NW Natural Wants to Increase Shareholder Profit (Again)

Posted on April 29, 2025 by Charlotte Shuff
Tags, Energy, General Interest

This year, NW Natural is asking for a 7% increase in billing rates for its household gas customers. The gas utility filed this request with regulators just two months after receiving a rate increase on November 1, 2024. This increase could mean NW Natural bills going up nearly 50% for households since 2021.

In CUB’s investigation into this case, we have found that a third of NW Natural’s requested increase is attempting to raise shareholder profits. Customers should not be asked to significantly increase the cost of their essential utility service for the benefit of wealthy investors.

What NW Natural is Asking For

This year, NW Natural is asking for a fairly limited amount in its requested increase. The request totals $59.4 million ($41 million assigned to residential customers) from investments and profit increases.

Major cost drivers include:

Inflation: Rising costs for equipment, staffing, etc.
Infrastructure: Replacing equipment at the Mist gas storage facility and the North Coast Feeder pipeline.
System Upgrades: Seismic upgrades for resource centers and modernizing IT systems
Profits: Increasing allowable profit margins to 10.4% (currently 9.4%)

CUB is continuing to review all of the costs to ensure customers only pay for the most reasonable. We are particularly concerned with the request to increase profit margins. This 1% increase would cost customers millions of dollars each year.

Customer Impacts

If approved, this would mean a $5.55/month increase for an average household across the year. Winter gas bills would have a larger impact, with new winter bills averaging at about $138 for single-family homes and $136 for multifamily homes. New rates could go into effect at the start of the winter heating season, November 1, 2025.

We also anticipate NW Natural filing for another rate change later this year related to the cost of gas. The final amount is unknown, though we expect an estimate in July.

Profits Under the Guise of Necessary Investments

Of the overall $59.4 million request, CUB has found that $20.6 million of NW Natural’s proposed rate increase goes to raising shareholder profits. One piece of this request is raising profit margins for shareholders. The other piece, continuing to profit on a decommissioned investment, has much more dire consequences for the future of utility regulation in Oregon.

NW Natural’s Ask: Higher Profit Margins

NW Natural is asking for a 1% increase in profit margins starting in November. While this may seem small, a 1% increase adds up to millions of dollars a year that customers pay with no added benefit to the service they receive. All while NW Natural has not shown that it can rein in costs to customers.

Last year, regulators made it clear that if utilities cannot manage their costs, it will come out of their profits. After Portland General Electric raised billing rates by 18% in January 2024, it filed for an additional rate increase weeks later. PGE’s request to increase rates for 2025 also included a request for higher profits. To manage costs for PGE customers, the Oregon Public Utility Commission ordered the utility to lower its profits in a decisive ruling.

CUB is asking regulators to decrease the profit allowed for NW Natural by millions of dollars per year.

NW Natural’s Ask: Continued Profits on Decommissioned Equipment

One of the big investments NW Natural is asking customers to pay for this year is the replacement of a major piece of equipment at the Mist Underground Natural Gas Storage Facility in Columbia County. While CUB supports replacing necessary equipment when it is no longer able to function or provide economic benefits to customers, the issue is how NW Natural is proposing to charge customers for the now-defunct equipment.

NW Natural is trying to continue earning a profit from equipment that is no longer in use. Although the old equipment has been removed from Mist, the gas utility still wants to earn a profit because the original cost has not yet been paid off. This goes against state policy, consumer interests, and the standards of utility regulation in Oregon.

Regulators Are Pushing Back

Regulators have also begun to push back on NW Natural’s request to raise customers’ billing rates. Analysts at the Oregon Public Utility Commission looked into the utility’s proposal and have come back with suggestions for the Commission to cut nearly every area of increase.

“Staff is concerned that [NW Natural] did not demonstrate enough spending discipline or strike the right balance between the interests of shareholders and customers in several of its decisions.” - Michelle Scala, Public Utility Commission Staff

Regulatory staff has suggested cuts including:

Infrastructure at the Mist Storage Facility and North Coast Feeder
System upgrades for IT modernization and customer meter upgrades
Reducing (not increasing) profits allowed to shareholders

This strong showing from the Public Utility Commission is a sign of progress in reining in skyrocketing utility rates. CUB is hopeful that as this case moves forward, we will see strong decisions in favor of customers.

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