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NW Natural's weather normalization mechanism in Oregon adjusted margin up by $4.0 million for the fourth quarter of 2012 and by $0.1 million for the year ended Dec. 31, 2012, based on weather that was 11% and 3% warmer than average, respectively. This compared to margin decreases of $2.5 million and $13.1 million for the same periods in 2011, based on weather that was 4% and 9% colder than average. The decoupling mechanism in Oregon adjusted margin up by $10.7 million for the year ended Dec. 31, 2012, compared to a margin increase of $19.3 million for 2011.

Industrial Sales. Gas deliveries to industrial customers in 2012 were 474 million therms, compared to 471 million therms in 2011. Utility margin from industrial customers was $28.6 million in 2012 and 2011.

Gas Cost Sharing Mechanism. Under the Company's regulatory incentive sharing mechanism in Oregon, lower gas costs contributed $3.8 million to margin for the year ended Dec. 31, 2012, compared to $2.1 million for 2011.

Utility customer growth rate at 0.9%
NW Natural's customer growth rate for the trailing 12-month period ended Dec. 31, 2012 was 0.9%, with the Company serving approximately 686,000 customers at year end. The Company added about 6,400 new customers in 2012, compared to 5,500 customers in 2011.

Gas reserves investment
Our gas reserves investment provides long-term gas price stability for our utility customers, and we continued to invest in gas reserves with $54.1 million of additional capital expenditure in 2012. At December 31, 2012, our net investment in these reserves was $71.3 million. These reserves hedged approximately 4% of total utility gas supply requirements for the year ended Dec. 31, 2012. Currently, we expect these supplies to hedge roughly 8% of our utility gas supply requirements for the 2012-13 gas contract year.

Results of gas storage operations
For the year ended Dec. 31, 2012, our gas storage segment contributed $0.17 per share on net income of $4.5 million, compared to $0.15 per share on net income of $4.1 million for 2011. For the fourth quarter of 2012, gas storage contributed net income of $1.3 million or $0.05 per share, compared to net income of $0.9 million or $0.03 per share for the same period in 2011. Gas storage results for 2012 reflected revenue increases from Gill Ranch due to additional contracted storage capacity and lower operating expenses. This increase was partially offset by higher interest expense from Gill Ranch's debt financing, which was outstanding for the entire year of 2012 compared to only one month in 2011.

Results of other operations
For the year ended Dec. 31, 2012, other non-utility investments and activities contributed less than a cent per share, compared to a net loss of $0.02 per share for 2011. For the fourth quarter of 2012, other non-utility investments and activities contributed income of less than $0.01 per share, compared to a net loss of $0.02 per share for the same period in 2011.

Operations and maintenance expense
Consolidated operations and maintenance expense for the year ended Dec. 31, 2012 was $129.5 million, compared to $125.4 million for 2011, for a 3% increase. This 3% increase was primarily due to increases in utility payroll and payroll related expenses reflecting an increase in field service employees, and higher costs for employee training, the Oregon general rate case, and information technology maintenance.