NW Natural’s Resource Planning Raises Questions at CUB

In late 2022, NW Natural filed its long-term resource plan with state utility regulators. As Oregon moves forward in reducing climate pollution from our energy systems, this plan will have long-lasting impacts on meeting state goals.

The main question NW Natural needs to address in its plan is how it is going to meet climate regulations that require emission reductions through 2050. CUB does not think the utility has answered this question at all. Instead, NW Natural uses completely unrealistic assumptions to suggest it can continue to grow its system while slashing its carbon emissions.

In its resource plan, NW Natural has:

• NOT come up with a reasonable plan to meet climate regulations
• Continued its plan to expand its business (adding more emissions)
• Dangerously assumed that new technology will be developed for gas that is unlimited, clean, and cheap

This process sets the stage for the next 30 years of the gas utility’s plan for how it will meet customer needs. Oregonians could suffer the cost without proper steps to meet climate regulations and realistic analysis. Oregon households deserve a plan that will affordably meet climate standards to prevent skyrocketing bills down the line.

What is This Long-Term Resource Plan?

All utilities are required to file Integrated Resource Plans to meet the future energy use and peak use needs (capacity needs) of their customers. These plans consider how much energy must be delivered and from where. They also consider ways to reduce demand. All resource plans must minimize both cost and risk for customers.

Utilities file these plans every two years. The plans include projections of future energy needs, analysis of the best available resources to meet those needs, and the activities required to secure those resources. Creating these plans requires vast amounts of economic modeling and analysis.

NW Natural Fails to Adequately Plan for the Future

NW Natural Must Meet Climate Regulations
In 2021, Oregon adopted the Climate Protection Program. This program is designed to reduce Oregon’s greenhouse gas emissions by 50% by 2035 and 90% by 2050. Oregon’s program is one of the strongest in the country.

The program applies to suppliers of fossil fuels, including NW Natural and other natural gas utilities. Emissions will be tracked each year.

These new climate regulations pose a new challenge for NW Natural. As the gas utility looks at how it can cut emissions, it must include new tactics in its resource planning. Unfortunately, the resource plan the utility filed this winter does not address this challenge.

NW Natural Avoids Creating a Plan to Meet Climate Requirements
In their resource planning, NW Natural has failed to show a reasonable plan for reducing emissions. It relies on new technology being developed that reduces emissions. This includes new appliances that use less gas and new forms of gas that are cheap, unlimited, and clean. If these “magic bullets” aren’t developed, it is unclear what actions they plan to take.

Without a realistic plan, CUB cannot advocate for the best interest of Oregon households. We don’t know how much it might cost to meet emissions reductions. We do not know if NW Natural can long-term meet the requirements of the Climate Protection Program.

More Customers, More Emissions, More Costs for Oregon Households
Not only does NW Natural’s resource plan not realistically address meeting climate regulations, but it also continues to plan for growth. As the gas utility continues to add more customers, it will also add more emissions. In this model, the company will not only have to reduce its current emissions, but it will also have to reduce those from new customers. This will continue to add cost to customers.

There is a growing consensus that moving away from natural gas (methane) is a key climate strategy. The federal government’s policy is shifting toward supporting electricity in homes, businesses, and transportation. New tax credits and rebates to support heat pumps and induction stoves are now available. This will support a shift away from fossil fuels in heating, cooking, and more.

NW Natural needs to create a plan that acknowledges that its business model cannot continue as usual. It needs to account for the fact that its customers will begin to install more electric appliances. Planning resources around continued growth is dangerous for customers that are left tied to the gas system either by choice or circumstance.

Unrealistic Analysis in Planning Endanger Customers
NW Natural’s resource plan makes many dangerous assumptions about alternative fuels. With this Pauliana-like approach to resource planning, customers could end up suffering the consequences of rising bills.

In the analysis for its plan, NW Natural makes many unrealistic assumptions about how they can use fuels like hydrogen, biogas, and other lower-emission options. For example, the utility makes many predictions about how hydrogen will be able to be mixed into their current pipelines.

Since hydrogen as a fuel is new, there are only predictions from experts on how much we can use and how much it will cost. Only a certain amount of hydrogen can be added to existing methane (natural gas) supplies. California regulators project a maximum of 5% to 20% blend of hydrogen can be added. NW Natural assumes at least 20% blending in their plan. They also assume the lowest prices that experts are predicting for hydrogen as a fuel. On top of this, they assume that hydrogen can be used to manufacture a new form of gas that is clean, unlimited, and cheap.

By combining projections for the largest amount of hydrogen that can be used at the lowest projected cost, NW Natural’s analysis is not just risky, it’s dangerous. This is a massive risk for customers, who will have to pay even higher costs when the utility is wrong.

CUB Will Continue to Protect Customers

Over the next few months, CUB will continue to push NW Natural to make a realistic resource plan. We will be working hard to make sure that the utility is not putting customers at risk through their inaction on climate issues.

Our analysts will keep digging into the details and putting the needs of Oregon households first. We will work with regulators to hold NW Natural to their requirements on climate emissions. And we will advocate for solutions that make sense for Oregonians and the environment.

Stay tuned for upcoming action opportunities on this issue! Sign up for the CUB email list for the latest updates, action alerts, and news on policies that affect the utilities your home relies on.

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