Northwest Natural Holding Company

Good morning, thank you for attending today's Northwest Natural Holdings Company U2 2024 Earnings Call. My name is Jayla and I'll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to our host, Nikki Sparley, Director of Investor Relations. Nikki, you may proceed.

Good morning and welcome to our second quarter 2024 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 our 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, Chief Executive Officer, and Brody Wilson, CFO, Vice President, Treasurer, and Chief Accounting Officer. David and Brody 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 and welcome. Our financial results are on track for the year and in line with our full year guidance issued in February. Brody will go through the detailed results here in a moment. This morning, I'll walk you through a few economic indicators and provide an update on our Oregon gas utility rate case. I'll wrap up with an update on our long-term decarbonization and growth initiatives. Turning to a few comments on the economy, Related to our gas utility service territory, Oregon's unemployment rate remains low and on par with the national average at 4.1% in June. Employment growth increased in Oregon to 1.6% compared to a drop in U.S. employment growth to 1.5% annualized for June 2024. Single family housing permits were up 8.6% year over year. in Oregon and increased 19.1% in the Portland metro area signaling favorable conditions for customer growth ahead. For June, unemployment rates in our water service territories were as low as 3%. In six of the nine counties our water utilities serve, single family building permits posted double digit growth for the 12 months into June 2024 compared to the same period in 2023. Collectively, our gas and water utility customer base grew 1.8% over the last 12 months. Moving to an update on our gas and water rate cases, our utilities have continued to make necessary investments in safety, reliability, and technology at record levels. For our water and wastewater utilities, we continue to find these systems need substantial investments to meet current and increasing quality standards and support customer growth. Like many other companies, we're also contending with inflationary pressures on operating expenses. These are all reasons why we decided to file rate cases for our gas utility in Oregon and a number of our water and wastewater utilities. We filed only after very careful consideration and with the utmost attention to the effect on customer bills. We know this is a difficult time. Our team has done all they can to reduce cost and operate as efficiently as possible while maintaining safe and reliable systems. I'm happy to report we've worked constructively with stakeholders in these cases and have made substantial progress. All party settlements have been filed in the majority of the dockets. Concerning the gas utility Oregon general rate case, in July, Northwest Natural filed an all party settlement resolving a majority of the case. That included a revenue requirement increase of $95 million that consisted of $85.4 million related to investments in the system and expenses. and $9.6 million for increased depreciation. The settlement also included a 50-50 capital structure, an ROE of 9.4%, and a cost of capital of approximately 7.1%. In addition, rate base would increase $357 million since the last rate case for a total rate base of $2.11 billion. We expect an order from the Commission on the full rate case this fall with rates effective November 1st. This week, we filed a preliminary Oregon annual purchase gas adjustment, which updates rates for the projected gas cost. Gas prices have been dropping, resulting in an expected decrease of 3.4% in customer bills, which will help offset an increase in rates from the rate case. All in, we expect customers will pay about 2% more for their natural gas service this coming winter than they did in 2005. On an annual basis, that's about a 0.10% compounded growth rate. We've also settled several water and wastewater utility rate cases. That includes the case for our largest utilities in Arizona, with new rates expected to go into effect November 1, 2024. With that, let me turn it over to Brody.