NW Natural Holdings used its fourth-quarter earnings call to highlight what management described as a “new chapter” for the company, marked by record adjusted earnings per share, strong customer growth, and a larger capital investment program across its gas, Texas local distribution, and water businesses.
2025 performance and segment contributions
Chief Executive Officer Justin Palfreyman said the company delivered record adjusted earnings per share at the top of its guidance range and posted its strongest organic customer growth in nearly two decades. He attributed the results to strategic moves made in recent years, including diversification into the water utility business, expansion into multiple jurisdictions, and the addition of Texas gas utilities.
- Northwest Natural Gas (NYSE:NWN) utility segment adjusted EPS improved by $0.45, primarily due to new Oregon rates, partially offset by higher operations and maintenance and depreciation.
- SiEnergy contributed $0.33 per share in 2025, exceeding the company’s expectation of $0.25–$0.30 per share.
- Water segment contributed $0.35 per share, also above the company’s expectation of $0.25–$0.30 per share, driven by new rates at its largest Arizona water and wastewater utility and incremental revenue from an acquisition late in 2024.
- The other segment posted a larger adjusted net loss year over year, which Kaszuba said primarily reflected higher interest expense at the holding company.
Regulatory updates: Oregon, Washington, and a proposed interim mechanism
Palfreyman said the company settled its Oregon rate case in 2025, with new rates effective Oct. 31. In Washington, he said the company reached a settlement in principle that resolves the revenue requirement, and it expects to file the multi-party settlement in the coming month.
He also discussed work underway with the Oregon Public Utility Commission on rulemaking for multi-year rate cases. While that process develops, management said it filed an alternative rate mechanism intended to recover certain capital investments made during the interim period. The proposal would result in a modest 1.5% increase to customer rates, with an effective date of Oct. 31, 2026. During Q&A, management said its 2026 guidance assumes receipt of this mechanism and described it as a way to avoid larger future “rate shock” for customers.
Palfreyman also noted that, on average, Northwest Natural residential customers are paying about the same for natural gas service as they did 20 years ago.
MX3 gas storage expansion at Mist: contracts, economics, and timeline
A central topic on the call was the company’s newly announced MX3 Gas Storage Expansion project at its Mist facility in the Pacific Northwest. Palfreyman said MX3 is the third major expansion at Mist since initial construction in 1989 and would add four to five BCF of storage capacity. He framed the project as a response to regional reliability and capacity needs, including what he described as a potential 9-GW capacity shortfall by 2030 for the Pacific Northwest electric grid.
Management said customers for MX3 include large, investment-grade regional utilities and midstream providers. Once the project receives a notice to proceed, the customers have agreed to 25-year contracts. Palfreyman said the company is in the development phase with signed customer agreements, an Energy Facility Siting Council permit secured, FERC approval received, and engineering, procurement, and construction providers identified.
The project’s new storage services would be regulated by FERC and are expected to provide stable returns under customer agreements specifying a fixed 12.5 return on equity and a 50% equity layer. Management estimated the project will cost approximately $300 million and expects the facility to be in service by the end of 2029.
MX3 is not included in the company’s current long-term earnings outlook. Palfreyman said the company is reaffirming its 4%–6% long-term EPS growth target, but expects to raise that target to 5%–7% once it receives notice to proceed for MX3. In response to analyst questions, management said it is targeting notice to proceed by the end of next year and cited remaining work that includes finalizing the EPC contract and obtaining some local permits.
On the earnings profile and funding considerations, management said it expects to receive AFDC during the construction period and believes equity needs could be funded through “normal issuances” under the company’s ATM program once the project advances, though it did not provide a detailed cash flow profile while EPC terms are still being finalized.
SiEnergy and Water: growth outlook and rate case considerations
Palfreyman said the company closed the SiEnergy acquisition in January 2025 and added the acquisition of Pines in June, with both utilities integrated. He said SiEnergy delivered 18% organic customer growth in 2025 and contributed 11% of consolidated adjusted EPS. He also said SiEnergy’s customer backlog grew to nearly 250,000 future meters, representing more than a 30% increase in a year.
Looking ahead, management expects SiEnergy to produce 15%–20% customer growth each year through 2030. For 2026, Palfreyman said SiEnergy is expected to contribute 10%–15% of consolidated EPS, and management is considering filing a general rate case sometime in 2026, weighing factors including customer affordability. During Q&A, management said it is evaluating use of the GRIP mechanism in a future Texas rate case and noted that House Bill 4384 has been helpful from an earnings perspective and was reflected “a little bit” in 2025 results.
For the water business, Palfreyman said the platform reached a scale in 2025 that enabled efficiencies through standardized processes and centralization. Management said it completed seven rate cases in 2025 and expects to process five more in 2026. The company expects the water segment to generate 2%–3% organic customer growth through 2030 and contribute 10%–15% of consolidated EPS in 2026. Palfreyman said the company continues to evaluate acquisitions opportunistically, but is currently emphasizing execution, organic and greenfield growth, and expansion of regulated service areas across its jurisdictions.
Kaszuba initiated 2026 adjusted EPS guidance of $2.95–$3.15 and said the company expects SiEnergy and Water together to contribute about 25% of consolidated earnings in 2026. He also reiterated the company’s long-term plan for $2.6 billion to $2.9 billion of capital expenditures through 2030 and projected 2026 consolidated capital expenditures of approximately $500 million to $550 million.
On funding, Kaszuba said the 2026 capital program is expected to be supported by cash from operations, incremental net long-term debt of about $150 million after considering maturities of $160 million, and equity issuance through the ATM of $40 million to $50 million. He also reported that 2025 cash provided by operating activities was approximately $270 million, capital expenditures were a record $467 million, and acquisitions totaled nearly $340 million. The company ended 2025 with about $590 million of liquidity.
Management also emphasized shareholder returns, noting that 2025 marked the company’s 70th consecutive year of dividend growth. The company said it expects dividend growth to be higher than in recent years while targeting a long-term dividend payout ratio of 55%–65%.
About Northwest Natural Gas (NYSE:NWN)
Northwest Natural Gas (NYSE: NWN), commonly known as NW Natural, is a publicly traded energy utility primarily engaged in the distribution of natural gas to residential, commercial and industrial customers. Headquartered in Portland, Oregon, the company operates an extensive pipeline network spanning thousands of miles across Oregon and southwest Washington. Its core business activities include gas procurement, system operation and maintenance, safety inspections and customer service support.
Dating back to the mid-19th century, Northwest Natural traces its origins to the Portland Gas Light Company, which first illuminated Portland streets with manufactured gas in 1859.
