Court Hearing: Oregon’s Largest Gas Utility Seeks to Undo Energy Victory Won by Public Interest Groups to Help Lower Rising Energy Costs

Salem, OR —

Two years ago, climate, justice, and consumer advocacy groups won a significant victory in a utility rate case against Oregon’s largest gas utility, NW Natural, to help provide relief from skyrocketing energy bills. Oregon utility regulators sided with the groups after a five-year fight, ordering NW Natural to phase out gas pipeline subsidies by November 2027 and disallowing $13.7 million in overspending on pipes. 

The victory would help contain rising costs by shaving millions of dollars off future rate hikes – and help the Pacific Northwest meet its goals to reduce carbon emissions to help mitigate climate change. 

The gas pipeline subsidies, known as line extension allowances, are a tool utilities use to subsidize the cost of new gas lines and hookups, encouraging new homes and businesses to be built with gas. These subsidies allow the utility to expand its gas infrastructure without charging new customers the true costs. Instead, existing customers pay for the expense of locking Oregon communities further into fossil fuel use. 

NW Natural appealed this victory, and next week, the Oregon Court of Appeals will hear arguments from both parties during a court hearing. The Oregon Department of Justice will defend the Oregon Public Utility Commission’s order on behalf of itself and the public interest groups that intervened in the utility rate case. 

In addition to the Citizens’ Utility Board, representing residential customers, the groups that won the victory in 2024 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. 

How to listen in

The public may tune in to the oral argument at 9 a.m. on Wednesday, May 6. 

• View the court hearing via livestream. 
• Attend in person at the Oregon Court of Appeals, 1163 State Street NE, Salem, Oregon 97301 

Statements from the public interest groups and their attorneys: 

“NW Natural is challenging a decision that will save Oregonians millions of dollars by limiting unnecessary gas system expansion, while simultaneously suing to roll back Oregon’s Climate Protection Program– one of the state’s most important tools for protecting households and businesses from rising energy cost risk,” said Nora Apter, Oregon Director at Climate Solutions. “If the company were truly focused on ratepayer interests and affordability, it would not be fighting the very policies designed to do exactly that.”

“A line extension allowance is a subsidy to expand fossil fuel infrastructure paid for by current gas utility customers, plain and simple,” said Dylan Plummer, Campaign Strategist with Sierra Club’s Clean Heat Campaign. “Recognizing its legal obligations to support our state to meet its climate targets, the Oregon Public Utility Commission made the common-sense decision to phase out these backward subsidies, joining numerous Commissions across the country doing the same. Northwest Natural’s appeal seeks to protect fossil fuel interests while keeping Oregon ratepayers on the hook to pay for more polluting gas pipelines.” 

“Eliminating subsidies for expanding the gas system was a big win for Oregonians,” said Bob Jenks, Executive Director of Oregon Citizens’ Utility Board. “Our analysis showed that these subsidies benefit shareholders but are harmful to existing customers. As Oregon commits to reducing climate pollution, NW Natural’s expansion of the gas system places a real risk on Oregon households.”

“The Commission’s order we’re defending in this appeal reflected serious concern about the utility’s spending,” said Earthjustice attorney Jaimini Parekh. “Line extension allowances are perverse incentives that favor the fossil fuel industry by growing our demand for gas at the expense of all of us who pay energy bills. We are fighting to remove these harmful subsidies and curb other wasteful spending by NW Natural that customers have been paying for with skyrocketing energy bills.” 

Background 

NW Natural is Oregon’s largest gas utility, providing more than 2.5 million people in Oregon and Southwest Washington with methane gas, a powerful greenhouse gas that traps heat in the atmosphere and is a primary contributor to human-caused climate change. 

The utility has actively fought against electrification efforts in the Pacific Northwest, and instead pushed for costly gas investments and promoted its pro-gas agenda through misleading propaganda. It previously challenged Oregon’s Climate Protection Program in court. This is Oregon’s climate policy that regulates climate pollution from the state’s largest fossil fuel emitters, including gas utilities. NW Natural won this legal challenge on a procedural technicality, prompting new rulemaking to fix the error and restore the program. It is now challenging the Climate Protection Program in court again.

The public interest groups won an earlier victory in 2022 against NW Natural when the Oregon Public Utility Commission ruled that Oregon’s largest gas utility, NW Natural, could no longer charge its customers to target schoolchildren with pro-gas propaganda booklets. The order also prohibited NW Natural from lobbying local governments to prevent climate action and required an increase in energy-efficiency measures.

Oregon Citizens’ Utility Board, alongside the groups represented by Earthjustice and the Green Energy Institute, also argued for and won a reduction in subsidies for new gas hookups, from $2,875 to $1380 between November 2022 and November 2024. That order in 2022 set up a system for declining the amount over three years permitted for line extension allowances, but it did not phase them out entirely. 

In the intervening years, CUB found that NW Natural was overspending despite the cap. The most expensive connection NW Natural covered was $86,553 for a single home in 2021, when the cap was $2,875. This discovery of overspending led to the 2024 ruling that the gas utility must remove $13.7 million from customer rates. The complete phase out of these subsidies was secured in the victorious 2024 order.