,028 | $ 34,997 | $ 77,551 | $ 72,443 |
Accounting Standards Updates 2017-07 [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operations and maintenance | $ 1,300 | $ 2,600 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Net income (loss) from continuing operations | $ (339) | $ 4,075 | $ 41,672 | $ 45,472 |
Average common shares outstanding - basic (in shares) | 28,791 | 28,648 | 28,772 | 28,641 |
Additional shares for stock-based compensation plans (in shares) | 0 | 69 | 53 | 81 |
Average common shares outstanding - diluted (in shares) | 28,791 | 28,717 | 28,825 | 28,722 |
Income (Loss) from Continuing Operations, Per Basic Share | $ (0.01) | $ 0.14 | $ 1.45 | $ 1.58 |
Income (Loss) from Continuing Operations, Per Diluted Share | $ (0.01) | $ 0.14 | $ 1.45 | $ 1.58 |
Antidilutive shares (in shares) | 53 | 32 | 10 | 21 |
Segment Information Segments Summary (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Operating Segments | |
Segment Reporting Information [Line Items] | |
Number of Operating Segments | 1 |
Segment Information - Utility Margin (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Segment Reporting Information [Line Items] | ||||
Operating revenues | $ 124,567 | $ 134,476 | $ 388,202 | $ 430,200 |
Less: Utility cost of gas | 42,053 | 53,005 | 150,159 | 196,616 |
Environmental remediation | 1,882 | 2,611 | 6,506 | 9,565 |
Revenue taxes | 4,780 | 0 | 17,209 | 0 |
Utility | ||||
Segment Reporting Information [Line Items] | ||||
Operating revenues | 118,515 | 376,448 | ||
Operating Segments | Utility | ||||
Segment Reporting Information [Line Items] | ||||
Operating revenues | 118,515 | 130,095 | 376,448 | 422,821 |
Less: Utility cost of gas | 42,107 | 53,005 | 150,271 | 196,616 |
Environmental remediation | 1,882 | 2,611 | 6,506 | 9,565 |
Revenue taxes | 4,780 | 0 | 17,209 | |
Utility margin | $ 69,746 | $ 74,479 | $ 202,462 | $ 216,640 |
Debt (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
|
Debt Instrument [Line Items] | ||||
Long-term Debt, Gross | $ 764,700 | $ 764,700 | $ 786,700 | $ 726,700 |
Short-term debt | 47,100 | 47,100 | 54,200 | 0 |
Long-term Debt | 758,680 | 758,680 | 779,887 | 720,109 |
Unamortized debt issuance costs | $ (6,020) | $ (6,020) | $ (6,813) | $ (6,591) |
Maturity start date range | Mar. 16, 2018 | |||
Maturity end date range | Sep. 13, 2047 | |||
Weighted average interest rate | 4.728% | 4.728% | ||
Minimum | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 1.545% | 1.545% | ||
Maximum | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 9.05% | 9.05% | ||
22M [Member] | ||||
Debt Instrument [Line Items] | ||||
Repayments of Debt | $ 22,000 | |||
Stated interest rate | 6.60% | 6.60% | ||
Debt Instrument, Maturity Date | Mar. 01, 2018 |
Debt Short-term Debt (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
|
Short-term Debt [Abstract] | |||
Short-term debt | $ 47,100 | $ 54,200 | $ 0 |
Short-term Debt Maximum Remaining Maturity | 12 days | ||
Short-term Debt Average Remaining Maturity | 7 days |
Debt Fair Value of Long Term Debt (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
---|---|---|---|
Debt Disclosure [Abstract] | |||
Gross long-term debt | $ 764,700 | $ 786,700 | $ 726,700 |
Unamortized debt issuance costs | (6,020) | (6,813) | (6,591) |
Carrying amount | 758,680 | 779,887 | 720,109 |
Estimated fair value | $ 792,623 | $ 853,339 | $ 791,885 |
Debt Debt Retired and Issued (Details) - 22M [Member] $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2018
USD ($)
|
|
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | $ 22.0 | |
Debt Instrument, Interest Rate, Stated Percentage | 6.60% | 6.60% |
Debt Instrument, Maturity Date | Mar. 01, 2018 |
Pension and Other Postretirement Benefit Costs - Amounts Recognized in Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Defined Benefit Plan, Amounts Recognized in Other Comprehensive Income (Loss) [Abstract] | ||||
Beginning balance | $ (8,284) | $ (6,815) | $ (8,438) | $ (6,951) |
Other Comprehensive Income (Loss), Defined Benefit Plan, Gain (Loss), Reclassification Adjustment from AOCI, before Tax | 209 | 225 | 418 | 450 |
Total reclassifications before tax | 209 | 225 | 418 | 450 |
Tax (benefit) expense | (56) | (88) | (111) | (177) |
Total reclassifications for the period | 153 | 137 | 307 | 273 |
Ending balance | $ (8,131) | $ (6,678) | $ (8,131) | $ (6,678) |
Pension and Other Postretirement Benefit Costs - Narrative (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Pension and Other Postretirement Benefits Cost (Reversal of Cost) [Abstract] | ||
Defined benefit pension plan cash contributions | $ 5,600 | |
Estimated future employer contributions in next fiscal year | 10,000 | |
Employer contributions | $ 3,500 | $ 2,800 |
Gas Reserves (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Reserve Quantities [Line Items] | |
Total cumulative gas reserves investment | $ 188,000,000 |
Term of hedge rate | 10 years |
Encana Oil & Gas (USA) Inc. | |
Reserve Quantities [Line Items] | |
Gas reserves investment | $ 178,000,000 |
Jonah Energy LLC | |
Reserve Quantities [Line Items] | |
Gas reserves investment | 10,000,000 |
Additional rate per therm | $ 0.4725 |
Gas Reserves - Investment (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
---|---|---|---|
Gas Reserves [Abstract] | |||
Gas reserves | $ 16,579 | $ 15,704 | $ 16,072 |
Gas reserves, non-current | 170,958 | 171,832 | 171,464 |
Less: Accumulated amortization | 95,596 | 87,779 | 79,444 |
Total gas reserves | 91,941 | 99,757 | 108,092 |
Less: Deferred taxes on gas reserves | 20,381 | 22,712 | 31,074 |
Net investment in gas reserves | $ 71,560 | $ 77,045 | $ 77,018 |
Investments (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
---|---|---|---|
Investments [Abstract] | |||
Ownership percentage of TWH | 50.00% | ||
Investment balance in TWH | $ 13.4 | $ 13.4 | $ 13.4 |
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure, Amount | $ 13.4 | $ 13.4 | $ 13.4 |
Derivative Instruments Notional Amounts (Details) therm in Thousands, $ in Thousands |
Jun. 30, 2018
USD ($)
therm
|
Dec. 31, 2017
USD ($)
therm
|
Jun. 30, 2017
USD ($)
therm
|
---|---|---|---|
Financial [Member] | Gas Year 2016 - 2017 | |||
Derivative [Line Items] | |||
TargetHedgeAchieved | 48.00% | ||
Financial [Member] | Gas Year 2017 - 2018 [Member] | |||
Derivative [Line Items] | |||
TargetHedgeAchieved | 49.00% | ||
Physical [Member] | Gas Year 2016 - 2017 | |||
Derivative [Line Items] | |||
TargetHedgeAchieved | 27.00% | ||
Physical [Member] | Gas Year 2017 - 2018 [Member] | |||
Derivative [Line Items] | |||
TargetHedgeAchieved | 26.00% | ||
Natural Gas Therms [Member] | Financial [Member] | |||
Derivative [Line Items] | |||
Derivative, Nonmonetary Notional Amount | 473,900 | 429,100 | 490,780 |
Natural Gas Therms [Member] | Physical [Member] | |||
Derivative [Line Items] | |||
Derivative, Nonmonetary Notional Amount | 724,450 | 520,268 | 495,751 |
Foreign Exchange Contract [Member] | |||
Derivative [Line Items] | |||
Foreign exchange | $ | $ 7,804 | $ 7,669 | $ 7,788 |
Derivative Instruments Narrative (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
---|---|---|---|
Derivative [Line Items] | |||
Derivative, fair value | $ (12.5) | $ (20.3) | $ (6.5) |
Derivative Instruments Credit Rating (Details) - USD ($) |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
|
Derivative [Line Items] | |||
Unrealized losses on derivatives | $ (14,300,000) | ||
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 2,500,000 | $ 2,900,000 | $ 900,000 |
Derivative liability | 15,000,000 | $ 23,300,000 | 7,400,000 |
(Current Ratings) A/A3 | |||
Derivative [Line Items] | |||
With Adequate Assurance Calls | 0 | ||
Without Adequate Assurance Calls | 0 | ||
BBB/Baa1 | |||
Derivative [Line Items] | |||
With Adequate Assurance Calls | 0 | ||
Without Adequate Assurance Calls | 0 | ||
BBB/Baa2 | |||
Derivative [Line Items] | |||
With Adequate Assurance Calls | 0 | ||
Without Adequate Assurance Calls | 0 | ||
BBB-/Baa3 | |||
Derivative [Line Items] | |||
With Adequate Assurance Calls | (3,605,000) | ||
Without Adequate Assurance Calls | (3,605,000) | ||
Speculative | |||
Derivative [Line Items] | |||
With Adequate Assurance Calls | (11,211,000) | ||
Without Adequate Assurance Calls | (6,987,000) | ||
Financial [Member] | |||
Derivative [Line Items] | |||
Additional Collateral, Aggregate Fair Value | $ 0 | $ 0 |
Environmental Matters (Details) |
Jun. 30, 2018 |
---|---|
OREGON | |
Site Contingency [Line Items] | |
Remediation Recovery Percentage | 96.68% |
Environmental Matters - Regulatory Deferred Assets (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
|
Site Contingency [Line Items] | |||
Regulatory assets | $ 41,092 | $ 45,781 | $ 37,504 |
Long-term regulatory assets | 339,177 | 356,608 | 348,284 |
Annual tariff rider collection | 5,000 | ||
Annual insurance proceeds to apply against remediation costs | 5,000 | ||
Total annual remediation expense and interest | 10,000 | ||
Environmental Restoration Costs | |||
Site Contingency [Line Items] | |||
Deferred costs and interest | 46,862 | 45,546 | 50,131 |
Accrued site liabilities | 119,712 | 126,950 | 120,485 |
Insurance proceeds and interest | (95,824) | (94,170) | (99,884) |
Regulatory Assets | 70,750 | 78,326 | 70,732 |
Regulatory assets | 5,594 | 6,198 | 6,724 |
Long-term regulatory assets | $ 65,156 | $ 72,128 | $ 64,008 |
Discontinued Operations Agreement (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2019 |
|
Other Ownership Interests [Line Items] | ||
Disposal Group, Including Discontinued Operation, Description and Timing of Disposal | The Agreement provides for an initial cash purchase price of $25.0 million (subject to a working capital adjustment), plus potential additional payments to NWN Gas Storage of up to $26.5 million in the aggregate if Gill Ranch achieves certain economic performance levels for the first three full gas storage years (April 1 of one year through March 31 of the following year) occurring after the closing and the remaining portion of the gas storage year during which the closing occurs. We expect the transaction to close within 12 months of signing and in 2019. The closing of the transaction is subject to approval by the California Public Utilities Commission (CPUC) and other customary closing conditions. | |
Gill Ranch [Member] | ||
Other Ownership Interests [Line Items] | ||
Percent Ownership In Joint Project | 75.00% | |
Pacific Gas and Electric Company [Member] | ||
Other Ownership Interests [Line Items] | ||
Percent Ownership In Joint Project | 25.00% | |
Minimum | Scenario, Forecast [Member] | ||
Other Ownership Interests [Line Items] | ||
Proceeds from Divestiture of Businesses | $ 25.0 | |
Maximum | Scenario, Forecast [Member] | ||
Other Ownership Interests [Line Items] | ||
Proceeds from Divestiture of Businesses | $ 26.5 |
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