The Oregon Public Utility Commission (PUC) Tuesday approved the pending $475 million sale of Cascade Natural Gas to North Dakota-based MDU Resources Group Inc., following stipulations and a settlement filed with the PUC last month by MDU. Seattle-based Cascade serves retail natural gas customers in Oregon and Washington state, with its 54,633 Oregon customers concentrated in the central region including the towns of Pendleton, Hermiston and Ontario.
Parties to the agreements included the companies, the Oregon Citizens Utility Board and the Northwest Industrial Gas Users, along with the PUC staff. MDU originally filed its application with the PUC to buy Cascade last Nov. 8.
"The [PUC] concluded the sale provides a net benefit to customers and will not harm Oregon citizens as a whole," PUC Chairman Lee Beyer said in announcing the three-member panel's decision. "We are confident this is a balanced package for all involved."
Cascade customers in Oregon will receive rate credits of $200,000 annually beginning next year, with the credits coming from shareholder funds. In addition, the PUC decided to lower Cascade's annual rates in the state by $700,000 as a result of a commission-initiated rate proceeding before the MDU merger was announced last July.
"PUC staff contended Cascade was earning more than its allowed rate of return, and that its rate should be lowered. The commissioners eventually agreed, setting a new authorized return on equity [ROE] of 10.1%, compared with its prior authorized ROE of 11.2%," a PUC spokesperson said.
"As part of the sale stipulation negotiated by various customer groups, PUC staff and the company, MDU Resources agreed to hold its Oregon customers harmless from any financial exposures of MDU Resources' other affiliates."
MDU Resources and Cascade filed stipulations with the PUC, outlining that they reached a settlement in principle of all issues with various parties to the merger proceeding pending before the Washington Utilities and Transportation Commission.
"The stipulations filed in Oregon relate to the application for approval of the pending merger with Cascade (announced July 9, 2006), as well as a pending show cause proceeding related to Cascade's level of rates in Oregon, which commenced in August 2006," MDU said in a news release issued last month.
The settlement stipulation in Washington is pending.
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