Northwest Natural Gas (NYSE:NWN) said first-quarter 2026 results were strong and in line with management’s expectations, driven by new rates, customer growth and performance across its regulated utility businesses.
President and CEO Justin Palfreyman said the company’s gas utility systems “performed very well over the heating season,” while the broader Northwest Natural Holdings platform benefited from having three regulated utility businesses. He said the company remains focused on “disciplined execution, steady earnings growth, and attractive overall shareholder returns.”
The company reaffirmed its full-year 2026 earnings guidance of $2.95 to $3.15 per share and maintained its long-term EPS growth target of 4% to 6%. Management said the SiEnergy and water businesses are still expected to contribute approximately 25% of consolidated EPS in 2026.
Regulatory Filings Remain Central to 2026 Strategy
Palfreyman highlighted several regulatory initiatives intended to reduce regulatory lag and produce a more balanced earnings profile. In Washington, Northwest Natural filed a multi-party settlement in March with the Washington Utilities and Transportation Commission resolving all revenue requirement aspects of its multi-year general rate case. The settlement remains subject to commission approval.
The proposed Washington settlement provides for annual revenue requirement increases over three years: $20.1 million in the first year beginning August 1, 2026, $7.7 million in the second year and $8.7 million in the third year. It includes a capital structure of 50% equity and 50% long-term debt and a 9.5% return on equity.
In Oregon, Palfreyman said the company remains engaged with staff and other parties on multi-year rate case rulemaking. He said the process could extend into 2027. In the meantime, Northwest Natural filed an alternative rate mechanism to recover certain safety, information technology and large public works investments. That proposal contemplates a 1.5% rate increase beginning October 31, 2026.
During the question-and-answer session, Palfreyman said economic conditions in Oregon have been “challenged a bit” for several years, including slower housing starts and other macroeconomic indicators. However, he said customer growth in Oregon remains largely in line with expectations for the year, with growth opportunities tied to the gas storage facility expansion and system safety and reliability investments.
SiEnergy Growth Supports Texas Expansion
SiEnergy, the company’s Texas gas utility, delivered 16% organic customer growth in the quarter. Palfreyman said its backlog exceeded 250,000 future meters at quarter end, highlighting long-term growth potential. Management expects SiEnergy to deliver 15% to 20% annual customer growth through 2030 and to contribute about 10% to 15% of consolidated EPS in 2026.
On May 4, SiEnergy filed a general rate case with the Texas Railroad Commission. The filing consolidates SiEnergy and the recently acquired Pines Gas entities, which Palfreyman said simplifies the company’s regulatory structure and operations in Texas. SiEnergy is requesting a $12 million revenue requirement increase based on a 10.75% return on equity, an 8.73% cost of capital and a capital structure of 60% equity and 40% long-term debt.
The filing reflects an increase in average rate base of $176.9 million since the prior rate case, bringing total rate base to $343.1 million. Palfreyman said SiEnergy is also requesting the factors necessary to file for the Gas Reliability Infrastructure Program, or GRIP, in future years. In response to an analyst question, he said the current rate case is expected to take approximately six months, with new rates anticipated in the fourth quarter.
Water Business Focuses on Organic Growth and Rate Cases
Northwest Natural Water posted 4.1% overall customer growth in the first quarter and 2.2% organic customer growth. Palfreyman noted that the water business is seasonal, with the highest demand in the third quarter and lower demand in the first quarter.
The company completed seven water and wastewater rate cases in 2025 and currently has four open rate cases in Oregon, Texas and Arizona. Palfreyman said Foothills, its largest water and wastewater utility, continues to invest in water storage and treatment to support regional growth. The company also received approval in the first quarter for its second Certificate of Convenience and Necessity expansion in Arizona.
In Texas, Palfreyman said Northwest Natural Water has signed agreements with developers representing a backlog of more than 10,000 connections, with about 25% in communities that have started development. He said the company has combined business development efforts in Texas to leverage SiEnergy’s developer and homebuilder relationships, creating opportunities to install gas, water and potentially wastewater systems in the same communities.
Asked about acquisitions in the water segment, Palfreyman said the company continues to look for opportunities but has seen the market slow. He said the company does not need acquisitions to grow, citing its expectation for 2% to 3% organic customer growth through 2030.
MX3 Storage Project Could Lift Long-Term Growth Outlook
Palfreyman also discussed the MX3 storage project, a $300 million FERC-regulated gas storage expansion expected to add 4 to 5 Bcf of capacity. He said the project is fully contracted under 25-year agreements and continues to progress as expected. The current timeline contemplates receiving notice to proceed by the end of 2027, with an in-service date in 2029.
Management said MX3 is not included in the current 4% to 6% long-term EPS growth guidance. Palfreyman said the company expects to include the project in guidance once it receives notice to proceed, which would raise the long-term EPS outlook to 5% to 7%.
Kaszuba said the company still expects 2026 capital expenditures of $500 million to $550 million. The funding plan includes operating cash flow, approximately $150 million of net long-term debt and $40 million to $50 million of equity issued through its at-the-market program. He said the company has approximately $590 million of available liquidity.
Kaszuba added that over the five-year planning horizon, capital spending is expected to be funded largely through operating cash flows, along with a balanced mix of long-term debt and equity. He said the company expects to meet equity needs through 2030 using its ATM program.
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.
