Updated Natural Gas Rates for Winter 2021/22

Natural gas bills for all the Oregon natural gas utilities are increasing this November. The average NW Natural residential customer will experience a 13.2 percent bill increase for gas costs as of November 1, 2021. The average residential customer of Cascade or Avista will experience a 10.2 percent and 8.4 percent bill increase, respectively.

At the end of October, the Oregon Public Utility Commission completed its comprehensive review of natural gas rates for Oregon utilities. Natural gas utility rates are comprised of two elements: the cost of the natural gas commodity and the cost to operate the utility. The cost of purchasing gas is the “cost of doing business” for the gas utility and does not include a profit for the company. Every November, Oregon natural gas utilities update the cost of their gas purchases in a “purchased gas adjustment.” This is what is causing rates to go up this November. There are three parts to the gas adjustment:

• True-up of last year’s usage. First, the utility compares the cost of gas that was forecast last year to the actual cost of gas. If the cost of natural gas is less than forecast, the savings are credited to customers in the following year. If there are increases in the cost of gas during a year, or the gas utility is required to purchase more gas than expected, the additional cost is recovered from customers in the following year.
• Forecast of gas costs for the upcoming year. If gas costs in the upcoming year are forecast to decrease, the natural gas utilities decrease their expected natural gas costs for customers. On the other hand, if gas costs are expected to increase, the natural gas company will increase the cost of the natural gas commodity in rates.
• The cost of renewable natural gas. NW Natural is funding its first two renewable natural gas projects for its customers. The first project is located in Arizona and will create renewable natural gas from dairy manure. The second project is located in New York and will convert wastewater to renewable natural gas. The cost of this renewable gas is more expensive than conventional fossil gas. Combined, these two renewable natural gas projects will provide 0.8 percent of customers’ gas needs from renewable natural gas.

Last year’s gas costs were more expensive than expected, and that has contributed to a high natural gas cost increase this year. In February 2021, the Pacific Northwest experienced extremely cold temperatures, which increased natural gas prices. Additionally, natural gas supply issues in Texas earlier this year affected the price for natural gas in Oregon. Even though Texas is several thousand miles away, the natural gas pipeline network is interconnected. Both states receive a portion of their natural gas from the Rocky Mountain supply region. This means that high natural gas prices in Texas can pull up market costs for natural gas in the Pacific Northwest because producers sell to the highest bidder.

Below is the average rate change, effective November 1, 2021, in natural gas rates for residential natural gas customers:

NW Natural: 13.2 Percent Increase

Cascade: 10.2 Percent Increase

Avista: 8.4 Percent Increase

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