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Oregon Racing Ahead to Expand CNG Vehicle Use

Aided by a new state law, NW Natural is accelerating its initiative to expand the use and fueling infrastructure for natural gas vehicles (NGV), and CEO Gregg Kantor, speaking on a 2Q2013 earnings conference call Wednesday, said that there is a statewide interest in developing natural gas as a transportation fuel.

While reporting a small quarterly increase in profits compared to the same period in 2012, Kantor outlined NW Natural's pending request to the Oregon Public Utility Commission (PUC) to establish a CNG service for fleet operators (see Daily GPIJuly 5).

A recently adopted state law (SB 844), which was supported strongly by Oregon Gov. John Kitzhaber, could boost the utility's role in pushing fueling for NGVs.

Kantor said that if the PUC approves the CNG tariff for his utility, NW Natural will be able to offer both the "cost and environmental benefits" of natural gas as a transportation fuel, something he stressed is missing today because of the lack of meaningful fueling infrastructure in the state.

Noting that the PUC recently held a workshop on the proposed CNG tariff, Kantor said it came coincidentally at a time when there was "a lot of momentum for CNG vehicles," as evidenced by Ford Motor Co.'s announcement that it will offer a CNG version of the 2014 model of its F-150 pickup truck and seven other models (see Daily GPIAug. 2).

"Vehicle choice without the fueling infrastructure only addresses half of the problem," Kantor said. "Our proposed CNG tariff will provide local businesses with the option of using natural gas in fleets that just isn't available in our market today."

Kantor called the proposed tariff and more use of alternative fueled transportation "a tangible way" to address the state's GHG emissions reduction program and Kitzhaber's 10-year energy plan, which was released last year (seeDaily GPIJan. 11). "In that plan, the governor calls out the beneficial role of natural gas in driving Oregon to a cleaner energy future," he said.

SB 844 further supports the GHG goals, he said, noting that Kitzhaber, the PUC, state Sen. Lee Beyer (a former PUC chairman) and the Oregon Trucking Association all joined together to push for the new law. It allows the PUC to establish a voluntary GHG reduction program by incenting natural gas utilities to reduce emissions.

"We believe this law provides a new way for NW Natural to invest in projects that have quantifiable environmental benefits for customers, and projects that would otherwise not move forward, " Kantor said. SB 844 is effective Jan. 1. In the meantime, the PUC has established a regulatory proceeding to establish criteria for projects and investments mechanisms.

"This bill represents Oregon's creative approach to environmental policy, and I think it provides the potential for a good deal of innovation going forward."

In response to an analyst's question, Kantor listed several areas for NW Natural investment in response to SB 844. He described the opportunities overall as being "pretty broad," including enhanced CNG/liquefied natural gas vehicle fueling infrastructure, changing out consumer's old gas-fired furnaces, and biogas development.

 For 2Q2013, Kantor reported net income of $2.1 million (8 cents/share), compared with $1.2 million (5 cents) for the same period last year.

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