Northwest Natural Gas Company, announced recently it has reached a proposed settlement with the Oregon Public Utility Commission (OPUC) staff and key intervenors on all remaining issues in its Oregon general rate case.

“The agreements filed this week provide a good outcome for the company and its customers,” said Mark Dodson, president and CEO. “The agreements make up a global settlement, one that includes a new weather normalization mechanism which will help stabilize the company’s revenues and our customers’ bills. The settlement also reflects the company’s increased business costs and planned system investments.”

NW Natural filed its Oregon general rate case in November 2002. In April, the company signed agreements with the OPUC staff and some of the intervenors in the case that covered all of the operation and maintenance expenses and rate base investments for the ratemaking test year in the case (Oct. 1, 2003, through Sept. 30, 2004).

The additional agreements filed this week include the proposed acceptance of NW Natural’s “weather-adjusted rate mechanism” (WARM), a weather normalization mechanism. The mechanism is intended to mitigate the impact of price volatility on both customers and the company.

The settlement provides for an authorized return on equity (ROE) of 10.2%. The parties agreed on 7.066% for the embedded cost of long-term debt and a capital structure with 49.5% common equity. In its last Oregon general rate case, completed in November 1999, the Commission authorized an ROE for NW Natural of 10.25%, a cost of debt of 7.75% and a capital structure including 47.7% common equity.

In addition to resolving all remaining issues in the case, the proposed settlement provides for new rates to go into effect on Sept. 1, a month earlier than originally anticipated.

The company agreed to compromises that reduced the annual revenue increase from $38.1 million per year in the company’s original request to approximately $13.9 million per year in the settlement. If the settlement is approved, approximately $6.2 million of the $13.9 million total increase will go into effect on Sept. 1; the remainder will go into effect as all or portions of NW Natural’s South Mist Pipeline Extension project and its Coos County Distribution System project are completed and go into service during the next 15 months.

“The global settlement reflects the constructive, professional approach taken by all the parties in the case,” said Dodson. “As a result, we were able to work through a number of tough issues with innovative proposals and to produce solutions acceptable to all interests.”

To become effective, the settlement comprising the agreements filed this week along with the agreements filed in April must be reviewed and approved by the Commission. Action is anticipated prior to Sept. 1.

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