Cascade Wants to Raise Oregon Natural Gas Rates
Posted on June 14, 2018 by Will Gehrke
Tags, Energy
Cascade Natural Gas, which distributes natural gas service to Northeastern Oregon and Central Oregon, recently filed to raise residential customer rates by 3.53 percent. Upon a closer examination of the numbers, Cascade is seeking to increase rates for all customers by 5.8 percent, however this increase is going to be offset by a decrease in taxes for the company. Since the Trump administration lowered the corporate income tax rate from 2017 to 2018, and ratepayers are responsible for paying for utilities’ corporate tax expenses, customer rates will be lowered to reflect this reduction. CUB would like to note that the Cascade rate case is the third rate case filed by an Oregon utility in 2018. This increase in rate case filings may be due to the federal corporate income tax reduction.
Cascade has stated that this rate increase is primarily motivated by the company’s need to implement safety upgrades in its local gas distribution system. Customers in Oregon only pay for the distribution cost associated with providing service to Cascade’s territory inside the state. Therefore, if a region of Oregon experiences extensive population growth, Oregonian customers bear the cost of improving the gas distribution system in that region. For the past seven years, Cascade has been replacing steel pipe that has reached the end of its useful life with new equipment. The majority of Cascade’s distribution service upgrades are being conducted in Bend, Oregon, which is one of the fastest growing cities in the United States. Pendleton, Oregon has also seen rapid growth in recent years.
Cascade is also seeking to change a longstanding practice regarding utility employee compensation. As part of its compensation package, Cascade provides stock options to its employees. Traditionally, the cost of employee compensation in Oregon has been shared between ratepayers and the utility. Cascade disagrees with this view and is asking the commission to allow for full recovery of employee stock compensation in rates. But CUB believes that providing stock options incentivizes Cascade employees to increase the value of company stock, which primarily benefits shareholders rather than customers.
CUB will spend the next several months analyzing this case. We intend to work diligently to ensure that Cascade is accountable to treating its residential customers fairly. Updates will be released as the case progresses, so stay tuned!
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06/14/18 | 0 Comments | Cascade Wants to Raise Oregon Natural Gas Rates