Northwest Natural Holding CoNWN
Northwest Natural Holding Co Leases Disclosure
LEASES
Lease Revenue
Leasing revenue primarily consists of NW Natural's North Mist natural gas storage agreement with PGE which is billed under an OPUC-approved rate schedule and includes an initial 30-year term beginning May 2019 with options to extend, totaling up to an additional 50 years upon mutual agreement of the parties. Under U.S. GAAP, this agreement is classified as a sales-type lease and qualifies for regulatory accounting deferral treatment. The investment in the storage facility is included in rate base under a separately established cost-of-service tariff, with revenues recognized according to the tariff schedule. As such, the selling profit that was calculated upon commencement as part of the sale-type lease recognition was deferred and will be amortized over the lease term. Billing rates under the cost-of-service tariff will be updated annually to reflect current information including depreciable asset levels, forecasted operating expenses, and the results of regulatory proceedings, as applicable, and revenue received under this agreement is recognized as operating revenue on the consolidated statements of comprehensive income. There are no variable payments or residual value guarantees. The lease does not contain an option to purchase the underlying assets.
NW Natural also maintains a sales-type lease for specialized compressor facilities to provide high pressure compressed natural gas (CNG) services. Lease payments are outlined in an OPUC-approved rate schedule over a 10-year term. There are no variable payments or residual value guarantees. The selling profit computed upon lease commencement was not significant.
Our lessor portfolio also contains small leases of property owned by NW Natural to third parties. These transactions are accounted for as operating leases and the revenue is recognized over the term of the lease agreement.
The components of lease revenue at NW Natural were as follows:
| Year ended December 31, | ||||||||||||||||||||
| In thousands | 2025 | 2024 | 2023 | |||||||||||||||||
| Lease revenue | ||||||||||||||||||||
| $ | 82 | $ | 86 | $ | 76 | |||||||||||||||
| 17,127 | 16,406 | 15,974 | ||||||||||||||||||
| Total lease revenue | $ | 17,209 | $ | 16,492 | $ | 16,050 | ||||||||||||||
Additionally, lease revenue of $0.6 million was recognized for each of the years ended December 31, 2025, 2024, and 2023, respectively, related to operating leases associated with non-utility property rentals. Lease revenue related to these leases was presented in other income (expense), net on the consolidated statements of comprehensive income as it is non-operating income.
Total future minimum lease payments to be received under non-cancelable leases at December 31, 2025 are as follows:
| In thousands | Operating | Sales-Type | Total | |||||||||||||||||
| NW Natural: | ||||||||||||||||||||
| 2026 | $ | 43 | $ | 14,901 | $ | 14,944 | ||||||||||||||
| 2027 | 27 | 14,500 | 14,527 | |||||||||||||||||
| 2028 | — | 14,004 | 14,004 | |||||||||||||||||
| 2029 | — | 13,594 | 13,594 | |||||||||||||||||
| 2030 | — | 13,204 | 13,204 | |||||||||||||||||
| Thereafter | — | 181,518 | 181,518 | |||||||||||||||||
| Total minimum lease payments | $ | 70 | 251,721 | $ | 251,791 | |||||||||||||||
| Less: imputed interest | 132,173 | |||||||||||||||||||
| Total leases receivable | $ | 119,548 | ||||||||||||||||||
| Other NW Holdings: | ||||||||||||||||||||
| 2026 | $ | 56 | $ | — | $ | 56 | ||||||||||||||
| 2027 | 57 | — | 57 | |||||||||||||||||
| 2028 | 58 | — | 58 | |||||||||||||||||
| 2029 | 59 | — | 59 | |||||||||||||||||
| 2030 | 60 | — | 60 | |||||||||||||||||
| Thereafter | 681 | — | 681 | |||||||||||||||||
| Total minimum lease payments | $ | 971 | $ | — | $ | 971 | ||||||||||||||
| NW Holdings: | ||||||||||||||||||||
| 2026 | $ | 99 | $ | 14,901 | $ | 15,000 | ||||||||||||||
| 2027 | 84 | 14,500 | 14,584 | |||||||||||||||||
| 2028 | 58 | 14,004 | 14,062 | |||||||||||||||||
| 2029 | 59 | 13,594 | 13,653 | |||||||||||||||||
| 2030 | 60 | 13,204 | 13,264 | |||||||||||||||||
| Thereafter | 681 | 181,518 | 182,199 | |||||||||||||||||
| Total minimum lease payments | $ | 1,041 | 251,721 | $ | 252,762 | |||||||||||||||
| Less: imputed interest | 132,173 | |||||||||||||||||||
| Total leases receivable | $ | 119,548 | ||||||||||||||||||
The total leases receivable above is reported under the NWN Gas Utility segment and the short- and long-term portions are included within other current assets and assets under sales-type leases on the consolidated balance sheets, respectively. The total amount of unguaranteed residual assets was $6.5 million and $6.0 million at December 31, 2025 and 2024, respectively, and is included in assets under sales-type leases on the consolidated balance sheets. Additionally, under regulatory accounting, the revenues and expenses associated with these agreements are presented on the consolidated statements of comprehensive income such that their presentation aligns with similar regulated activities at NW Natural.
Lease Expense
Operating Leases
We have operating leases for land, buildings and equipment. Our primary lease is for NW Natural's headquarters and operations center. Our leases have remaining lease terms of five months to 14 years. Many of our lease agreements include options to extend the lease, which we do not include in our minimum lease terms unless they are reasonably certain to be exercised. Short-term leases with a term of 12 months or less are not recorded on the balance sheet.
As most of our leases do not provide an implicit rate and are entered into by NW Natural, we use an estimated discount rate representing the rate we would have incurred to finance the funds necessary to purchase the leased asset and is based on information available at the lease commencement date in determining the present value of lease payments.
NW Holdings assumed operating leases in connection with the SiEnergy acquisition. The leases primarily relate to office space, warehouse facilities, and land use agreements supporting the operations of SiEnergy. The assumed leases resulted in an increase of $2.3 million to both the operating lease right of use asset and operating lease liabilities recognized by NW Holdings. No finance type leases were assumed as part of the acquisition. The assumed lease balances are reflected in the disclosures and financial statements of NW Holdings as of December 31, 2025. Refer to Note 14 for additional information.
The components of lease expense, a portion of which is capitalized, were as follows:
| Year ended December 31, 2025 | ||||||||||||||||||||
| In thousands | NW Natural | Other (NW Holdings) | NW Holdings | |||||||||||||||||
| Operating lease expense | $ | 7,754 | $ | 957 | $ | 8,711 | ||||||||||||||
| Short-term lease expense | 557 | — | 557 | |||||||||||||||||
| Year ended December 31, 2024 | ||||||||||||||||||||
| In thousands | NW Natural | Other (NW Holdings) | NW Holdings | |||||||||||||||||
| Operating lease expense | $ | 7,545 | $ | 198 | $ | 7,743 | ||||||||||||||
| Short-term lease expense | 595 | — | 595 | |||||||||||||||||
| Year ended December 31, 2023 | ||||||||||||||||||||
| In thousands | NW Natural | Other (NW Holdings) | NW Holdings | |||||||||||||||||
| Operating lease expense | $ | 7,244 | $ | 176 | $ | 7,420 | ||||||||||||||
| Short-term lease expense | 925 | — | 925 | |||||||||||||||||
Supplemental balance sheet information related to operating leases as of December 31, 2025 is as follows:
| In thousands | NW Natural | Other (NW Holdings) | NW Holdings | |||||||||||||||||
| Operating lease right of use assets | $ | 65,650 | $ | 2,574 | $ | 68,224 | ||||||||||||||
| Operating lease liabilities - current liabilities | $ | 2,515 | $ | 713 | $ | 3,228 | ||||||||||||||
| Operating lease liabilities - non-current liabilities | 73,097 | 1,889 | 74,986 | |||||||||||||||||
| Total operating lease liabilities | $ | 75,612 | $ | 2,602 | $ | 78,214 | ||||||||||||||
Supplemental balance sheet information related to operating leases as of December 31, 2024 is as follows:
| In thousands | NW Natural | Other (NW Holdings) | NW Holdings | |||||||||||||||||
| Operating lease right of use assets | $ | 68,115 | $ | 511 | $ | 68,626 | ||||||||||||||
| Operating lease liabilities - current liabilities | $ | 1,653 | $ | 187 | $ | 1,840 | ||||||||||||||
| Operating lease liabilities - non-current liabilities | 75,591 | 323 | 75,914 | |||||||||||||||||
| Total operating lease liabilities | $ | 77,244 | $ | 510 | $ | 77,754 | ||||||||||||||
The weighted-average remaining lease terms and weighted-average discount rates for the operating leases at NW Natural were as follows:
| 2025 | 2024 | |||||||||||||
| Weighted-average remaining lease term (years) | 14.3 | 15.3 | ||||||||||||
| Weighted-average discount rate | 7.3 | % | 7.3 | % | ||||||||||
SiEnergy had operating leases with a weighted-average remaining lease term of 4.1 years and a weighted-average discount rate of 6.0% as of December 31, 2025.
Headquarters and Operations Center Lease
NW Natural commenced a 20-year operating lease agreement in March 2020 for a new headquarters and operations center in Portland, Oregon. There is an option to extend the term of the lease for two additional periods of seven years. There is a material timing difference between the minimum lease payments and expense recognition as calculated under operating lease accounting rules. OPUC issued an order allowing us to align our expense recognition with cash payments for ratemaking purposes. We recorded the difference between the minimum lease payments and the aggregate of the imputed interest on the finance lease obligation and amortization of the right-of-use asset as a regulatory asset on our balance sheet. The balance of the regulatory asset was $9.7 million and $9.0 million as of December 31, 2025 and 2024, respectively.
Maturities of operating lease liabilities at December 31, 2025 were as follows:
| In thousands | NW Natural | Other (NW Holdings) | NW Holdings | |||||||||||||||||
| 2026 | $ | 7,619 | $ | 846 | $ | 8,465 | ||||||||||||||
| 2027 | 7,612 | 721 | 8,333 | |||||||||||||||||
| 2028 | 7,795 | 598 | 8,393 | |||||||||||||||||
| 2029 | 7,983 | 567 | 8,550 | |||||||||||||||||
| 2030 | 8,080 | 232 | 8,312 | |||||||||||||||||
| Thereafter | 85,329 | 85,329 | ||||||||||||||||||
| Total lease payments | 124,418 | 2,964 | 127,382 | |||||||||||||||||
| Less: imputed interest | 48,806 | 362 | 49,168 | |||||||||||||||||
| Total lease obligations | 75,612 | 2,602 | 78,214 | |||||||||||||||||
| Less: current obligations | 2,515 | 713 | 3,228 | |||||||||||||||||
| Long-term lease obligations | $ | 73,097 | $ | 1,889 | $ | 74,986 | ||||||||||||||
As of December 31, 2025, there were no finance lease liabilities at NW Natural and NW Holdings.
Cash Flow Information
Supplemental cash flow information related to leases was as follows:
| Year ended December 31, 2025 | ||||||||||||||||||||
| In thousands | NW Natural | Other (NW Holdings) | NW Holdings | |||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||||||||||||||
Operating cash flows from operating leases (1) | $ | 7,709 | $ | 733 | $ | 8,442 | ||||||||||||||
| Finance cash flows from finance leases | 340 | — | 340 | |||||||||||||||||
| Right of use assets obtained in exchange for lease obligations | ||||||||||||||||||||
| Operating leases | $ | 568 | $ | 2,671 | $ | 3,239 | ||||||||||||||
| Finance leases | 340 | — | 340 | |||||||||||||||||
(1) Includes approximately $2.3 million of non-cash operating lease right of use asset and operating lease liabilities recognized as part of the SiEnergy acquisition.
| Year ended December 31, 2024 | ||||||||||||||||||||
| In thousands | NW Natural | Other (NW Holdings) | NW Holdings | |||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||||||||||||||
| Operating cash flows from operating leases | $ | 7,495 | $ | 199 | $ | 7,694 | ||||||||||||||
| Finance cash flows from finance leases | 529 | — | 529 | |||||||||||||||||
| Right of use assets obtained in exchange for lease obligations | ||||||||||||||||||||
| Operating leases | $ | 250 | $ | 108 | $ | 358 | ||||||||||||||
| Finance leases | 529 | — | 529 | |||||||||||||||||
| Year ended December 31, 2023 | ||||||||||||||||||||
| In thousands | NW Natural | Other (NW Holdings) | NW Holdings | |||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||||||||||||||
| Operating cash flows from operating leases | $ | 7,434 | $ | 176 | $ | 7,610 | ||||||||||||||
| Finance cash flows from finance leases | 369 | — | 369 | |||||||||||||||||
| Right of use assets obtained in exchange for lease obligations | ||||||||||||||||||||
| Operating leases | $ | 659 | $ | — | $ | 659 | ||||||||||||||
| Finance leases | 369 | 101 | 470 | |||||||||||||||||
Finance Leases
NW Natural also leases building storage spaces for use as a gas meter room in order to provide natural gas to multifamily or mixed use developments. These contracts are accounted for as finance leases and typically involve a one-time upfront payment with no remaining liability. The right of use asset for finance leases was $3.3 million and $3.0 million at December 31, 2025 and 2024, respectively.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Mar 2, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.