NW Holdings' principal business is to operate as a holding company for NW Natural, SiEnergy, NWN Water and its other subsidiaries. NW Natural's principal business is the distribution of natural gas, which is regulated by the Oregon Public Utility Commission (OPUC) and Washington Utilities and Transportation Commission (WUTC). NW Natural also has natural gas storage services, which are regulated by the Federal Energy Regulatory Commission (FERC), and to a certain extent by the OPUC and WUTC. SiEnergy's principal business is the distribution of natural gas in Texas; primarily in the Houston, Dallas and Austin metropolitan areas. SiEnergy also includes a natural gas transmission utility serving customers in the greater metropolitan areas of Dallas and Austin, Texas. SiEnergy's natural gas utilities are subject to regulation by the Railroad Commission of Texas and the cities in which it provides services. NWN Water's principal business is water and wastewater utility services. NWN Water's subsidiaries own water businesses, which are regulated by the public utility commission in the state in which the water utility is located, which is currently Oregon, Washington, Idaho, Texas and Arizona. Wastewater businesses, to the extent they are regulated, are generally regulated by the public utility commissions in the state in which the wastewater utility is located, which is currently Texas and Arizona. Accounting records and practices of the regulated businesses conform to the requirements and uniform system of accounts prescribed by these regulatory authorities in accordance with U.S. GAAP. The businesses in which customer rates are regulated have approved cost-based rates which are intended to allow such businesses to earn a reasonable return on invested capital.

In applying regulatory accounting principles, NW Holdings and NW Natural capitalize or defer certain costs and revenues as regulatory assets and liabilities pursuant to orders of the applicable state public utility commission, 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.


	Regulatory Assets
	June 30,				December 31,
In thousands	2026		2025		2025
Current:
NW Natural:
Unrealized loss on derivatives(1)	$	36,508	$	25,977	$	63,578
Gas costs	19,240		5,973		6,284
Environmental costs(2)	12,690		11,447		12,148
Decoupling(3)	42,164		9,313		11,631
Pension balancing(4)	7,131		7,131		7,131
Income taxes	2,208		2,208		2,208
Washington Climate Commitment Act compliance	7,754		7,874		7,482
Security and systems improvements	1,270		2,018		1,771
Industrial demand side management(5)	12,181		13,612		10,539
Weather Adjusted Rate Mechanism	15,099		8,708		9,932
Other(6)	11,197		8,929		10,431
Total current - NW Natural	167,442		103,190		143,135
SiEnergy	331		699		410
NWN Water	319		25		200
Total current - NW Holdings	$	168,092	$	103,914	$	143,745
Non-current:
NW Natural:
Unrealized loss on derivatives(1)	$	17,541	$	7,908	$	14,039
Pension balancing(4)	12,004		18,169		15,647
Income taxes	9,289		8,993		9,148
Pension and other postretirement benefit liabilities	91,539		106,705		96,008
Environmental costs(2)	386,293		160,120		180,063
Gas costs	4,983		1,360		9,434
Decoupling(3)	11,069		1,534		8,891
Washington Climate Commitment Act compliance	48,228		32,851		33,085
Security and systems improvements	8,085		8,369		8,234
Industrial demand side management(5)	2,604		1,906		9,334
Weather Adjusted Rate Mechanism	3,424		1,332		6,062
Other(6)	38,129		21,289		29,902
Total non-current - NW Natural	633,188		370,536		419,847
SiEnergy HB 4384 depreciation deferral(7)	4,675		—		2,095
SiEnergy other	1,636		995		1,412
NWN Water	1,157		1,137		840
Total non-current - NW Holdings	$	640,656	$	372,668	$	424,194


	Regulatory Liabilities
	June 30,				December 31,
In thousands	2026		2025		2025
Current:
NW Natural:
Gas costs	$	17,217	$	41,049	$	34,172
Unrealized gain on derivatives(1)	4,338		7,182		3,922
Decoupling(2)	1,691		6,811		5,181
Income taxes	5,406		4,726		5,406
Asset optimization revenue sharing	13,971		14,121		25,981
Washington Climate Commitment Act compliance	66,556		51,801		57,441
Other(3)	6,692		5,082		5,805
Total current - NW Natural	115,871		130,772		137,908
SiEnergy	62		24		66
NWN Water	101		148		—
Total current - NW Holdings	$	116,034	$	130,944	$	137,974
Non-current:
NW Natural:
Gas costs	$	1,083	$	5,133	$	687
Unrealized gain on derivatives(1)	3,430		4,077		366
Decoupling(2)	—		841		—
Income taxes(4)	154,961		160,990		159,176
Accrued asset removal costs(5)	580,531		543,700		561,594
Asset optimization revenue sharing	—		—		2,386
Washington Climate Commitment Act proceeds	5,000		—		—
Other(3)	24,036		21,510		24,637
Total non-current - NW Natural	769,041		736,251		748,846
SiEnergy asset removal costs	9,114		—		8,155
NWN Water	1,303		943		1,406
Total non-current - NW Holdings	$	779,458	$	737,194	$	758,407

We believe all costs incurred and deferred at June 30, 2026 are prudent. All regulatory assets are reviewed annually for recoverability, or more often if circumstances warrant. If we should determine that all or a portion of these regulatory assets no longer meet the criteria for continued application of regulatory accounting, then NW Holdings and NW Natural would be required to write-off the net unrecoverable balances in the period such determination is made.

DISAGGREGATION OF EXPENSE DISCLOSURES. In November 2024, the FASB issued ASU 2024-03, which requires additional disclosures of disaggregated income statement expenses. The disclosures are required beginning with our annual report for the year ending December 31, 2027. The FASB issued ASU 2025-01 on January 6, 2025, to amend the effective date language of ASU 2024-03 clarifying that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. ASU 2025-01 did not impact the effective date of ASU 2024-03 for NW Holdings and NW Natural. The adoption of this standard is not anticipated to have an impact on our results of operations, liquidity, or capital resources.

FINANCIAL INSTRUMENTS - CREDIT LOSSES. In July 2025, the FASB issued ASU 2025-05, which simplifies how entities estimate credit losses on current accounts receivable and current contract assets arising from revenue transactions under ASC 606. It introduced a practical expedient that allows all entities to assume that economic conditions at the balance sheet date remain unchanged for the life of the asset, eliminating the need for forward-looking forecasts. The Company elected the practical expedient and adopted this ASU effective January 1, 2026. The adoption of this standard did not have a material impact on our results of operations, liquidity or capital resources.

IMPROVEMENTS TO INTANGIBLE ASSET ACCOUNTING AND DISCLOSURES. In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). This ASU modernizes the accounting for software costs to adapt to an incremental and iterative software development method. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and may be applied using a prospective, modified prospective or retrospective transition approach. The adoption of this standard is not anticipated to have a material impact on our results of operations, liquidity or capital resources.

INTERIM REPORTING. In December 2025, the FASB issued ASU 2025-11, which improves the guidance in Topic 270, Interim Reporting, by clarifying the current disclosure requirements for interim periods. The ASU adds to Topic 270 a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. The adoption of this standard is not anticipated to have an impact on our results of operations, liquidity, or capital resources.

CODIFICATION IMPROVEMENTS. In December 2025, the FASB issued ASU 2025-12, which makes changes to the Codification that clarify, correct errors, or make minor improvements. The amendments make the Codification easier to understand and apply. The amendments in this ASU are varied in nature and may affect the application of guidance in cases in which the original guidance may have been unclear. ASU 2025-12 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. The adoption of this standard is not anticipated to have an impact on our results of operations, liquidity, or capital resources.

ENVIRONMENTAL CREDITS AND ENVIRONMENTAL CREDIT OBLIGATIONS. In May 2026, the FASB issued ASU 2026-02, which provides recognition, measurement, presentation, and disclosure guidance for environmental credits and related obligations. The guidance is effective for annual periods beginning after December 15, 2027, and interim periods within those annual periods. The ASU is expected to be applicable to the extent the Company generates, purchases, receives, holds, sells, or uses environmental credits, or has regulatory compliance obligations that may be settled using environmental credits. The Company is currently evaluating the impact that the adoption of this standard will have on results of operations, liquidity or capital resources.

Cash and cash equivalents include cash on hand plus highly liquid investment accounts with original maturity dates of three months or less. These investments are readily convertible to cash with fair value approximating cost. As of June 30, 2026, the amount invested in money market funds was $2.2 million at NW Holdings and $2.2 million at NW Natural. As of June 30, 2025, the amount invested in money market funds was $72.0 million at NW Holdings and $69.0 million at NW Natural. These investments are measured using net asset value per share.

NW Holdings receivable balances primarily consist of trade receivables for the sale of natural gas and natural gas transportation services from NW Natural and SiEnergy and water sales and wastewater services from NWN Water. These businesses establish an allowance for uncollectible accounts for trade receivables (allowance), including accrued unbilled revenue, based on the age of receivable balances, collection experience of past due balances and payment plans, and historical trends of write-offs. Differences between the estimated allowance and actual write-offs will occur based on a number of factors, including changes in economic conditions, customer creditworthiness, and natural gas and water prices. The allowance is adjusted quarterly, as necessary, based on information currently available.


	As of						As of
	December 31, 2025		Six Months Ended June 30, 2026				June 30, 2026
In thousands	Beginning Balance		Provision recorded, net of adjustments		Write-offs recognized, net of recoveries		Ending Balance
Allowance for uncollectible accounts:
Residential	$	2,280	$	300	$	(631)	$	1,949
Commercial	374		39		(203)		210
Industrial	46		17		—		63
Accrued unbilled and other	348		(100)		4		252
Total NW Natural	3,048		256		(830)		2,474
Other - NW Holdings	1,020		555		(194)		1,381
Total NW Holdings	$	4,068	$	811	$	(1,024)	$	3,855

NW Natural currently holds two net investments in sales-type leases, with substantially all of the net investment balance related to the North Mist natural gas storage agreement with Portland General Electric (PGE) which is billed under an OPUC-approved rate schedule. See Note 7 for more information on the North Mist lease. There is no allowance for uncollectible accounts recorded for sales-type lease receivables. NW Natural will continue monitoring the credit health of the lessees and the overall economic environment, including the economic factors closely tied to the financial health of our current and future lessees.

NW Natural is subject to greenhouse gas (GHG) emission reduction requirements under the Washington Climate Commitment Act (CCA) regulations. Under Washington's CCA, emission reduction compliance mechanisms include: 1) allowances distributed at no cost by the state, 2) purchasing allowances at state-run auctions or secondary markets, 3) purchasing carbon offsets, and 4) supplying alternative gaseous fuels, such as renewable natural gas and hydrogen.

NW Natural accounts for all purchased Washington allowances as inventory at the lower of cost or net realizable value. Any compliance instruments or allowances that are acquired through government allocations at no cost will be accounted for as inventory at no cost. As of June 30, 2026 and 2025, NW Natural had $83.2 million and $54.5 million of emissions allowances for compliance in Washington recorded as inventory.

The CCA allows for the sale of compliance instruments or allowances, and as a result, should NW Natural sell these it will recognize revenue when title to the instrument or allowance is transferred to a counterparty, and NW Natural will recognize expense at the time of recognition of the related sale. As of June 30, 2026, NW Natural consigned no-cost allowances to Washington auctions and has received a total of $51.7 million in cash, which proceeds were recorded as a regulatory liability for the benefit of customers.

We measure the compliance obligation, which is based on emissions, at the carrying value of inventory held plus the fair value of any additional emission allowances NW Natural would need to purchase to satisfy the obligations. Under the Washington program, NW Natural has recognized a $56.0 million and $40.7 million liability as of June 30, 2026 and 2025. A portion of the costs to comply with the Washington program are currently being recovered from utility customers through rates. NW Natural recognized $56.0 million and $40.7 million of deferred costs as of June 30, 2026 and 2025.

NW Natural is subject to GHG emission reduction requirements under the Oregon Climate Protection Program (CPP). Under Oregon’s CPP, emission reduction compliance mechanisms include: 1) compliance instruments distributed at no cost by the Oregon Department of Environmental Quality (ODEQ), 2) purchasing credits through funding Community Climate Investments (CCIs), and 3) supplying alternative gaseous fuels, such as renewable natural gas and hydrogen.

We measure the compliance obligation, which is based on emissions, at the carrying value of inventory held plus the fair value of any additional emission allowances NW Natural would need to purchase to satisfy the obligations. NW Natural is currently recovering in Oregon rates costs associated with RNG, as well as costs related to NW Natural’s transportation energy efficiency program, all of which reduce NW Natural’s compliance obligation under the CPP. Under the Oregon program, NW Natural has not recorded a liability as of June 30, 2026 and 2025.

The CPP allows for the sale of compliance instruments, and as a result, should NW Natural sell these, it will recognize revenue when title to the instrument is transferred to a counterparty, and NW Natural will recognize expense at the time of recognition of the related sale. As of June 30, 2026, NW Natural has not sold compliance instruments in the market.

Other current assets consist of various items that are expected to be realized within the next twelve months and are not classified elsewhere on the balance sheet. Other current assets are comprised primarily of prepaid assets, restricted cash and gas reserves. As of June 30, 2026, NW Holdings and NW Natural had $27.6 million and $14.4 million of prepaid assets, respectively, and $2.6 million of gas reserves. As of June 30, 2025, NW Holdings and NW Natural had $23.4 million and $13.5 million of prepaid assets, respectively, and $2.7 million of gas reserves. See the Restricted Cash section above for restricted cash balances.

For GAAP accounting purposes, implementation costs associated with cloud computing arrangements are capitalized consistent with costs capitalized for internal-use software. Capitalized implementation costs are included in other assets in the consolidated balance sheets. The implementation costs are amortized over the term of the related hosting agreement, including renewal periods that are reasonably certain to be exercised. Amortization expense of implementation costs are recorded as operations and maintenance expenses in the consolidated statements of comprehensive income. The implementation costs are included within operating activities in the consolidated statements of cash flows.

For regulatory accounting purposes, cloud-based software is reflected in rate base as property, plant and equipment and amortized over the expected useful life through depreciation expense. NW Natural is allowed recovery of and a return on cloud computing arrangements like other property, plant and equipment in rate base. The amount of cloud-based software capital expenditures for the first six months of 2026 and 2025 was $5.1 million and $3.9 million, respectively. The amount of cloud computing amortization for the first six months of 2026 and 2025 was $6.1 million and $6.3 million, respectively.