Northwest Natural Gas Co. is among pipeline operators nationwide who are facing rising costs this year for new pipeline integrity testing. Northwest said Monday that it reached an agreement with the staff of the Public Utility Commission of Oregon (OPUC) over $5 million in additional charges in 2004 and the $5-15 million per year in charges over the next nine years for new pipeline integrity testing and related pipeline safety activities.

More aggressive pipeline integrity programs were initiated this year following passage of a new pipeline integrity law in 2002 and the U.S. Department of Transportation’s more stringent safety and inspection rules. The increased federal regulation came after two major pipeline explosions in Bellingham, WA, and Carlsbad, NM, prompted more scrutiny over the condition of natural gas and liquids pipelines.

Under Northwest’s agreement with the OPUC staff, the additional pipeline safety costs will be reflected in customer rates beginning later this year. “The agreement reached by the parties ensures that we will comply with the new federal pipeline integrity rules and allocate costs fairly among our customers,” said Gregg Kantor, senior vice president of public and regulatory affairs for the utility company.

The agreement has been filed with and must be approved by the OPUC. Any rate changes would go into effect on Oct. 1 and then in future years they would go into effect at the time of the company’s purchased gas cost adjustment filings. The agreement extends through Sept. 30, 2008, and may be reviewed for extension after that.

Portland-based Northwest Natural serves more than 580,000 residential and business customers in Oregon and southwestern Washington.

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