The company's supply strategies are paying off for customers and shareholders alike. NW Natural has an annual Purchased Gas Adjustment (PGA) tariff in Oregon and Washington to true up actual versus projected gas costs in rates. In Oregon, the company absorbs 33 percent of any excess cost of gas, or retains 33 percent of any gas cost savings, as compared to commodity prices in rates. The other 67 percent is deferred and credited (or collected) from customers.
 For 2006, NW Natural's one-third share of gas cost savings added 18 cents per share to earnings. For our customers, the share of benefits over recent years is even more impressive: more than $60 million returned in the form of rate relief or bill credits.
Further Supply Development
In 2001, we began providing storage services to interstate customers using incremental Mist capacity developed outside of core customer rates. This business segment continues to be a significant element of our growth strategy. For example, NW Natural has in place a 10-year contract with Portland General Electric beginning this year to provide storage services for gas to fuel two electricity generating plants located in northwest Oregon. One of the two, Port Westward, is a new 400-megawatt base-load facility just commencing operation this spring.
NW Natural plans to continue adding storage capacity at Mist to accommodate utility customer growth and serve the expanding regional gas storage market. An expansion is under way for 2007 that would increase Mist's withdrawal capability by about 15 percent.
In addition to storage, NW Natural and TransCanada Corporation's GTN Systems are continuing to study and evaluate customer interest in a proposed transmission pipeline. The Palomar pipeline would connect GTN's interstate gas line in central Oregon to NW Natural's high-pressure system southeast of Portland, and to other NW Natural facilities in northwest Oregon. A decision whether or not to proceed with the project is expected to be made later this year. If constructed, commercial operation of the pipeline could commence by late 2011.
|
