Portland, OR-based NW Natural has accelerated a utility rate decrease for its distribution utility customers in Oregon and Washington, asking regulators in both states to approve rate decreases totaling $39 million. Separately last Friday, CEO Gregg Kantor also reported during a 1Q2012 earnings conference call that the company's joint venture drilling program with a unit of Encana Corp. and a merchant gas storage project in California passed important milestones during the quarter.
The utility would normally pass along retail rate savings to customers in November each year, but given the current rapid drop in wholesale gas prices, Kantor said "the prices we secured last November through March this year were substantially lower than what is set in rates." In addition, he said that "given the continuing slow economy, it made sense to get those savings [$35 million in Oregon and $4 million in Washington] to customers early."
Customers will receive the savings in the form of a credit on their June gas utility bills, Kantor said. For Oregon customers there is also a $9 million credit related to NW Natural's Mist storage facility in the northwest corner of the state where, like the rest of the nation, gas levels are at all-time highs.
"Despite producers pulling back on production [in the face of record storage volumes], gas prices have fallen by about $2," Kantor said.
In the utility ratepayer-supported joint venture drilling program with Encana in Canada, Kantor said the reserve purchase program is on track to drill 24 new wells this year (see Daily GPI, April 21, 2011). The Oregon utility's investment in the program reached about $70 million during the first quarter, said Kantor, while announcing essentially flat earnings quarter over quarter at the $40 million level.
"We have completed about 28% of the projected $250 million in total investment planned under the program," Kantor said.
In gas storage, the new Gill Ranch merchant facility in Northern California "performed a little better" in the first quarter this year, according to CFO David Anderson, who responded to a analyst's question on NW Natural's storage operations. However, he said the improved results in California were somewhat offset by lower-than-expected results out of the Mist field.
"In general, our Gill Ranch facility is basically at full capacity, ahead of where we anticipated it would be at this time," Anderson said.
In an ongoing general rate case, Anderson said the next settlement conference will be held later in May, followed by testimony filings in the case Aug. 9 and hearings, if no settlement is reached, Aug. 23-24. Current timelines call for a decision by the Oregon Public Utility Commission by Oct. 22 to make the new rates effective Nov. 1.
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