Any insurance proceeds recovered after Dec. 31, 2012 will be applied against expenses approved for amortization in the SRRM in equal amounts over the 10-year period following receipt of the funds.
This settlement also provides for recovery of NW Natural's costs associated with the construction of a water pumping station at the Gasco site in Portland, Oregon. The station is currently under construction and is expected to be completed in the third quarter of 2013 with a cost estimate between $20-25 million. Under the settlement, NW Natural can file for rate recovery in the annual PGA upon completion, and its approved investment costs will be rolled into customer rates as part of rate base and recovered over approximately 30 years.
Recovery of Carrying Costs on Working Gas Inventory
In NW Natural's 2012 general rate case, the Commission ordered a new docket (UM 1651) be opened to determine the amount NW Natural should recover for working gas inventory carrying costs.
Under the stipulated settlement in UM 1651, NW Natural will collect $4.5 million for deferred carrying costs on working gas inventory for the year Nov. 1, 2012 through Oct. 31, 2013. If approved, this amount will be included in customer rates Nov. 1, 2013 through Oct. 1, 2014.
In addition, annual carrying costs on working gas inventory in the amount of $4.5 million will be added to permanent base rates beginning Nov. 1, 2013, until adjusted in a future rate proceeding. This annual amount represents carrying costs on approximately $39.5 million in working gas inventory at NW Natural's authorized utility rate of return.
"This approach is consistent with how carrying costs on working gas inventory have historically been treated, and we believe it is an appropriate resolution of the issue," said Kantor.
2013 Earnings Guidance
Due to the one-time charge mentioned above, the Company is today revising its 2013 earnings guidance range from $2.15 - $2.35 to $2.02 - $2.22 per share. NW Natural's 2013 earnings guidance assumes a continued slow economic recovery and customer growth, normal weather conditions, and no significant changes in prevailing legislative and regulatory policies or outcomes.
This report, and other presentations made by NW Natural from time to time, may contain forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects" and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements regarding the following: plans, objectives, goals, strategies, future events, investments, customer growth, construction timelines or costs, commodity and other costs, customer rates or rate recovery, revenues and earnings, dividends, performance, effects of future regulatory proceedings, or future regulatory approvals, effects of regulatory mechanisms such as SRRM, and other statements that are other than statements of historical facts.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements are discussed by reference to the factors described in Part I, Item 1A "Risk Factors", and Part II, Item 7 and Item 7A "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosure about Market Risk" in the Company's most recent Annual Report on Form 10-K and in Part I, Items 2 and 3 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures About Market Risk", and Part II, Item 1A, "Risk Factors", in the Company's quarterly reports filed thereafter.
All forward-looking statements made in this report and all subsequent forward-looking statements, whether written or oral and whether made by or on behalf of the Company, are expressly qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. New factors emerge from time to time and it is not possible for the Company to predict all such factors, nor can it assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statements.
About NW Natural
NW Natural (NYSE: NWN) is headquartered in Portland, Ore., and provides natural gas service to about 689,000 residential, commercial, and industrial customers through 14,000 miles of mains and service lines in western Oregon and southwestern Washington. It is the largest independent natural gas utility in the Pacific Northwest with approximately $2.8 billion in total assets.
NW Natural and its subsidiaries currently own and operate underground gas storage facilities with storage capacity of approximately 31 Bcf in Oregon and California. Additional information is available at www.nwnatural.com.
503.226.4211 ext. 3412
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