Settlement Reached in NW Natural’s General Rate Case

It has been a busy year for the regulatory team here at CUB. Amid a flurry of other activity at the Oregon Public Utility Commission (PUC), including various investigations, rulemakings, and annual proceedings, four of Oregon’s six large investor-owned utilities have filed general rate cases. While there are other mechanisms at a utility’s disposal to update their rates in between rate cases, general rate cases are the primary venue for utilities to seek an increase in the rates they charge customers. For CUB, these proceedings offer the opportunity to examine all cost drivers across a utility’s system—including relevant offsetting benefits—to determine whether the utility’s proposed rate hike is reasonable. In most cases, CUB and other stakeholders are successful in knocking down a fair number of utility requests to ensure customers are only paying for costs that are necessary for the provision of utility service. General rate cases truly are the core of the customer protection mandate we at CUB adhere to, day in and day out.

NW Natural filed the first of the four general rate cases brought by Oregon utilities for 2020, on December 30, 2019. In its initial filing, NW Natural requested a $71.4 million increase to customer rates in Oregon, representing a roughly 11.5 percent increase. In opening testimony, CUB expressed significant concerns with an increase of this magnitude, especially while NW Natural’s customers are experiencing one of the worst economic downturns in recent history.

CUB raised several other issues in response to NW Natural’s filing, including concerns about its advertising budget, concerns that the company’s “Less We Can” campaign was more centered on enhancing corporate image than actually educating customers, NW Natural’s proposal to increase compensation to its executives, and concerns related to several of the company’s larger capital expenditures. A main driver of NW Natural’s rate increase is its recently completed corporate headquarters relocation, from One Pacific Square in Old Town to 250 SW Taylor in downtown Portland. After a thorough review, CUB and other parties determined NW Natural acted in customers’ best interests in completing the move and minimized cost impacts.

After the initial filing and subsequent testimony submitted by all parties to the proceeding, settlement conferences were held on April 29, May 6, and June 8-9, 2020. As a result of these negotiations, parties were able to arrive at an all-party settlement that significantly reduced the size of the company’s rate request to a level that CUB believes is reasonable. After initially requesting a $71.4 million increase, NW Natural and parties agreed to a $45.8 million increase, which represents a 7.37 percent overall increase. The parties memorialized this settlement in a filing with the PUC on July 31, 2020.

CUB would like to commend NW Natural for working in good faith with parties to reduce its rate increase in light of the economic turmoil brought on by the COVID-19 pandemic. When NW Natural filed its rate case, the infectious disease had not yet stepped foot on U.S. soil. In the time since the initial filing, the health and economic impacts of the pandemic sharply escalated. NW Natural quickly agreed not to attempt to increase the profit margin its shareholders receive and worked with parties throughout the proceeding through the lens of our new economic reality. This is in stark contrast to the Pacific Power rate case, where the dispute around shareholder profits is ongoing. While we realize that any rate increase is difficult for customers to bear during this time, CUB believes the outcome of this case is reasonable and protects Oregon customers from an unnecessary rate hike.

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