NW Natural Bills to Increase 25%
Posted on October 26, 2022 by Charlotte Shuff
Tags, Energy, General Interest
As Oregon moves to reduce climate pollution and methane gas prices continue to skyrocket globally, natural gas customers in Oregon face increasing financial risk. Over the past year, CUB has pushed back hard against NW Natural’s requests to raise customer bills. This fall, regulators approved much of NW Natural’s rate increase.
Natural gas bills will go up 25% for NW Natural customers over the next year. This increase is a result of two rate hikes requested by NW Natural and approved by the Public Utility Commission this week. Oregon’s utility regulators rejected the utility’s most contentious requests, which CUB and climate advocates opposed.
While households will still feel the impacts of this bill increase we reduced next year’s rates by more than $10 million and will save customers more than $30 million in coming years. CUB and climate activists also won big on reducing customer-funded subsidies for expanding the gas system.
Bills Will Not Go Up All at Once
CUB is concerned about this bill hike for customers already struggling with the rising costs of other household essentials. A 25% increase at the start of the winter heating season could be disastrous for many families.
To prevent shutoffs, NW Natural and CUB struck an agreement. Instead of raising rates the full 25% this fall, NW Natural will provide bill credits through the winter heating season. Then, in the spring, the utility will add the additional increases. While this does not lower the overall rate increase, our hope is that the increase will be more manageable. This agreement will hopefully help many households keep their gas service and avoid disconnection.
Beginning November 1, Oregon customers will see their NW Natural bills raise by 14%. The utility will roll out the additional increases after the winter heating season.
No Longer “Business as Usual” for Natural Gas in Oregon
Although regulators approved two significant rate increases, the Public Utility Commission took some critical steps in this case.
Eliminating Customer Deposits
CUB continued to push for eliminating customer deposits. NW Natural has joined PGE and Cascade Natural Gas in eliminating deposits for all new customers and existing low-income customers.
Reducing Customer-Funded Subsidies for Expanding the Gas System
State regulators ordered that NW Natural must reduce the number of customer dollars it spends on expanding its gas system. NW Natural will reduce its subsidies by $27 million over the next 3 years.
This saves customers not just the amount spent on expansions, but also millions of dollars extra from profit margins that the company is allowed to add to the subsidies. CUB and the environmental coalition fought hard against Oregon households paying to expand the gas system.
Existing customers pay for expanding NW Natural’s business through a subsidy called a “line extension allowance.” These funds offset the costs of paid building developers, encouraging new homes to be built with gas. The company was set to spend approximately $28 million annually to add about 10,000 customers each year. These subsidies will be reduced by $27 million over the next 3 years.
CUB will continue to push for removing this customer-funded growth of the gas system to reduce risk for residential customers.
What is Included in This Rate Increase?
On Monday, October 24, the Oregon Public Utility Commission released the first of the two bill hikes for NW Natural customers. Earlier this year, NW Natural asked regulators to raise customer rates by nearly $82 million.
The Commission approved $62.7 million, or an 8.46% increase. Commissioners partially rejected the original request, siding with CUB and climate activists on a number of issues.
The majority of the bill increase comes from updates to NW Natural’s system. These investments will help improve the safety and reliability of natural gas service in Oregon. Costs include:
- Reinforcing a gas main in Salem ($21.3 million)
- Three new repair dispatch centers ($36.5 million)
- Replacing outdated accounting systems ($63.7 million)
CUB thoroughly investigated these requests and found that they were reasonable. We recognize that maintaining utility systems is necessary for safely delivering natural gas (methane gas) to Oregon homes.
On Tuesday, October 25, regulators also approved a bill adjustment for NW Natural related to the increasing cost of methane gas on the market. Combined, these two rate hikes total a 25 percent increase for NW Natural customers over the next year.
CUB & Climate Advocates Won for Oregon Households
Profit Margins Decreased
Thanks to CUB and others, NW Natural will now see their profit margins request decrease by more than $2.5 million.
Advertising Costs Decreased
After major pushback from advocates, NW Natural will have to lower the advertising costs they bill to customers by $1 million per year. Under Oregon law, utilities are allowed to charge customers for the promotion of safety information, programs for customers, and notices about service.
A major thanks to Climate Solutions, Earth Justice, and the other climate and community led groups for their investigation into this advertising issue. These groups uncovered even more questionable advertising from NW Natural. This included an activity book distributed in Oregon schools promoting natural gas to children.
Customers Will Not Pay for Executive Bonuses
After much pushback from advocates, customers will not be charged for bonuses for top NW Natural executives. NW Natural was asking customers to pay for about $11 million in bonuses for employees and top executives.
Reducing Costs for Payments to Powerful Trade Organizations
These membership payments go to organizations such as the American Gas Association and the Home Builders’ Association. These powerful industry groups routinely oppose policies working to address climate change.
State regulatory staff and the environmental coalition won a reduction in how much customers are paying for NW Natural dues to trade organizations.
Increased Low-Income Energy Assistance
NW Natural will expand its low-income energy assistance program. The utility will now offer $4,000 to qualified customers in bill discounts. $1,500 of that will go towards a health and safety repair allowance.
Community Energy Project led the advocacy on this issue. CUB applauds their continued championing of expanding resources for low-income Oregonians.
Natural Gas Prices Rise Across Oregon
Customers of Oregon’s other natural gas utilities will also face rising bills this fall from the rising. Cascade Gas customers will see a 25.23% increase. Avista Utilities customers will see an 18.38% increase. These rate hikes are also the result of the rising cost of methane gas. Customers will see bills go up starting November 1.
CUB will continue to push back against unnecessary bill increases. To stay informed on the latest on Oregon utility issues, sign up for the CUB newsletter.
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10/28/22 | 1 Comment | NW Natural Bills to Increase 25%