Corporate Reorganization in Oregon

The Oregon Public Utility Commission has signed off on a proposal under which a natural gas local distribution company (LDC), Northwest Natural Gas Company d/b/a NW Natural, may proceed with its plan to engage in a corporate restructuring.

Under the plan, NW Natural intends to form a holding company (HoldCo), with the LDC becoming a wholly owned subsidiary thereunder. According to NW Natural, a holding company structure will afford it more flexibility to pursue other lines of business separate and apart from the delivery of gas to end-use consumers. The company asserted that the changing market environment for the natural gas industry as a whole made it prudent to act to shield or insulate its LDC operations from its nonutility lines of business, which sometimes entail a greater measure of risk.

That is, NW Natural affirmed, a holding company paradigm can help mitigate the risks the LDC might face if an affiliate suffers from some type of financial distress. The company likewise averred that the separation afforded by the holding company format can facilitate the company’s long-term business strategy of diversifying into other avenues of business. In particular, the LDC pointed to its pipeline, gas storage, and biogas projects as examples of endeavors that now will be affiliated with NW Natural via HoldCo but no longer will be direct subsidiaries of the LDC. In approving the holding company plan, the commission agreed that the reorganization was well-suited to protecting LDC customers from the adverse rate consequences that might otherwise occur in association with NW Natural’s ongoing business diversification activities. (UM 1804, Order No. 17-526)