NW Natural Sells Water Utility for $1.4B

TL;DR

NW Natural selling water biz for $1.4B to focus on gas. Big move!

AI Summary

Northwest Natural Holding Company announced on October 25, 2024, that it has entered into a definitive agreement to sell its Water Utility business to an affiliate of The Pritzker Organization for $1.4 billion. This strategic divestiture is expected to allow the company to focus on its core Gas Utility operations and pursue growth opportunities in that segment.

Why It Matters

This significant divestiture allows Northwest Natural Holding Company to streamline its operations and concentrate on its primary gas utility business, potentially leading to improved financial performance and strategic focus.

Risk Assessment

Risk Level: medium — The sale of a major business segment introduces execution risk and potential impacts on future earnings and strategic direction.

Key Numbers

• $1.4B — Sale Price (Acquisition price for the Water Utility business by The Pritzker Organization.)

Key Players & Entities

• Northwest Natural Holding Company (company) — Seller
• The Pritzker Organization (company) — Buyer
• $1.4 billion (dollar_amount) — Sale price of Water Utility business
• October 25, 2024 (date) — Date of definitive agreement

FAQ

Key Financial Figures

• $154.9 million — f Oregon (OPUC). The filing requested a $154.9 million annual revenue requirement increase, wh
• $34.0 million — ue requirement increase, which included $34.0 million related to an updated depreciation stud
• $95.0 million — a total revenue requirement increase of $95.0 million over revenues from existing rates, whic
• $9.6 million — ues from existing rates, which includes $9.6 million related to an updated depreciation stud
• $2.11 billion — al of 7.056%; and Average rate base of $2.11 billion or an increase of $357 million since th
• $357 million — base of $2.11 billion or an increase of $357 million since the last rate case. On October
• $13.7 million — d a downward adjustment to rate base of $13.7 million of undepreciated line extension costs,
• $13.7 m — n-cash, pre-tax charge of approximately $13.7 million, or approximately $10.1 million a
• $10.1 million — imately $13.7 million, or approximately $10.1 million after-tax (or approximately 26 cents pe
• $93.3 million — ed in a revenue requirement increase of $93.3 million over existing rates. Average rate base
• $2.09 billion — ents for completed capital projects was $2.09 billion or an increase of $334 million since th
• $334 million — cts was $2.09 billion or an increase of $334 million since the last rate case. NW Natural
• $2.20 — nnual earnings guidance in the range of $2.20 to $2.40 per share on a generally accep
• $2.40 — nings guidance in the range of $2.20 to $2.40 per share on a generally accepted accou
• $1.94 — ising its 2024 annual guidance range to $1.94 to $2.14 per share on a GAAP basis, or

Filing Documents

• nwn-20241025.htm (8-K) — 59KB
• nwn-20241025_g1.jpg (GRAPHIC) — 56KB
• nwn-20241025_g2.jpg (GRAPHIC) — 38KB
• 0001733998-24-000118.txt ( ) — 467KB
• nwn-20241025.xsd (EX-101.SCH) — 3KB
• nwn-20241025_def.xml (EX-101.DEF) — 16KB
• nwn-20241025_lab.xml (EX-101.LAB) — 28KB
• nwn-20241025_pre.xml (EX-101.PRE) — 16KB
• nwn-20241025_htm.xml (XML) — 5KB

01 Regulation FD Disclosure

Item 7.01 Regulation FD Disclosure On December 29, 2023, Northwest Natural Gas Company (NW Natural), a wholly owned subsidiary of Northwest Natural Holding Company (NW Holdings), filed a request for a general rate case (Rate Case) with the Public Utility Commission of Oregon (OPUC). The filing requested a $154.9 million annual revenue requirement increase, which included $34.0 million related to an updated depreciation study. On July 24, 2024, NW Natural, the OPUC staff, the Oregon Citizens' Utility Board (CUB), the Alliance of Western Energy Consumers (AWEC), the Coalition of Communities of Color, Climate Solutions, Verde, Columbia Riverkeeper, Oregon Environmental Council, Community Energy Project, and Sierra Club (Coalition), which comprise all of the parties to the rate case, filed a stipulation (Second Stipulation) with the OPUC which addressed the majority of issues in the Rate Case. Prior to the Second Stipulation, NW Natural, the OPUC staff, CUB and AWEC reached a partial settlement on the cost of long-term debt of 4.712% (First Stipulation and together with the Second Stipulation, the Stipulations). The Second Stipulation provides for a total revenue requirement increase of $95.0 million over revenues from existing rates, which includes $9.6 million related to an updated depreciation study, subject to completion of capital projects identified as being placed in service prior to the rate effective date. The revenue requirement is based on the following assumptions: Capital structure of 50% common equity and 50% long-term debt; Return on equity of 9.4%; Cost of capital of 7.056%; and Average rate base of $2.11 billion or an increase of $357 million since the last rate case. On October 25, 2024, the OPUC issued an order approving the Stipulations and resolving the remaining open items in the Rate Case. Along with resolving several non-revenue items, the OPUC affirmed its decision in NW Natural's prior general rate case docket to phase out NW Natu

01 Other Events

Item 8.01 Other Events On December 29, 2023, Northwest Natural Gas Company (NW Natural), a wholly owned subsidiary of Northwest Natural Holding Company (NW Holdings), filed a request for a general rate case (Rate Case) with the Public Utility Commission of Oregon (OPUC). The filing requested a $154.9 million annual revenue requirement increase, which included $34.0 million related to an updated depreciation study. On July 24, 2024, NW Natural, the OPUC staff, the Oregon Citizens' Utility Board (CUB), the Alliance of Western Energy Consumers (AWEC), the Coalition of Communities of Color, Climate Solutions, Verde, Columbia Riverkeeper, Oregon Environmental Council, Community Energy Project, and Sierra Club (Coalition), which comprise all of the parties to the rate case, filed a stipulation (Second Stipulation) with the OPUC which addressed the majority of issues in the Rate Case. Prior to the Second Stipulation, NW Natural, the OPUC staff, CUB and AWEC reached a partial settlement on the cost of long-term debt of 4.712% (First Stipulation and together with the Second Stipulation, the Stipulations). The Second Stipulation provides for a total revenue requirement increase of $95.0 million over revenues from existing rates, which includes $9.6 million related to an updated depreciation study, subject to completion of capital projects identified as being placed in service prior to the rate effective date. The revenue requirement is based on the following assumptions: Capital structure of 50% common equity and 50% long-term debt; Return on equity of 9.4%; Cost of capital of 7.056%; and Average rate base of $2.11 billion or an increase of $357 million since the last rate case. On October 25, 2024, the OPUC issued an order approving the Stipulations and resolving the remaining open items in the Rate Case. Along with resolving several non-revenue items, the OPUC affirmed its decision in NW Natural's prior general rate case docket to phase out NW Natural's line

Forward-Looking Statements

Forward-Looking Statements This report, and other presentations made by NW Holdings or NW Natural from time to time, may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipates," "assumes," "continues," "could," "intends," "plans," "seeks," "believes," "estimates," "expects," "will" and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements regarding the following: plans, objectives, assumptions, expectations, estimates, timing, goals, strategies, commitments, expenses, future events, investments, targeted capital structure, cost of capital, return on equity, rate base, financial results, financial position, revenue requirement, technology upgrades, cybersecurity, meter modernization, system and infrastructure reinforcement, expansion or reliability, gas storage investments, costs, timing or benefits, customer growth, customer rates and the timing and magnitude of any rate changes, renewable natural gas, revenues and earnings, earnings guidance, performance, timing, outcome, or effects of rate cases or other regulatory proceedings, mechanisms, approvals or recoveries, regulatory prudence reviews, anticipated regulatory actions or filings, and other statements that are other than statements of historical facts. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy, geopolitical factors, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual results may differ materially from those contemplated by the forward-looking statements. You are therefore cautioned against relying on any of these forward-looking statements. They are neither statements of historical fac