Northwest Natural Holding Company

Good morning and thank you all for attending the NW Natural Holdings Company third quarter 2024 earnings call. My name is Brika and I will 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 your host, Nikki Sparley, Head of Investor Relations at NW Natural Holdings. Thank you. You may proceed, Nikki.

Thank you. Good morning and welcome to our third quarter 2024 earnings call. As a reminder, some things that will be said this morning contain forward-looking statements. They're 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. Following this call, a recording will be available on our website. 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 Ray Kasuba, Senior Vice President and CFO. David and Ray 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, and good morning, everyone. The company continues to perform very well, including having a strong third quarter. In 2024, we've been focused on executing on our capital investment plan, regulatory dockets, and growth opportunities with great success. I'm happy to report the completion of our Oregon gas utility rate case and also the conclusion of three water and wastewater utility rate cases. Today, I'll cover an update on the economy and the rate cases. Ray will provide an update on our financials, and then I'll close the call with an update on our growth opportunities. Turning to a few comments on the economy. Related to our gas utility service territory, Oregon's unemployment rate remains low at 4%. lower than the national average of 4.1% in September. Single family housing permits were up 13.1% in the Portland metro area on a rolling 12 month basis. Permits are a good indicator of potential future customer growth. For September, unemployment rates in our water service territories were as low as 2.8%. In six of the nine counties our water utilities serve, single family building permits posted double digit growth for the 12 months ended September 2024 compared to the same period in 2023. Collectively, our gas and water utility customer base grew 1.9% over the last 12 months and topped 875,000 at September 30th, 2024. Moving to an update on our gas and water rate cases, our utilities have continued to make necessary investments in safety, reliability, and technology. 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. These are all reasons why, after careful consideration of the effect on customer bills, we decided to file rate cases for our gas utility in Oregon and a number of our water and wastewater utilities. I'm happy to report we've worked collaboratively with stakeholders in these cases and received constructive orders in nearly all cases, putting us on track for solid results going forward. That includes orders in three of our five water and wastewater rate cases. A particular note is an order approving the all-party settlements for our largest utilities in Arizona with new rates effective November 1st, 2024. Concerning the Oregon gas utility rate case in October, the Commission issued an order approving the all-party settlements that we've discussed before. Under the order, Northwest Naturals' revenue requirement increased $93.3 million That consisted of $83.7 million related to investments in the system and expenses, and $9.6 million for increased depreciation. The order also included a 50-50 capital structure, a return on equity of 9.4%, and a cost of capital of approximately 7.1%. Rate base increased $334 million to $2.1 billion in total. We're disappointed in the Commission's decision to require Northwest Natural to forego recovery of $13.7 million of rate base related to line extension allowances previously approved in past rate cases. This will result in a $10.1 million after-tax non-cash disallowance, which will be recognized in our fourth quarter results. During the quarter, we filed for our annual purchase gas adjustments in both Oregon and Washington. which updates rates for the projected gas costs for the coming year. The result is good news, a 9.4% decline for Washington customers. In Oregon, the rate case combined with the decline in gas costs resulted in the average Oregon residential customer bill increasing a modest 4.7%. New rates went into effect on November 1st. Overall, I'm pleased that residential customers across our service territory are paying less today for their natural gas service than they did 20 years ago. With that, let me turn it over to Ray.