Customers Win Big in NW Natural Rate Case
Posted on October 30, 2024 by Charlotte Shuff
Tags, Energy, General Interest
Starting November 1, 2024, NW Natural customers will see a modest increase in bills. An average household will see an added $3.74 per month, or a 4.7% increase. In a year marked by record-high utility bills, NW Natural customers avoided a much larger increase. Regulators sided with advocates and the community on a wide range of issues. NW Natural originally requested an increase of 18% for Oregon households.
Big Win: Regulators rejected the gas utility’s proposal to expand a controversial subsidy paid for by customers to expand the gas system. This decision to phase out the practice of Oregonians paying for adding new buildings to the gas system is the result of a nearly five-year fight by CUB and environmental advocates.
Customers Win Big in Fight Over New Bills
NW Natural originally asked to raise household gas bills by 18% earlier this year. The gas utility’s request included:
- Higher profit margins
- Expanding subsidies for growing the gas system
- Higher bills for customers in new gas buildings
- Infrastructure upgrades
No Higher Profit Margins
NW Natural agreed to keep the profits it is allowed to make the same as in 2024. The utility is allowed to make a 9.4% profit off of the capital investments it makes on its gas system. This is typical for utilities in Oregon.
No Higher Bills for New Gas Buildings
Regulators rejected NW Natural’s proposal to charge customers in buildings with new gas hookups almost 200% more than existing gas customers. CUB advocated for rejecting this new price structure as it could have posed a real threat to the affordability of living in new construction.
Phasing Out Subsidies
Existing customers will no longer pay to expand NW Natural’s business through a subsidy called a “line extension allowance.” This subsidy is often paid to building developers, encouraging new homes to be built with gas. Regulators sided with CUB after a nearly five-year fight to protect households from this unnecessary cost.
Removing Overspending from Bills
While CUB was investigating NW Natural’s expansion subsidy, we found that the utility massively overspent on expanding its system. The most expensive connection NW Natural covered was $86,553 for a single home in 2021 when the cap was $2,875. In addition to phasing out the subsidy NW Natural used to hook up new buildings, regulators also ruled that the gas utility must remove $13.7 million from customer rates from overspending.
Why Bills are Going Up This Winter
NW Natural proposed a number of infrastructure investments go into customers’ bills this year. CUB understands that utilities need to make upgrades to keep the system running and we thoroughly investigated each issue. Ultimately, we came to an agreement with NW Natural that many of these costs were reasonable.
NW Natural customers will now pay more to cover the costs of:
- Software upgrades
- Office building upgrades
- Pipe replacement in the North Coast Feeder
CUB has agreed that these could be added to bills as a reasonable cost for providing safe and reliable service to customers.
Bill Discount Program Expanded
In addition to achieving lower rate increases for all customers, customers will see an expansion of NW Natural’s bill discount program. This program lowers energy bills each month for those who qualify based on household size and income.
Tier 0: Household income at or below 15% SMI receive an 85% bill discount
Example of Who Qualifies: A family of four earning below $17,698 per year will receive an 85% bill discount
Tier 1: Household income 16-30% SMI receive a 50% bill discount
Example of Who Qualifies: A family of four earning between $17,698 to $35,395 per year will receive a 50% bill discount
Tier 2: Household income 31-45% SMI receive a 30% bill discount
Example of Who Qualifies: A family of four earning between $35,395 to $53,0931 per year will receive a 30% bill discount.
Tier 3: Household income 46-60% SMI receive a 15% bill discount
Example of Who Qualifies: A family of four earning between $53,093 to $70,790 per year will receive a 15% bill discount
NW Natural agreed to create a new debt forgiveness program that will help low-income customers who struggle with recurring bill debt that leads to spiraling energy costs. NW Natural will be working with community-based organizations in a collaborative process to develop the program, which will roll out in 2025.
Correction: This blog initially displayed NW Natural’s previous bill discount program tiers. Tiers 1 and 2 have been updated to reflect changes to the NW Natural bill discount program. Tiers 0 and 3 were posted correctly.
Regulators Stopped Short of Capping Future Rate Increases
While we’re very pleased to see that the rate increase will be relatively low this year, that’s no guarantee for the future. Oregonians saw their NW Natural rates go up by 25% in 2024. NW Natural asked for an 18% increase this year. Customers need the peace of mind that their energy bills are not going to keep skyrocketing which would come with capping rate increases.
Over the last four years, we have seen a troubling trend of utilities raising rates more often and in higher amounts. With utilities asking for multiple increases each year, it can be challenging to know how much of an increase customers are facing.
To combat this, CUB is proposing a new way of regulating how utilities can increase bills. CUB is proposing that the Oregon Public Utility Commission put a cap on rate increases. We are asking the Commission to limit rate increases to 7% plus inflation or 10%, whichever is lowest. This cap would apply to the cumulative increase customers see over the course of a year. Any requests over that cap will be pushed to next year or beyond.
In normal circumstances, it should be rare for utilities to increase rates by more than 10%. Unfortunately, we have seen a growing pattern of Oregon’s for-profit utilities asking for 15-20% increases nearly every year for the last four years. This is a call to Oregon regulators for all for-profit utilities, not just NW Natural.
Regulators still have a chance to put a cap in effect this year and CUB will keep pushing for affordability and transparency in utility bills.
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12/09/24 | 3 Comments | Customers Win Big in NW Natural Rate Case