Northwest Natural Holding Company

Hello everyone and welcome to the NW Natural Holdings Company Q2 2022 earnings call. My name is Seb and I will be the operator for your call today. There will be an opportunity to ask questions at the Q&A session. You can register a question at any time by pressing star 1 on your telephone keypad or press star 2 if you need to withdraw your question. If you need assistance at any time, please press star 0 to flag an operator. I will now hand the floor over to Nikki Sparley to begin. Please go ahead.

Thank you, Seb. Good morning and welcome to our second quarter 2022 earnings call. As a reminder, some 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, please refer to the language at the end of our press release. We expect to file our 10Q 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 Burkhartsmeyer, 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 will turn it over to David.

Thanks, Nikki. Good morning and welcome, everybody. We continue to see strong financial results that are in line with our expectations and the guidance that we provided earlier this year. Frank will go through more of the details here in a moment. This morning, I'll walk through some economic indicators for Oregon and Washington and provide an update on our Oregon general rate case. I'll wrap up with some exciting efforts related to hydrogen and gas utility and an update on our water and competitive renewables business. Turning to a few comments on the economy, in our service territory, we continue to experience growth despite a dynamic macroeconomic backdrop. Reports in the first quarter of 2022 rank Oregon in the top 10 states for the change, positive change in GDP. That outperformance is based on stronger than average growth in real estate and the healthcare industries as the Oregon economy continues to rebound after COVID. So the labor market also remains robust with low unemployment and strong employment gains. In Oregon, unemployment was 3.6% in June 2022. That's nearly as low as the pre-pandemic levels of 3.4% in February of 2020. Single-family housing activity remains solid. The median sales price of a home in our area was up 9.4% for the second quarter of 2022 compared to last year. And the inventory of homes for sale in the Portland metro area remains low at 1.4 months of supply. Overall customer growth is in line with our expectations with a dip in mixed-use multifamily construction that we knew was coming. Single-family ads continue to be strong, driving the addition of nearly 10,200 new customers during the last 12 months, which equates to a growth rate of 1.3%. Our water and wastewater utilities also continue to grow. Strong residential housing construction primarily in Texas, where our water and wastewater utility posted nearly 11% organic growth. And Idaho, where our Falls Water Company posted 4% organic growth. boosted us to a consolidated 3% customer growth from organic customer growth over the last 12 months. The combination of this organic growth and acquisitions resulted in a 27% increase in our water and wastewater utility connections. Moving to an update on our Oregon general rate case. As you know, 2021 and 2022 have CapEx plans related to spend for safety and reliability, technology system upgrades, and cybersecurity investments. So to recover those costs, we filed an mortgage and rent case in December of last year. The original request included a revenue requirement increase of $73.5 million that's based on a 50-50 cash structure, a return on equity of 9.4%, and a cost of capital of about 6.9%. In May 2022, we filed a settlement with the main parties in the case related to the majority of the revenue requirement items. That included a revenue requirement increase of $62.7 million, Also on a 50-50 cash structure, an ROE of 9.4% and an overall cost of capital of 6.8%. It also included a rate-based increase of $337 million since the last rate case for a total rate base of $1.77 billion. In June, we reached the second multi-party settlement related to a number of smaller items, including recovery of our COVID deferral. We expect an order from the Commission on the full rate case this fall with rates effective November 1st. With that, let me turn it over to Frank to cover more of the details of the quarter. Frank?