Northwest Natural Gas Company, dba NW Natural (NYSE:NWN), today reported that Oregon Governor John Kitzhaber has signed Senate Bill 967 into law, effective immediately.
On March 29, 2011, Senate Bill 967 was introduced in the Oregon Senate to repeal the existing law governing the annual regulatory adjustment for income taxes paid by certain utilities. The bill passed the Senate on April 20, 2011, and was passed by the Oregon House of Representatives on May 9, 2011.
In 2005, Oregon Senate Bill 408 was signed into law, effective Jan. 1, 2006. SB 408 required certain regulated gas and electric utilities to annually review the amount of income taxes collected in utility rates and compare it to amounts of income taxes paid. Under this law, if companies pay less in income taxes than are collected from Oregon utility customers, they are required to refund those amounts to customers. If companies pay more in income taxes than are collected from Oregon utility customers, the utilities are required to collect a surcharge from customers.
NW Natural’s income taxes have resulted in a surcharge every year since SB 408 became law. For the 2008 and 2009 tax years, the OPUC approved the company’s recovering $0.2 million and $5.1 million, respectively, from customers in the form of a surcharge.The 2008 amount, plus accrued interest, was collected over a one-year period beginning June 1, 2010. It was also agreed that the 2009 surcharge and interest would be collected over a one-year period beginning June 1, 2011. The new law will require utilities, including NW Natural, to reverse amounts accrued for the 2010 and 2011 tax years. For the three months ended March 31, 2011, NW Natural estimated a surcharge of $2.7 million, but did not recognize it for accounting purposes due to the significant uncertainty surrounding our ability to collect this amount in future rates.