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As gas bans spread, Northwest Natural is playing offense with local policymakers from SNL Energy Finance Daily As gas bans spread, Northwest Natural is playing offense with local policymakers Byline: Tom DiChristopher Portland, Ore.-based utility Northwest Natural Holding Co. has reached out to local officials to convey the value of natural gas as West Coast cities prepare to implement ordinances that ban gas hookups in new buildings or seek to accelerate electrification. The company's subsidiary, Northwest Natural Gas Co., provides gas to 2 million people in western Oregon and southern Washington, putting it in the middle of a decarbonization push in California and Seattle. "It's our focus right now to make sure all of our elected officials, all the city councils, all of our jurisdictions, understand why the gas system exists, what it's here for, and how we can achieve the climate change goals that our governor and the state want to achieve," Northwest Natural President and CEO David Anderson said on the company's Nov. 5 earnings conference call. A strong regional economy and growth in home construction helped the company sign up 12,000 new customers and add $5.3 million to its utility margin over the last year, executives said. Measures to prevent or dissuade gas infrastructure in new homes would put that growth at risk. Anderson said regional weather will play a part in decisions about local gas systems, noting that its service territory experiences long, cold winters. That consideration has already influenced a gas ban under consideration in Seattle, where fireplace and gas appliance manufacturers forced lawmakers to delay a vote on the proposed ordinance. Northwest Natural is also examining its options to begin investing in renewable natural gas, or RNG, as state regulators work through rulemaking to implement a new law that seeks to increase RNG use in Oregon. The company expects to invest up to $30 million under the law, but it is not yet certain how much it will spend to purchase RNG and flow it through its system versus developing projects to process the fuel. "From my perspective, strategically, I think it's important to get as much renewable natural gas on the system as quickly as possible. And that might start off with purchases," Anderson said. However, Anderson said he is also excited about power-to-gas projects, which would allow Oregon to use its excess electricity to create hydrogen. Northwest Natural expects to follow the same playbook it has used to develop its water utility business over the last two years, Anderson added. That will involve making "beachhead" purchases of water utilities and tacking on acquisitions nearby. The company's water unit, NW Natural Water Co. LLC, made its first purchase outside the Northwest in October, scooping up private Houston-area utility T&W Water Service Co. Northwest Natural has been looking for opportunities west of the Mississippi River, but Anderson said he now expects the company's focus beyond the Northwest to center on Texas, based on its strong economic growth and attractive regulatory environment. Anderson also said most of the near-term opportunities for acquisitions are for private companies versus municipal water utilities. Northwest Natural reported Nov. 5 that its third-quarter net loss from continuing operations widened to $18.5 million from $11.1 million a year ago. The company regularly reports a third-quarter loss due to seasonal factors, but the impact of new rates in Oregon created additional headwinds this year. |
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