NW Natural customers to see smaller rate increase, won’t pay for pipeline expansion
NW Natural’s residential customers will see a rate increase of 4.5% on November bills, a much smaller increase than the company wanted.Customers will also no longer bear the cost of paying for the expansion of the natural gas system in Oregon and for the gas company’s political lobbying.The smaller-than-anticipated rate increase is the result of two separate decisions reached by state regulators over the past week.Last December, NW Natural, the state’s largest natural gas company, filed a general rate case seeking to increase its revenues by $154.9 million, or a rate increase of nearly 17%. General rate cases allow utilities to recover the costs of operating expenses, investments and capital costs.NW Natural was seeking to recover costs related to replacing its aging metering infrastructure, updates to its information technology systems, seismic upgrades to regional operations buildings and improvements to its distribution system and storage facility.But in a decision last Friday, the Oregon Public Utility Commission approved a multi-party settlement reached this summer that set NW Natural’s annual revenue increase at just $95 million, lowering the rate increase to about 10% across all customers.That rate was further lowered Tuesday when the commission approved a decrease in the annual cost of buying natural gas. (why is this a decrease?)The combined impact of the two decisions means a residential customer’s average bill is expected to be about 4.5 % higher than the previous years’ bill, the commission said.The increase goes into effect this Friday.As part of its decision last week, the commission also ordered NW Natural to remove costs for the company’s lobbying activities from rates and to stop charging customers for gas pipeline expansion by 2027.NW Natural will have to phase out charges called line extension allowances, in which all existing customers subsidize the cost of connecting new buildings to the gas pipeline system. Without the subsidies, an individual developer or homeowner would have to cover the costs.State regulators had previously ordered NW Natural in 2022 to reduce – but not completely phase out – those subsidies.A natural gas fact-finding investigation released by the Public Utility Commission in January 2023 found that growing the gas system in Oregon and adding new hookups will increase emissions and drive up utilities’ costs to comply with the state’s climate mandate to reduce fossil fuel emissions – which is likely to lead to rate increases for all customers.Oregon is now one of just a handful of states that have decided to remove the subsidies from customer rates. California, Washington, Colorado, and Connecticut have also taken a similar approach.Getting rid of the subsidies won’t greatly reduce individual residential customers’ rates because new gas connections are paid for over a long period and the cost is spread over hundreds of thousands of customers. (I’m confused – I thought the subsidies would go away and the hundreds and thousands of people won’t have to pay anymore? Or are you saying that it would cause a big reduction because the subsidies are paid over long periods by the utility’s hundreds of thousands of customers.)But activists hailed it a win for the planet and said it will result in more affordable energy bills for Oregonians.“Over time, those costs would have become substantial. We’re nipping the problem at the bud to prevent costs from escalating in the future. Everything adds up,” Earthjustice attorney Jaimini Parekh told The Oregonian/OregonLive. The Seattle-based nonprofit focuses on environmental advocacy.Parekh said phasing out the subsidies may slow the expansion of the natural gas system that contributes to climate warming and lead to the electrification of more buildings.NW Natural — which controls 80% of the state’s natural gas market – is responsible for 9% of Oregon’s carbon dioxide emissions. Natural gas also emits methane, which is responsible for up to 30% of global warming.The utility has continued to expand. In 2023, NW Natural added 4,685 new service lines for residential, commercial and industrial customers, though most of the connections are residential.NW Natural has about 708,000 customer accounts in Oregon, consisting of approximately 644,000 residential, 62,000 commercial, and 840 industrial customers. Almost 90% of the utility’s customers are in Oregon.NW Natural spokesperson David Roy said the company is “committed to providing essential, reliable energy to our customers at an affordable price.” Roy said the utility is disappointed with the commission’s decision on phasing out charges for new hookups.“Line extension allowances are not subsidies – they help lower the up-front costs and are paid back by the new customer over the course of their service,” Roy said.He also pointed to the company’s expansion of its residential bill discount program to help reduce low-income customers’ rate increases. NW Natural is increasing its discounts from 40% to 80% off bills for customers with income less than 15% of the state median and from 25% to 40% off bills for customers with income less than 30% of the state median.
NW Natural’s residential customers will see a rate increase of 4.5% on November bills, a much smaller increase than the company wanted.
NW Natural’s residential customers will see a rate increase of 4.5% on November bills, a much smaller increase than the company wanted.
Customers will also no longer bear the cost of paying for the expansion of the natural gas system in Oregon and for the gas company’s political lobbying.
The smaller-than-anticipated rate increase is the result of two separate decisions reached by state regulators over the past week.
Last December, NW Natural, the state’s largest natural gas company, filed a general rate case seeking to increase its revenues by $154.9 million, or a rate increase of nearly 17%. General rate cases allow utilities to recover the costs of operating expenses, investments and capital costs.
NW Natural was seeking to recover costs related to replacing its aging metering infrastructure, updates to its information technology systems, seismic upgrades to regional operations buildings and improvements to its distribution system and storage facility.
But in a decision last Friday, the Oregon Public Utility Commission approved a multi-party settlement reached this summer that set NW Natural’s annual revenue increase at just $95 million, lowering the rate increase to about 10% across all customers.
That rate was further lowered Tuesday when the commission approved a decrease in the annual cost of buying natural gas. (why is this a decrease?)
The combined impact of the two decisions means a residential customer’s average bill is expected to be about 4.5 % higher than the previous years’ bill, the commission said.
The increase goes into effect this Friday.
As part of its decision last week, the commission also ordered NW Natural to remove costs for the company’s lobbying activities from rates and to stop charging customers for gas pipeline expansion by 2027.
NW Natural will have to phase out charges called line extension allowances, in which all existing customers subsidize the cost of connecting new buildings to the gas pipeline system. Without the subsidies, an individual developer or homeowner would have to cover the costs.
State regulators had previously ordered NW Natural in 2022 to reduce – but not completely phase out – those subsidies.
A natural gas fact-finding investigation released by the Public Utility Commission in January 2023 found that growing the gas system in Oregon and adding new hookups will increase emissions and drive up utilities’ costs to comply with the state’s climate mandate to reduce fossil fuel emissions – which is likely to lead to rate increases for all customers.
Oregon is now one of just a handful of states that have decided to remove the subsidies from customer rates. California, Washington, Colorado, and Connecticut have also taken a similar approach.
Getting rid of the subsidies won’t greatly reduce individual residential customers’ rates because new gas connections are paid for over a long period and the cost is spread over hundreds of thousands of customers. (I’m confused – I thought the subsidies would go away and the hundreds and thousands of people won’t have to pay anymore? Or are you saying that it would cause a big reduction because the subsidies are paid over long periods by the utility’s hundreds of thousands of customers.)
But activists hailed it a win for the planet and said it will result in more affordable energy bills for Oregonians.
“Over time, those costs would have become substantial. We’re nipping the problem at the bud to prevent costs from escalating in the future. Everything adds up,” Earthjustice attorney Jaimini Parekh told The Oregonian/OregonLive. The Seattle-based nonprofit focuses on environmental advocacy.
Parekh said phasing out the subsidies may slow the expansion of the natural gas system that contributes to climate warming and lead to the electrification of more buildings.
NW Natural — which controls 80% of the state’s natural gas market – is responsible for 9% of Oregon’s carbon dioxide emissions. Natural gas also emits methane, which is responsible for up to 30% of global warming.
The utility has continued to expand. In 2023, NW Natural added 4,685 new service lines for residential, commercial and industrial customers, though most of the connections are residential.
NW Natural has about 708,000 customer accounts in Oregon, consisting of approximately 644,000 residential, 62,000 commercial, and 840 industrial customers. Almost 90% of the utility’s customers are in Oregon.
NW Natural spokesperson David Roy said the company is “committed to providing essential, reliable energy to our customers at an affordable price.” Roy said the utility is disappointed with the commission’s decision on phasing out charges for new hookups.
“Line extension allowances are not subsidies – they help lower the up-front costs and are paid back by the new customer over the course of their service,” Roy said.
He also pointed to the company’s expansion of its residential bill discount program to help reduce low-income customers’ rate increases. NW Natural is increasing its discounts from 40% to 80% off bills for customers with income less than 15% of the state median and from 25% to 40% off bills for customers with income less than 30% of the state median.