NW Natural Requests 12 Percent Rate Hike
Posted on January 3, 2020 by Will Gehrke
Tags, Energy
NW Natural has filed a rate case to start the new year. Analyzing and scrutinizing each component of the company’s $71 million increase in revenues collected from customers will be one of CUB’s primary concerns throughout the coming months. If approved as filed, the average residential customer of NW Natural will experience a whopping 12 percent increase over current customer rates. This may be the largest proposed rate hike we have seen since the Western Power Crisis of 2000-01.
As stated in its application, NW Natural has faced increased capital costs since the last general rate case in 2017. The company has invested in gas distribution system projects, such as its major pipeline reinforcement investments in Hood River and Sandy, Oregon. Also, NW Natural is moving its corporate headquarters from NW Portland to downtown Portland. CUB is still evaluating the company’s headquarters relocation, however at first blush, we are skeptical of the plan to change headquarters during a building boom in downtown Portland, which could affect whether customers should pay. CUB will also examine other NW Natural expenditures and will evaluate if these expenditures were imprudently incurred or are not presently used to provide necessary utility services.
CUB’s immediate concern is the company’s proposed profit margin to shareholders. In this filing, NW Natural has proposed to increase its profit margin from 9.4 percent to 10 percent, which would allow the company to earn a profit higher than the average gas utility. CUB will look closely at the company’s analysis and will advocate for a profit margin that aligns with that of other gas utilities.
CUB is concerned that NW Natural is proposing that the Public Utility Commission (PUC) abandon policies that limit the amounts of Executive bonuses that can be charged to customers. This policy applies to all utilities, and reflects the fact that bonuses to Corporate Executives are generally related to corporate earnings for shareholders and therefore they should be paid by shareholders. In addition, NW Natural is asking the PUC to change its policy limiting the amount of advertising that utilities can charge to customers. Because Oregon provides utilities with monopoly service territories, Oregon has limited the amount of advertising that a utility can do and charge to customers.
This is a major case for CUB and the PUC, and a significant proposed rate increase to residential customers. In the coming months, CUB will be evaluating NW Natural’s case in order to ensure fair and reasonable rates for residential customers.
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01/03/20 | 1 Comment | NW Natural Requests 12 Percent Rate Hike