Customers of Oregon’s largest natural gas utility could see a smaller-than-expected rate increase later this year, as climate and environmental groups have reached a partial settlement with the company that could reduce the rate increase by 10 percentage points when it goes into effect on Nov. 1.
NW Natural, which serves more than 2.5 million people, has agreed to reduce its revenue increase from more than $150 million to $95 million, according to the nonprofit Earthjustice. The revenue increases cover the utility’s expected expenses and contribute to the company’s bottom line. The smaller revenue increase could reduce the utility’s proposed rate increase from 17% to 7%, which would be a major win, according to Carra Sahler, director and attorney at the Green Energy Institute.
Flames erupt from the burners of a natural gas stove, Wednesday, June 21, 2023, in Walpole, Massachusetts. (AP Photo/Steven Senne)
Steven Senne/AP
“This agreement keeps their return on equity at the existing 9.4%, so it will not increase it,” Sahler said. “… There will still be a rate increase that people will feel, and that is really only due to the growth of the utility in normal operations.”
However, the Oregon Citizens Utility Board, a nonprofit consumer advocacy group, noted that the exact amount of NW Natural’s rates for next year could still change as negotiations continue – and depending on what the state utility commission allows.
The Green Energy Institute, which worked with climate and environmental groups, the Oregon Public Utility Commission and NW Natural to reach a settlement, said the gas utility is also increasing its bill rebate and increasing eligible incomes. NW Natural will also agree to a debt-forgiveness program designed to prevent the utility from shutting off power to its customers.
“This settlement prevents unjustified price increases and will help ease the growing burden of energy bills on struggling families and low-income communities of color,” Nikita Daryanani, climate and energy policy manager for the Coalition of Communities of Color, said in a statement. “Our organizations will continue to advocate for sustainable, equitable energy solutions that prioritize the well-being of impacted communities and the environment while keeping energy prices affordable.”
NW Natural spokesman David Roy said the utility had no comment on the partial settlement but “has always worked to deliver energy to our customers and communities in a safe, reliable and affordable manner.”
Energy prices are rising across the country. Many of Oregon’s investor-owned utilities have raised their prices steadily since 2020. NW Natural’s prices have increased more than 50% since 2020. The increases are partly due to the prices of fossil fuels like natural gas, but also due to the transition to renewable energy and corporate profits.
These annual increases hit the state’s most vulnerable and low-income communities hard. This year, more than 8,700 gas and electric customers were cut off for nonpayment, and Portland General Electric reported a record number of shutoffs due to nonpayment this year.
The partial agreement with NW Natural announced this week may provide some relief after recent utility rate hikes, but climate and environmental groups say more needs to be done to keep energy costs down.
One solution, says Sahler, is not to increase gas consumption in households and other buildings.
“This is really the biggest thing we can do,” she said. She also pointed to states’ climate goals to nearly phase out the use of carbon-emitting natural gas, which is mostly methane, by the end of this century, and called new investments in the fuel useless. “If we know we can’t burn methane by 2050 … we shouldn’t be expanding the gas system.”
The Oregon Public Utility Commission will review and approve the rate increases, which will take effect on November 1.
NW Natural’s rates dispute is ongoing. Sahler said the groups are still trying to reach an agreement to prevent subsidies for gas infrastructure expansion and to prevent the utility from charging its customers for lobbying costs.
The organizations involved in the partial agreement are the Coalition of Communities of Color, Climate Solutions, Verde, Columbia Riverkeeper, Oregon Environmental Council, Community Energy Project and Sierra Club. The groups are represented by Earthjustice and the Green Energy Institute at Lewis & Clark Law School. Other parties to the agreement are NW Natural, the Public Utility Commission of Oregon, the Oregon Citizens’ Utility Board and the Alliance of Western Energy Consumers.
