NW Natural views legislation signed in Oregon last month as a way to further decarbonize its natural gas distribution system, which is the state’s largest.

CEO David Anderson recently touted the new law, calling it another tool for the Portland-based company’s low-carbon pathway initiative. Senate Bill (SB) 98, which takes effect in September, is aimed at encouraging wider use of renewable natural gas (RNG) in the state.

During the natural gas utility’s second quarter earnings call, Anderson said the bill would help create a new path for more development of RNG, which he described as a “zero-carbon resource.” He noted that all forms of RNG are included under the new law, which calls for the Oregon Public Utility Commission to conduct a rulemaking for implementing the bill over the next 12 months.

“It enables utilities to acquire RNG for their customers, and goes further by allowing as much as 30% RNG in the state’s pipeline systems,” Anderson said. The law would allow NW Natural to apply up to 5%, or about $33 million, of its annual revenue requirement, which is the total funds needed to cover costs and authorized profits, to cover the incremental cost of the fuel, which is essentially biomethane from landfills, farms and wastewater treatment plants.

If they are the lowest-cost option, RNG interconnection and production facilities can be rate based by gas utilities in the state under SB 98, Anderson said. “We believe there are good reasons to expand RNG and a good supply of it as the Oregon Department of Energy last year estimated the potential for 50 Bcf of RNG production in the state,” he said.

During the second quarter, the gas-only utility continued its diversification into the water sector, placed its expanded gas storage capacity into service and reached an all-party settlement for its general rate case in the state of Washington.

An added 4 Bcf of capacity dedicated to no-notice service to Portland General Electric is now operating at NW Natural’s North Mist field in Oregon, and the $149 million addition brings its overall capacity to 20 Bcf.

Separately, the company’s water subsidiary purchased the Sunriver water utility and wastewater plant serving about 20,000 people in Oregon. NW Natural Water Co. LLC now serves about 45,000 customers in the Pacific Northwest with a total investment of $70 million in the water sector.

The Washington rate settlement, where NW Natural has 10% of the gas utility customers, relates to the first general rate case increase request in 10 years in that state. The utility is seeking an increase of $8.3 million annually in its overall revenues.

NW Natural reported second quarter net income of $1.1 million (7 cents/share), compared with a loss of $998,000 (minus 1 cent) in the year-ago period.