SEATTLE – The Attorney General’s Public Counsel Section, which represents the public in utility rate cases, announced today that a settlement has been reached between NW Natural and other parties concerning the company’s proposal to increase natural gas service rates.
Public Counsel Section Chief Simon ffitch said he believes the settlement is in the best interest of NW Natural’s residential and small-business customers.
“While any rate increase hurts already-strained household budgets, this settlement minimizes the impact and eliminates some substantial problems with NW Natural’s original request,” ffitch said.
“The elimination of NW Natural’s revenue decoupling and weather adjustment requests is especially important,” he continued. “These proposals could have meant even higher bills for families and small businesses right when customers are doing everything they can to keep their utility bills down.”
Portland-based NW Natural, which provides natural gas service to approximately 65,000 customers in Washington, filed its original request with the state Utilities and Transportation Commission in March.
Under the settlement agreement, which still requires approval by the state Utilities and Transportation Commission, residential customers would see roughly a 4.2 percent increase to their monthly gas bills – instead of the 6.3 percent boost NW Natural originally sought. The new rates would take effect in January 2009.
Public Counsel, UTC Staff, the Northwest Industrial Gas Users, the NW Energy Coalition and The Energy Project, a low-income advocacy group, together reached agreement with the company and filed the settlement today. The UTC staff’s recommendation to approve the settlement is not binding on the commission.
The settlement cuts down NW Natural’s original request as follows:
- No increase to shareholder profit margin.
NW Natural asked to increase its shareholder profit margin, also known as “return on equity,” to 10.65 percent. The settlement sets a significantly lower return of 10.10 percent.
- Less additional revenue.
The company sought to collect an additional $4.34 million in revenues through rates. Under the settlement, the company would be allowed to take only $2.7 million in additional revenues. This includes a reduction in the amount the company sought for corporate executive bonuses and marketing and advertising expenses.
- Smaller increase in the basic monthly charge.
NW Natural wanted to more than double the monthly basic charge that all residential customers pay regardless of the amount of natural gas used from $5 to $12. Under the settlement, the company can only increase the charge by $2 to $7.
- No surcharge for decreased customer energy use (“revenue decoupling”).
NW Natural sought permission to collect a surcharge from residential and small business customers if per-customer use declined, also known as revenue decoupling. The company agreed to withdraw the revenue decoupling proposal, which Public Counsel opposed.
- No rate adjustments for weather fluctuations.
NW Natural requested permission to adjust rates for residential and small business customers depending on weather conditions; rates would have increased in warmer-than-average months and decreased in colder-than-average months. Public Counsel opposed this “weather adjustment” request and NW Natural agreed to drop it from the settlement.
Customers have the chance to voice their opinions about the settlement agreement during a public hearing before the commissioners:
- November 13 – 6-7:30 p.m.
Clark Public Utilities – Electric Center
1200 Fort Vancouver Way
Vancouver, WA *
As an alternative, customers can submit comments to the UTC via e-mail at email@example.com, online at www.utc.wa.gov/comment, or call toll-free 1-800-562-6150.
Settlement documents are available at www.utc.wa.gov. Enter docket number 080546.
Today's settlement announcement is separate from NW Natural’s request to increase customer rates effective Nov. 1 as a result of rising wholesale costs.
The Public Counsel Section advocates for the interests of consumers on major rate cases, mergers and other rulemakings before the UTC. Public Counsel also advocates for consumers in court appeals, through technical study groups and before the Legislature and other policy makers. The office maintains contact with the public through a citizen advisory committee, community organizations, public hearings and personal contact with consumers in major cases. More information about Public Counsel’s work is available online atwww.atg.wa.gov/utilities.aspx.
* The Office of the Attorney General and the UTC are committed to providing reasonable accommodation to participants with disabilities. If you need reasonable accommodation please contact John Cupp at 360-664-1113 firstname.lastname@example.org.
Media Contacts: Kristin Alexander, Media Relations Manager - Seattle, (206) 464-6432
Simon ffitch, Public Counsel Section Chief, (206) 389-2055
Editor’s Note: The spelling of Simon ffitch is correct – the surname begins with two lowercase f’s.