ORDER NO. 96-035

ENTERED FEB 13 1996

THIS IS AN ELECTRONIC COPY

BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

UP 125

DISPOSITION: APPLICATION GRANTED WITH CONDITIONS

On January 16, 1996, Northwest Natural Gas company (NWNG) filed

this application with the Public Utility Commission pursuant to ORS 757.480 and OAR

860-27-025(3). NWNG is requesting Commission approval to sell company-owned property to Western PCS I Corporation (Western) and Sprint Corporation. Western is negotiating on behalf of itself and Sprint.

At its public meeting on February 6, 1996, the Commission adopted the staff recommendation.

Based on the application and the Commission's records, the Commission makes the following:

FINDINGS OF FACT

NWNG provides natural gas service to the public in Oregon.

NWNG proposes to sell property consisting of 2 Ghz microwave licenses that fall within frequency blocks A and B in the Portland Major Trading Area as defined by the Federal Communications Commission (FCC), along with 2 Ghz radios used in connection with those facilities that will no longer be in service.

FCC has auctioned off the rights to operate the Personal Communications Services (PCS) within frequency blocks A and B to Western and Sprint Corporation, leaving NWNG no choice but to vacate the frequencies.

As the current holder of the licenses to operate within those frequencies, FCC rules require NWNG to negotiate with Western and Sprint for relocation or replacement of facilities. The negotiated contract price, $507,687, is based on the estimated cost of replacement of NWNG facilities. In addition, NWNG will receive an incentive payment of $100,000 for agreeing to vacate the frequencies by April 1, 1996, one year earlier than required under FCC rules. All of the property proposed for sale has been treated as utility property since its acquisition in 1974.

NWNG anticipates possible relocation of two additional microwave paths within the next two to three years after the FCC auctions block C frequencies sometime in 1996. After that transaction, the company will determine whether it is more economical to replace all legs with a microwave system or to use T-1 leased digital circuits as it is proposing to do in the interim.

NWNG will record the entire proceeds, including the incentive payment, to FERC Account 253, Other Deferred Credits, which will be used to offset the future replacement costs and write off the balance of the sold or obsolete facilities.

Final accounting approval cannot be made at this time due to the anticipated relocation of two additional microwave paths and because the permanent type or method of replacement has not yet been determined. However, any gain on the sale of the facilities should be recorded in FERC Account 411.6, Gains for Disposition of Utility Property. Subsequent ratemaking treatment will be addressed in NWNG's next general rate case.

There is no indication that the proposed sale will impair the company's ability to provide its public utility service.

OPINION

Applicable Law

ORS 757.005(1)(a)(A) defines a public utility as an entity that owns, operates, manages, or controls any plant or equipment in this state for the furnishing of heat, light, or power to the public.

ORS 757.480 provides that a public utility doing business in Oregon shall first obtain Commission approval for any transaction to sell, lease, assign or otherwise dispose of property of such public utility necessary or useful in the performance of its duties to the public or any part thereof of a value in excess of $10,000.

NWNG is a public utility subject to the Commission's jurisdiction. The proposed transaction involves property which has a value in excess of $10,000.

There is no indication that the proposed sale will impair PGE's ability to provide public utility service in Oregon.

CONCLUSIONS

NWNG is a public utility subject to the jurisdiction of the Public Utility Commission of Oregon.

NWNG's proposed transaction meets the requirements of ORS 757.480.

The application should be granted.

ORDER

IT IS ORDERED that:

The application of Northwest Natural Gas company for authority to sell property consisting of 2 Ghz microwave licenses that fall within frequency blocks A and B in the Portland Major Trading Area as defined by the Federal Communications Commission (FCC), along with 2 Ghz radios used in connection with those facilities that will no longer be in service, to Western PCS I Corporation and Sprint Corporation is granted with the following conditions:

NWNG shall file, as soon as available, final executed or conformed copies of all documents related to this transaction.

NWNG shall file, as soon as available, copies of the journal entries recording the transaction.

Commission approval of the sale of property does not constitute approval for ratemaking purposes.

Made, entered, and effective ________________________.

A party may request rehearing or reconsideration of this order pursuant to ORS 756.561. A party may appeal this order pursuant to ORS 756.580.