Our Low-Carbon Pathway

18 SUPPORTIVE MECHANISMS OREGON • Decoupling ⚫ Breaks link between earnings and consumption by removing incentive to increase usage Employs use-per-customer decoupling calculation, which adjusts margin revenues to account for the difference between actual and expected customer volumes OREGON Weather Normalization (WARM) • Stabilizes collection of fixed costs for residential and commercial customers Adjusts billings based on temperature variances compared to average weather Applied from December through May of each heating season OREGON WASHINGTON Purchased Gas Adjustment (PGA) • Adjusts annual rates to reflect changes in expected cost of gas commodity purchases • Includes spot purchases, contract supplies, derivatives, storage inventories, in OR gas reserves • Includes temporary rate adjustments amortizing deferred regulatory account balances OREGON WASHINGTON Environmental Cost Recovery • Recovers environmental costs for sites attributable to each state at a rate of 96.68% in Oregon and 3.32% in Washington • Costs are subject to an annual prudence review in both Oregon and Washington, and in Oregon an earnings test1 • Allows for deferral of environmental costs in both Oregon and Washington, and in Oregon the accrual of carrying costs 1 To the extent the utility earns more than its authorized ROE in Oregon in a year, the utility is required to cover environmental expenses and interest on expenses greater than $10 million (plus interest from insurance proceeds) with those earnings that exceed its authorized ROE NW NaturalⓇ

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