Another Utility Sticks It To Ratepayers
Coming on the heels of a national poll which cites Portland as the fourth most overpriced city in the country in which to live (rating higher than San Francisco!), another NW utility begs for -- and will get -- permission to impose an 18%+ rate increase on its 501,000 residential customers in Oregon. Once again, privately owned utilities are not asked to assume any of the burden for fluctuation in the market.
How can this be allowed to happen in a plunging economy where so many are out of work, uninsured, making less than they did five years ago, and already paying a disproportionate amount of their income for housing? Does Portland want to drive everyone but the wealthy and upper middle class, many of whom came to Portland from out of State?
For the first time in 51 years, I am seriously considering moving away from Portland. I can't afford it any more. We're able to get by at the moment because the high temperatures have meant that the thermostat can be turned off, but we can't get away from high base electric/gas/phone charges and ridiculously high rent - even for the small place in which we live. 2/3 of the money I bring in during any given month goes directly for rent! Now we can expect to pay 18% more for natural gas . . . which was supposed to be the clean, cheap alternative to oil and electricity. Makes one want to buy a tent and start camping out in Forest Park except we'd probably be outed by Australian brush busting runners.
NW NATURAL FILES FOR RATE INCREASE
Wholesale Prices Account for Most of the 18.4 Percent Boost for the Utility's Residential Customers in Oregon
by Jonathan Brinckman
August 17, 2004
Northwest Natural Gas Co., which supplies natural gas to 501,000 customers in Oregon, appliced for permission to levy an 18.4 percent residential rate increase for October 1.
The increase is virtually certain to be approved by the Oregon Public Utility Commission because 15.5 percent of it is a direct pass-through of higher wholesale prices, which is allowed by law. The remaining 2.9 percent is for construction costs of a pipeline project near Portland that the commission already has reviewed.
"This is something we have to do," said Randy Friedman, manager of gas supply for the Portland utility. "We don't make money on these higher gas costs."
[MY NOTE: It should NOT be necessary for a monopolistic utility providing a necessity of life to "make money."]
For an average NW Natural residential gas customer using about 56 therms a month, the increase would add $10.57 to the monthly bill, raising it from $57.55 to $68.12.
Oregon's two other natural gas utilities also have submitted requests for an October 1 rate increase. Avista Corp, which has 82,000 customers in Southern Oregon and a section of Northeast Oregon, has asked for a 14.8 percent increase. Cascade Natural Gas Corp., which has 47,000 customers in Central Oregon, has asked for a 7.9 percent increase.
Driving the price increases is a sharp and largely unexpected rise in the price of natural gas nationally as the economy has picked up steam and gas demand has outstripped supply. The wholesale national average price of gas increased from $2.19 for 1,000 cubic feet in 1999 to $4.98 in 2003, a 127 percent increase.
At the same time, new cross-country pipeliens have connected the Northwest to the East Coast and the Southwest. The new pipelines mean this region is no longer insulated from the national market.
"We used to be an island in a sea of gas," said Dan Kirschner, executive director of the Northwest Gas Association. "That's no longer the case."
Further, record high oil prices are contributing to the increase in natural gas prices by keeping industrial gas users from switching to oil, a common practice among many gas users when gas prices spike.
"Our other fuel choice is oil, and oil prices are horrible," said Bruce Martin energy and environment manager for Blue Heron Paper Co., a 250-employee paper mill in Oregon City. "This hurts us very much," said Ron Ingram, the company's chief financial officer, refering to the rise in wholeseale natural gas prices.
NW Natural has applied to increase its rate for commercial customer by 20 percent and its rate for industrial customers by 13.3 percent.
The company's last big rate increase was on October 1, 2001, when it raised residential rates by 20.1 percent. At the time, demand for natural gas was soaring as indusdtrial users used gas to generate electricity during the West Coast electric power crisis of 2000 and 2001. NW Natural subsequently lowered its residential rate by 11.9 percent in October.
"The crisis was over and we were able to drop rates," said NW Natural's Friedman, referring to last year's rate decrease. "Now we have this new tightness in the (natural gas) market, and oil prices have gone through the roof. That's caused a psychological state among people that are trading energy that just feeds on itself."
Most energy analysts predict that natural gas prices will remain high for several years, until new pipelines connect the market in the mainland United States to new gas fields in Alaska and new plants that process liquefied natural gas, known as LNG, make it possible to ship natural gas from overseas.
However, Terry Morlan, manager of economic analysis for the Northwest Power and Conservation Council thinks high gas prices may dampen demand. In turn, he said, decreased demand could result in lower prices.
"It's generally accepted that natural gas prices will remain high untill we get LNG or build pipelines from Alaska," he said. "But prices may come down a bit sooner because demand is going to respond to these high prices. People tend to forget about that."
The utility commission plans a public hearing on the rate increase proposal on September 28.
Jonathan Brinckman: 503-221-8190
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