Northwest Natural Gas Co. reported that the Oregon PublicUtility Commission (OPUC), in an order issued Nov. 12, authorized anet revenue increase from NW Natural’s Oregon operations of $0.2million/year. The revenue increase will come from rate increasesaveraging about 1.3% for Oregon residential customers, partiallyoffset by rate decreases for certain commercial and largeindustrial customers.

In its Oregon general rate case, filed in October 1998, thecompany had proposed a revenue increase of $14.7 million/yearthrough rate increases averaging 3.8%. The OPUC staff in March 1999recommended a net revenue reduction of $19.9 million/year.

The commission’s decision authorizes a return on commonshareholders’ equity (ROE) of 10.25%. This compares to thecompany’s proposed ROE of 11.25% and the OPUC staff’s originallyproposed ROE of 8.5%. The Portland, OR, company’s previouslyauthorized ROE of 13.25% was adopted by the OPUC in NW Natural’sprior general rate case in Oregon in 1989.

The commission confirmed that the 10.25% ROE determined in thiscase will be used as the baseline return under a new mechanismadopted in April 1999 for use in prospective purchased gasadjustment (PGA) proceedings. Under the commission’s order adoptingthe mechanism, NW Natural will be authorized to retain all of itsearnings, on a weather-normalized basis, up to a threshold levelequal to the authorized ROE plus 300 basis points, or 13.25%.One-third of any earnings above that level would be refunded tocustomers. The commission had provisionally set the threshold at12.6% until it made a decision in the general rate case.

The commission authorized NW Natural to implement new rateswithin three days after it files tariffs. The company has 60 daysto decide whether to seek rehearing or reconsideration and may seekjudicial review thereafter.

The commission determined its revenue requirement for NW Naturalfrom a system rate base of $777 million, compared to $782 millionin the company’s filing and $773 million in the OPUC Staff’soriginal filing. The commission developed a capital structure from1998 test year data incorporating 47.5% long-term debt, 4.8%preferred and preference stock and 47.7% common equity. Indeveloping its capital structure the commission adopted a staffproposal to adjust NW Natural’s common equity ratio from 50.2% to47.7%, representing removal of the company’s investment balance ofabout $39 million in its unregulated subsidiaries. The commissionrejected a proposal by the Northwest Industrial Gas Users (NWIGU),an intervenor in the case, to include short-term debt in thecompany’s capital structure for ratemaking purposes.

©Copyright 1999 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.