Northwest Natural Holding Company

Good day and welcome to the NW Natural Holdings Company third quarter 2021 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ms. Nikki Sparley, Director of Investor Relations. Please go ahead, ma'am.

Thank you, Chuck. Good morning, and welcome to our third quarter 2021 earnings call. As a reminder, some of the things that will be said this morning contain forward-looking statements. They are based on management's assumptions, which may or may not occur. For a complete list of cautionary statements, refer to the language at the end of our press release. We expect to file our 10-Q later today. As mentioned, this teleconference is being recorded and will be available on our website following the call. Please note these calls are designed for the financial community. If you are an investor and have additional questions after the call, please contact me directly at 503-721-2530. News Media may contact David Roy at 503-610-7157. Speaking this morning are David Anderson, President and Chief Executive Officer, and Frank Verkartsmeyer, Senior Vice President and Chief Financial Officer. David and Frank have prepared remarks and then will be available along with other members of our executive team to answer your questions. With that, I'll turn it over to David.

Thanks, Nikki, and good morning, everybody. I'll start today with highlights from the quarter and then turn it over to Frank to cover our financial performance. And finally, I'll wrap up the call with a few updates on our strategic initiatives and a look forward. The company continues to operate very well during the year and, as you've seen, posted very strong financial results. We reported net income of $1.24 per share for the first nine months of 2021 for a 55 percent increase compared to net income from continuing operations of 80 cents per share for the same period last year. New rates in Oregon drove results at the natural gas utility along with solid customer growth and higher revenues at our interstate storage business. We also continue to see positive momentum in the local job market and the housing sector. Employment growth in the Portland metro area has picked up steam since late last year, growing faster than the U.S. throughout most of 2021. Unemployment rates in the Portland metro area have declined to 14.4, excuse me, 4.9% in August 2021, compared to the national rate of 5.2%. Single-family housing activity remains very strong. In Portland, home sales were up 15% for the first nine months of 2021 compared to 2020, and the average sale price was up 18%. New single-family permits issued were up 29% in Oregon through September this year compared to last year. In summary, construction and development remain robust in our region. This resulted in translated, if you will, into nearly 12,000 new customers connecting to our system over the last 12 months, which equates to a growth rate of 1.5%. Our water and wastewater utilities also continue to grow. Strong residential construction primarily in Idaho, Texas, and Washington translated into a 3% customer growth rate. We also closed acquisitions this past year leading to an overall connection growth rate of 5%. During the quarter, We filed our annual purchase gas adjustment, which for the first time in Oregon included renewable natural gas. In October, we received approval from both the Washington and Oregon commissioners on our PTAs. New rates went into effect November 1st. Despite these increases, customers continue to pay nearly 30 percent less for their natural gas today than they did 15 years ago. And natural gas continues to maintain its competitive position as a fuel of choice. In fact, for the typical home we serve, natural gas enjoys up to a 60 percent price advantage over electric or an oil furnace. Now, an update on our general rate case in Washington. As you may remember, Washington's service territory covers about 12 percent of our overall customers and about 10 percent of consolidated revenues. In October, the Commission issued an order approving our multi-party settlement. Under the multi-year order, Northwest Natural's revenue requirement increased $5 million on November 1st and will increase to an additional $3 million on November 1st in 2022. The order includes several items that mitigate the impact to customer build. As parties recognize, this remains a very challenging time for customers. Both years are based on a cost of capital of 6.814%, and rate-based would increase the total of $52.6 million to $247.3 million. We continue also to make progress under the landmark Oregon Senate Bill 98 legislation, which supports renewable energy procurement and investment by natural gas utilities. During the third quarter, our request for proposal for additional RNG supply or investments concluded. And I'm happy to report we have received a very robust response and are evaluating a number of potential opportunities coming out of this process. Northwest Natural has options to invest up to a total estimated $38 million in four separate RNG development projects that will access biogas derived from water treatment at Tyson Foods processing plants. Construction on our first RNG facility began this fall with a commissioning plan for early 2022. To date, we've signed agreements with options to purchase or develop RNG totaling about 2 percent of Northwest Natural's annual sales volumes in Oregon. I'm very proud of the progress we made in just, frankly, one year. To put it into perspective, total, today, wind and solar account for about 11 percent of our nation's electric supply, and that's after decades of investment. So I think we've made good progress in a short period of time with more to come. We'll continue to take these critical steps to source more and more of our supply from renewables, knowing that this also helps communities close the loop on waste. In our water business, we're seeing increased business development activity and a robust acquisition pipeline. That includes acquiring water utilities around our existing systems. We've closed three tuck-in acquisitions this year and expect to close another one soon. At the same time, we continue to invest in our existing utilities. For example, construction is going well on an upgraded wastewater facility at our Sun River, Oregon utility. Projects like this help our water utilities continue providing safe and reliable service and meet stringent environmental standards. To support investments at our utilities, we're filing general rate cases if necessary. And today, we've successfully completed rate cases in Idaho, Oregon, and Washington, building constructive relationships with our regulators. Right now, we're working through a general rate case at our largest utility, Sun River, here in Oregon, which is moving along nicely. We continue to see an increased level of business development activity, and remain excited about the investment potential for this business. We hope to have more announcements soon. And finally this morning, I'm pleased to report that in the fourth quarter, the Board of Directors approved a dividend increase, making this the 66th consecutive year of annual dividend increases. Northwest Natural is one of only three companies on the New York Stock Exchange with this outstanding record. With that, let me turn it over to Frank to cover some more of the financial information.