HispanicBusiness

Results of utility operations
Utility net income results
For the year ended Dec. 31, 2012, utility operations provided earnings of $2.05 per share on net income of $55.1 million. This compared to $2.26 per share on net income of $60.5 million for 2011. Major factors contributing to the decrease were an $8.4 million increase in operating expenses due to an increase in utility payroll and payroll related expenses and the $2.7 million after-tax income tax charge from the rate case. Partially offsetting these losses was a $1.6 million increase in utility margin comprised of increases due to a $7.4 million net charge in 2011 related to a utility tax law change in Oregon as well as 0.9% residential and commercial customer growth in 2012 compared to 2011. Partially offsetting these margin increases were $3.9 million of timing differences from new billing rate structures under the Oregon general rate case as well as the effects of warmer weather. Also increasing net income was a $1.5 million decrease in interest expense.

For the fourth quarter of 2012, utility operations contributed net income of $26.9 million or $1.00 per share, compared to $28.8 million or $1.08 per share for the same period in 2011. The fourth quarter decrease was primarily due to the impact on revenue of the $3.9 million of timing differences from new billing rate structures under the Oregon general rate case, which took effect on November 1, 2012.

Utility margin results
For the year ended Dec. 31, 2012, utility gas sales and transportation deliveries, excluding deliveries of gas stored for others, were 1.11 billion therms, compared to 1.15 billion therms in 2011. The 4% decrease in volumes from last year was mainly due to the effects of weather, which was 11% warmer during 2012 than a year ago.

For the fourth quarter of 2012, NW Natural's utility gas sales and transportation deliveries, excluding deliveries of gas stored for others, were 326 million therms, down 7% from 350 million therms delivered in the fourth quarter of 2011, mainly due to weather, which was 15% warmer during the fourth quarter of 2012 than last year. Utility margin for the fourth quarter of 2012 decreased by $5.1 million or 5%, primarily due to $3.9 million of timing differences in new billing rate structure referred to above, $0.6 million for other revenue requirement decreases in the rate case, and the effect of warmer weather. However, the margin impact from lower sales volumes due to warmer weather during the fourth quarter of 2012 was largely mitigated by the Company's weather normalization mechanism in Oregon.

Residential and Commercial Sales. Sales to residential and commercial customers for the year ended Dec. 31, 2012 were 638 million therms, compared to 682 million therms in 2011. The 6% decrease in consumption was primarily due to 11% warmer weather over last year. Utility margin totaled $306.4 million for 2012, compared $315.7 million last year, primarily reflecting positive margin impact realized in the second quarter of 2011 when colder weather was not fully offset by our Oregon weather normalization mechanism, and the negative margin impact realized in the fourth quarter of 2012 when $3.9 million of timing differences from our new billing rate structure were effective. In addition, margin decreased in 2012 due to warmer weather in Washington, which does not have normalization mechanisms in place, and Oregon customers that opt out of weather normalization.