Investments

6 Months Ended

Jun. 30, 2020

Investments [Abstract]

Investments

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 NW Natural's NGD system. NWN Energy, a wholly-owned subsidiary of NW Holdings, owns 50% of TWH, and 50% is owned by TransCanada American Investments Ltd., an indirect wholly-owned subsidiary of TC Energy Corporation.

Variable Interest Entity (VIE) Analysis

TWH is a VIE, with NW Holdings' investment in TWP reported under equity method accounting. It has been determined that NW Holdings is not the primary beneficiary of TWH’s activities as it only has a 50% share of the entity, and there are no stipulations that allow NW Holdings a disproportionate influence over it. Investments in TWH and TWP are included in other investments in NW Holdings' balance sheet. If this investment is not developed, then the maximum loss exposure related to TWH is limited to NW Holdings' equity investment balance, less its share of any cash or other assets available to NW Holdings as a 50% owner. The investment balance in TWH was $13.4 million at June 30, 2020 and 2019 and December 31, 2019. See Note 14 in the 2019 Form 10-K.

On June 12, 2020, NWN Energy entered into a Purchase and Sale Agreement with an unrelated third party to sell 100% of its interest in TWH for a purchase price of $14.0 million. The purchase price is to be paid as follows: $7.0 million upon closing the transaction and $7.0 million upon the one-year anniversary of the close date. The investment in TWH did not meet the criteria to be classified as held for sale or discontinued operations.

Subsequent Event

On August 6, 2020, NWN Energy completed the Purchase and Sale Agreement transaction to sell 100% of its interest in TWH. As a result, NWN Energy received $7.0 million upon closing and recorded a receivable for $7.0 million in accordance with the terms of the Purchase and Sale Agreement. The completion of the Purchase and Sale Agreement resulted in an after-tax book gain of less than $0.5 million.

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 14 in the 2019 Form 10-K.