NW Natural Wants to Raise Rates (Again). This is What You Need to Know.
NW Natural, a utility company that sells fossil “natural” gas (e.g. methane), wants to raise prices for Oregon customers for a second year in a row. What they are planning to do with the money is, quite frankly, jaw-dropping, which is why OEC and a group of environmental and community-based organizations, represented by the Green Energy Institute at Lewis & Clark Law School and Earthjustice, are pushing back as formal intervenors in an ongoing public “rate case” proceeding. To get to the bottom of it, I sat down with Nora Apter, OEC’s Climate Program Director, to learn more about what NW Natural is doing and why their customers–or really anyone who’s concerned about climate change or corporate accountability–should care.
Joel Schoening (JS): First question, what’s going on and why should people be paying attention?
Nora Apter (NA): At the root of it, NW Natural wants to increase utility bills for customers in order to expand its sales of methane–a harmful super-pollutant that is bad for our climate and our health–and lock more people into fossil fuel dependency for years to come. But, because they are a state regulated utility, they have to get approval from the Oregon Public Utility Commission (OPUC) before they can increase rates. This process is called a “rate case” and it’s happening now.
JS: There’s a lot to talk about there. I want to get into the rate case details, but before we go there, what else do people need to know about the core issues here?
NA: Yeah, there’s a lot to unpack for sure. Let’s start with NW Natural’s core product. To cut to the chase, what we have all known as “natural” gas is actually mainly methane. It’s one of the most potent climate pollutants, far worse than carbon. When you burn it, say for cooking or heating your home, it releases all kinds of hazardous air pollutants and toxins that are bad for your health. As one example, recent studies have shown that kids who grow up in homes with gas stoves have more than a 40% higher risk of getting asthma. NW Natural knows all too well the many health and climate risks of methane, yet they actively promote it as a safe, clean product to make customers feel comfortable piping it into their homes. They also advertise a great deal about so-called renewable natural gas (RNG), which is funny because they’re not yet actually offering that product to customers. And even if they were, that’s not anything they should be bragging about, since RNG is still primarily methane, which means it’s still a climate pollutant and still poses the same health and safety risks when burned in our homes.
What you also need to know is that NW Natural is not a home-town mom and pop shop. It’s a Wall Street investor-owned fossil gas company with $1 billion in annual revenues. And, rather than using their assets or giving smaller dividends to shareholders, they want Oregon customers to shoulder the burden of paying for executive bonuses, investments in an expanded infrastructure, anti-climate lobbying, and pro-gas advertising campaigns. We’re talking about things like publishing activity books that teach school children to associate fossil gas with baking cookies, pizza, and even dinosaurs. You can’t make this stuff up.
JS: Okay, so, NW Natural is up to some shenanigans. What’s the rate case have to do with it?
NA: In order to raise rates on customers, NW Natural and other regulated utility companies in Oregon must seek approval in a formal request to the OPUC, which regulates utilities.
The OPUC assesses the effects and justification for the proposed change and makes a determination about whether a rate increase is warranted. OPUC seeks to balance a need to protect the public from risky or unreasonable investments and the utility’s need to generate enough income to operate and provide a return for shareholders. Rate cases are especially important since most customers don’t have alternative utility providers to choose from in the same way that they could choose other common products, like what kind of milk they buy at the store. For most homes, there’s only one provider of water, electricity, and gas.
If this sounds super wonky, that’s because it is. But it’s important to pay attention to, not only because it could increase how much you’re paying each month in utility bills, but also because it will determine what types of activities are considered “fair and reasonable” for the gas utility to recover from you, their customer.
JS: Okay, so we need to be keeping an eye on these big companies because they essentially have a state contract to bill us for our energy. Isn’t it reasonable to think, well, if costs are rising for the company, shouldn’t they be allowed to ask for a rate increase? What’s really going on here?
NA: This is where it’s important to pay attention to the details. What exactly is the utility trying to recover through a proposed rate hike? NW Natural, in its request for a rate increase, is seeking to raise rates by $81 million to fund, among other things, shareholder profits, executive bonuses, expanded fossil gas infrastructure, and pro-gas lobbying and advertising. The company’s proposal would increase monthly residential energy bills by about 12 percent, on top of the 13 percent bill increase that NW Natural put in place last year, and not including a 16% increase they are asking for this coming winter. For NW Natural customers, this will be the third bill hike since last November, and could mean a bill increase of 42% in just a 13-month period.
JS: How is a decision made? What criteria are used? Is NW Natural allowed to do this? Is this a yes/no decision or can some smaller rate increase be approved? Can the state say what the rate increase can be used for?
NA: When deciding whether to approve a proposed rate adjustment, OPUC Commissioners must “ensure the change is fair and reasonable for utility customers while also allowing the utility service provider the opportunity to recover reasonable costs and earn a reasonable return on its investments.” In other words, NW Natural must demonstrate that the rates are fair, just, reasonable, and sufficient, and that the investments they are seeking to recover are prudent, and that its shareholders get a return on their investment.
It’s not a straight up or down decision. In most major rate cases, the OPUC holds hearings where the utility, OPUC staff, other experts known as “intervenors,” and utility customers are allowed to provide comments on a proposed bill increase and have the opportunity to push back against particular aspects of a utility’s proposal.
JS: For longtime followers of OEC, why is OEC intervening in the NW Natural rate case, and what does it mean to be an “intervenor”?
NA: An intervention is a specific legal process in which another party (besides OPUC and the utility) petitions to formally participate and provide expertise in the rate case. As official intervenors in the NW Natural’s rate case, OEC and our partners–represented by GEI and Earthjustice attorneys–are able to litigate and participate directly in negotiations to influence the OPUC’s decision.
As part of our work to ensure an equitable transition to a clean energy future, OEC is committed to fighting for energy affordability and ensuring that our utilities achieve their state-mandated pollution reduction requirements. NW Natural’s proposal to increase customer rates to pay for things like expanded gas infrastructure and investments in expensive, nascent alternative fuels, like RNG, is risky for Oregon customers and for our climate, and will especially impact renters and low-income households who are already disproportionately burdened by high energy costs.
At the same time, investment decisions like those faced by the OPUC in this rate case are important for climate mitigation because they lock in high- or low- emissions trajectories over long periods. If the state hopes to achieve its GHG emissions reduction goals and mitigate the climate emergency, the use of fossil gas must significantly decline. Every new customer NW Natural adds increases fossil fuel sales, expands our reliance on fossil gas and delays the transition to cost-effective, zero-carbon alternatives. Every new gas hookup digs us deeper into climate catastrophe. Further, continuing to increase our reliance on fossil gas comes with an outsized cost and risk for ratepayers compared to lower-cost electrification and deep energy efficiency solutions.
JS: What if the rate increase is denied? Will that put gas service at risk for people who depend on it? Can OPUC approve a smaller rate increase than NW Natural is asking for?
NA: People who currently rely on gas don’t need to worry about their service going away based on this. The OPUC can choose to reject certain parts of NW Natural’s proposed rate hikes based on the above criteria. OEC and our co-intervenors in the rate case are pushing the OPUC to reject NW Natural’s attempts to make customers pay for things like executive bonuses, anti-climate lobbying, pro-gas advertising, subsidies for fossil gas customer growth, expanded gas infrastructure, and risky investments in RNG.
Again, and as I lay out in my expert testimony, approving the rate hike at the amount sought by NW Natural will do nothing to benefit Oregon ratepayers. Instead, NW Natural’s proposed investments will help to preserve a fossil gas system funded by Oregon customers, allowing NW Natural to continue operating in a business-as-usual manner for as long as possible, despite what is demanded by the climate emergency and the state’s climate policies. At the same time, NW Natural’s proposed investments will only further its rampant greenwashing, by polishing its image for credit agencies, its customers, regulatory agencies, and the wider public about its ability to deliver “renewable” energy. Not to mention, the strategy will enable the company to continue to invest billions of dollars to build and repair gas infrastructure that will lock in decades of profits while leaving fewer and fewer ratepayers footing the cost.
JS: What’s next?
NA: There have been many months of back and forth between the coalition of intervenors and NW Natural. Closing briefs in the case are due on August 22nd, the Commissioners will hear arguments of the parties on August 25, and the OPUC is set to make a final decision on October 20. If approved, the new rates would go into effect on November 1, 2022. Stay tuned.