Portland, OR-based Northwest Natural Gas Co. (NNG) Monday is keeping its 2002 earning estimates at the $1.90 to $2.05/share level, attributing a lot of the good news to an approved settlement it reached earlier with the Oregon Public Utilities Commission (PUC). These estimates take into consideration a one-time, second quarter charge of 32 cents/share for NNG’s failed bid to buy neighboring utility Portland General Electric (PGE) from bankruptcy-mired Enron Corp.

The settlement, which took effect Tuesday, stabilizes the volatility of wholesale rates and runs through next year, said a spokesperson for NNG. The company is also obligated to file a new general rate case request in Oregon by Nov. 1 as part of the settlement with state regulators.

“The settlement includes an elasticity adjustment that will help stabilize margin revenues and recover fixed costs in the face of variable consumption patterns (when prices spike, customers cut back),” said Mark Dodson, NNG’s president. He noted that the purpose of the filing and settlement was “to make the company indifferent to the consumption patterns and energy efficiency activities” of residential and commercial gas customers.

The so-called “de-coupling” of the utility’s earnings and consumer energy saving is supposed to ensure that NNG does not have an incentive to discourage energy-saving measures by its customers. Along with the requirement to file a new general rate case, NNG is required under the settlement to: (a) institute a “public purposes” funding program to provide low-income rate and weatherization assistance; (b) transfer the utility energy efficiency programs to a third-party in the next 12 months; and (c) adopt service quality measures to assure current customer service levels are maintained.

Through the settlement and a Sept. 26 PUC decision on NNG’s purchased gas cost adjustment, overall rates will go down about 14%, the utility said, despite the conservation settlement resulting in increases of 2.6 cents/therm and 1.3 cents/therm for residential and commercial customers, respectively.

Without the conservation adjustment the past 18 months, NNG estimated it lost $11 million, or 26 cents/share, in 2001, and $10 million or 24 cents/share the first six months of this year in reduced margin.

Northwest Natural serves 550,000 natural gas utility customers in Oregon and southwest Washington.

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