One Last Holiday Gift: NW Natural Files New Rate Case

While the holiday season was winding down and people across Oregon were preparing to ring in the New Year, NW Natural filed its first rate case in six years with the Oregon Public Utility Commission (PUC) on December 29, 2017. Analyzing and scrutinizing each component of the company’s request for a $52.4 million increase in revenues collected from customers will be one of CUB’s primary concerns throughout the coming months. If approved as filed, NW Natural’s request would comprise an 8.3 percent increase over current customer rates.

Of the company’s approximately 666,000 residential customers, around 90 percent reside in Oregon, with the majority concentrated in the Portland metropolitan area. NW Natural customers may have noticed a steady, gradual decline in monthly gas bills in recent years. This has largely been due to average costs of natural gas lowering in nationwide markets. No matter the circumstances though, CUB is determined to keep rates at a fair and reasonable level despite NW Natural’s recent request.

In its application, NW Natural cites several drivers for its request for a rate hike, most notably continued capital investments in its gas distribution system—think large investments in replacing pipelines to provide service—and increases in operations and maintenance expenses. Just like we did in Avista’s rate case last year, CUB plans to closely analyze each capital investment that NW Natural is seeking to put into customer rates. If any of the company’s expenditures were imprudently incurred or are not presently used to provide necessary utility service, CUB will argue to remove or lessen the amounts that NW Natural is seeking to recover. CUB will take a fine tooth comb through all expenses that NW Natural is including in its request to increase rates.

Even after a brief and high-level review of NW Natural’s filing, CUB has immediate concerns about the company’s proposed profit margin to return to its shareholders, or “return on equity” (ROE). In its filing, NW Natural has proposed a 10.0 percent ROE. While seemingly small, this is a significant departure from both the 9.5 percent ROE authorized in NW Natural’s last rate case and the 9.4 percent ROE authorized in Avista’s rate case last year. CUB will look closely at the company’s analysis, and will advocate for an ROE that more closely aligns with past PUC precedent and that of other gas utilities. Customers should not have to fund increased returns for a utility’s shareholders without receiving an equivalent benefit.

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