Oregon’s largest natural gas utility says a regulator’s decision to phase out a program that helps hook up new gas customers is discriminatory and is asking for a redo.

On Wednesday, NW Natural asked the Oregon Court of Appeals to reverse a 19-month-old decision by the Oregon Public Utility Commission.

In October 2024, the OPUC ordered the company to start phasing out its “line extension allowance” that year and eliminate it entirely by November 2027.

The utility, which serves more than 2.5 million people in Oregon and Southwest Washington, at the time said the decision was an “extreme measure and that no Oregon law limits the growth of the natural gas system.”

That decision removed nearly $14 million in costs that NW Natural would have recovered through rates — in turn helping reduce customers’ monthly bills.

A “line extension allowance” is a subsidy that helps with costs like laying down new pipes or hooking up gas to homes and businesses.

It makes becoming a new customer more affordable by spreading these costs across existing customers through their rates.

At Wednesday’s arguments, attorneys for NW Natural and the state of Oregon presented differing views about who suffers – and who benefits – from the OPUC’s decision.

NW Natural attorney J. Mark Little argued that OPUC’s decision has the effect of discriminating against new customers by forcing them to take on the full cost of connecting gas service for the first time.

He asked the Oregon Court of Appeals to remand the decision back to the OPUC for a “redo.”

“The commission really based that analysis on a legally incorrect view of Oregon law,” Little said. “And one example of this is that the commission thought that it was allowed to discriminate against new customers.”

Assistant attorney general with the Oregon Department of Justice Jordan Silk disagreed – saying the subsidy for hooking up new NW Natural customers could have the effect of economically harming people already paying for the company’s gas.

“The PUC basically did draw a distinction between new customers and existing customers, and saying that we think the risk is too great of harming existing customers by having this incentive in place,” Silk said.

He also said “discrimination” in the context of this case is much different than “discrimination” in the context of constitutional law.

A decision from the Oregon Court of Appeals can take anywhere from 3 months to 9 months.

“Today was one part of the legal process; we will await the Court’s final decision,” a NW Natural spokesperson, David Roy, said by email. He said a ruling in the OPUC’s favor could exacerbate an affordability crisis.

Continued fight over fossil fuels

Environmental and climate advocates have been pushing to limit new uses of natural gas, a fossil fuel that contributes to climate change when burned.

They saw OPUC’s move to limit financial support for new customer hookups as a victory.

“As Oregon commits to reducing climate pollution, NW Natural’s expansion of the gas system places a real risk on Oregon households,” Oregon Citizens’ Utility Board executive director Bob Jenks said in a statement.

That push to limit natural gas poses a challenge for NW Natural, whose business model depends on customers continuing to use its product.

That business model is also challenged by the state’s Climate Protection Program, which sets caps on greenhouse gas emissions from oil and natural gas companies, including NW Natural. It sets a target of 90% reduction in carbon emissions by 2050.

NW Natural is one of dozens of companies currently suing to challenge the program.

They say it’s inflicting “irreparable harm” to businesses and Oregonians, and they are challenging the state’s authority to implement the climate program.

News Source : https://www.opb.org/article/2026/05/06/nw-natural-challenges-a-decision-to-phase-out-subsidies-for-new-gas-customers/