NW Natural is analyzing more low-carbon options, such as renewable natural gas (RNG) and power-to gas in efforts to decarbonize its natural gas-only utility business while expanding into the water utility sector as a hedge against increasing pressure to cut fossil fuel use.

CEO David Anderson during a recent quarterly conference call said the Oregon Public Utility Commission (PUC) accepted the most recent integrated resource plan (IRP) at the end of February. The IRP, which focuses on cutting the carbon footprint of the utility, represents "an important step in our long-term planning process..."

The Portland, OR-based company for the first time has "analyzed low-carbon gas options,” such as RNG, he said. The PUC also has authorized the gas utility to purchase RNG, and it expects to be approved to invest in more biogas production in the future.

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"There is a bill in the Oregon legislature that would allow us additional purchases of RNG," Anderson said. "We'd like to own the production assets eventually if it makes sense. Our bigger strategic play here is to get as much RNG on the system and power-to-gas as we possibly can to decarbonize our operations."

NW Natural has spent about $70 million to date acquiring small private-sector water utilities in three Pacific Northwest states and has set its longer-range sights on assets in a broader west-of-the-Mississippi region. The company also plans to buy up to 4.5 million therms of RNG annually, a "small portion of overall supplies but a great start,” Anderson said.

Anderson said California regulators are to decide by midyear whether to allow the sale of the Gill Ranch gas storage project near Fresno after the company proposed selling its 75% stake to eCorp Storage. He also updated other projects.

At North Mist, an underground gas storage facility northwest of Portland, base gas injections have been completed and construction is nearly finished on a 2.5 Bcf reservoir. Also nearing completion are a compressor station with capacity of nearly 120 MMcf/d and a 13-mile pipeline connecting the Portland General Electric (PGE) generation plants at Port Westward and Beaver, near Clatskanie, OR. The project would provide PGE with no-notice storage for use by the generation plant.

"We estimate that the expansion will be placed in service this spring at an estimated cost of $149 million," Anderson said.

Net income was $32.5 million ($1.12/share) in 4Q2018, compared with $28.5 million (99 cents) in 4Q2017. For 2018, net income was $57.4 million ($1.99/share), versus $60.5 million ($2.10) in 2017.