Customers of Oregon’s largest natural gas utility could see a lower-than-expected rate increase later this year. That’s after climate and environmental justice organizations reached a partial settlement with the company that could lower its rate increase by 10 percentage points when rates go up 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 nonprofit Earthjustice. Revenue increases pay for the utility’s expected expenses and go toward company profits. The smaller revenue hike could lower the utility’s proposed rate increase from 17% to 7%, a huge win according to Green Energy Institute’s director and staff attorney Carra Sahler.
Flames emerge from burners on a natural gas stove, Wednesday, June 21, 2023, in Walpole, Mass. (AP Photo/Steven Senne)
Steven Senne / AP
“This settlement keeps their return on equity at the existing 9.4%, so it’s not raised,” Sahler said. “… There is still going to be a rate increase that people will feel and that is due entirely actually to the utility’s business as usual growth.”
But the Oregon Citizens Utility Board, a consumer watchdog nonprofit, noted that the exact change in next year’s NW Natural rate could still shift, as negotiations continue — and depending on what the state’s Public Utilities Commission allows.
Green Energy Institute, which worked with climate and environmental justice groups, the Oregon Public Utility Commission and NW Natural in reaching a settlement, said the gas utility is also increasing its bill discount and expanding eligible incomes. NW Natural will also agree to create a debt forgiveness program that will prevent the utility from disconnecting its customers.
“This settlement prevents unjustified rate hikes and will help ease the growing burden of energy bills faced by struggling families and low-income communities of color,” Coalition of Communities of Color’s Climate & Energy Policy Manager, Nikita Daryanani said in a statement. “Our organizations will continue to advocate for sustainable, equitable energy solutions that prioritize the wellbeing of impacted communities and the environment, while keeping energy rates affordable.”
NW Natural spokesperson David Roy said the utility does not have a comment on the partial settlement but has “always worked to deliver energy in a safe, reliable and affordable manner to our customers and communities.”
Energy rates are on the rise across the nation. Many of Oregon’s investor-owned utilities have consistently raised their rates since 2020. NW Natural’s rates have climbed by more than 50% since 2020. The increases are in part due to the price of fossil fuels, like natural gas, and also by the transition to renewable energy, and company profits.
These year-after-year increases are hurting the state’s most vulnerable populations and low-income communities. This year, more than 8,700 gas and electric customers have been disconnected because of nonpayment, and Portland General Electric reported a record number of disconnections after customer nonpayments this year.
The partial NW Natural settlement announced this week could begin to provide some relief from the recent utility rate increases. But climate and environmental groups say more work is needed to keep energy bills low.
One solution, Sahler said, is to not increase the use of gas in homes and other buildings.
“That’s really the biggest thing we can do,” she said. She also referenced state climate goals to nearly eliminate the use of carbon-emitting natural gas, which is primarily comprised of methane, by later this century, calling new investments in the fuel useless. “If we know that we can’t burn methane by 2050 … let’s not expand the gas system.”
The Oregon Public Utility Commission will review and approve rate increases, which will go into effect Nov 1.
NW Natural’s rate case is ongoing. Sahler said groups are still seeking to reach settlements on preventing subsidies that grow gas infrastructure and preventing the utility from charging customers for lobbying expenses.
The organizations involved in the partial settlement 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 settlement include NW Natural, the Public Utility Commission of Oregon, Oregon Citizens’ Utility Board and the Alliance of Western Energy Consumers.