Portland, OR-based Northwest Natural Gas Co. announced Monday it reached a proposed settlement calling for a $3.5 million rate increase for Washington customers. The Washington Utilities and Transportation Commission must approve the deal, which involved the utility commission staff and key Washington intervenors for the company, the bulk of whose customers are in Oregon.

If approved, new rates will go into effect on July 1, reflecting a 6.8% residential increase, 6.7% commercial hike, and an overall increase of 6.5% for the 54,000 Northwest customers in the state of Washington.

Northwest Natural originally asked for $7.9 million as the state of Washington portion of its pending general rate case, for which the settlement was filed Friday in a stipulation among WUTC staff, the public counsel, Northwest Industrial Gas Users, the Citizens Utility Alliance and Oregon-based gas utility.

“The agreements filed today are a positive outcome for the company and its customers,” said Mark Dodson, Northwest’s CEO. “They ensure that we will have adequate resources to reliably, safely and economically serve our customers in our fast-growing Washington territory.”

Northwest Natural said the filing reflects an agreement on an overall annual revenue increase and “does not address specific issues such as return on equity or capital structure.” The proposed settlement is less than half of the original request of $7.9 million filed by the utility in November 2003.

The settlement allows the company to track into rates later this year the Washington allocation for the South Mist Pipeline Extension. The company’s original filing also included cost recovery for a new service center in Washington, but this project has been delayed and is not included in the settlement. The settlement also does not include Northwest Natural’s gas supply costs, which are included in an annual purchased gas adjustment filled in August.

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