Jurisdiction

ORS 757.005 defines a public utility as anyone providing heat, light, water, or power service to the public in Oregon. The Company is a public utility subject to the Commission’s jurisdiction.

Applicable Law

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.

OAR 860-027-0025 specifies the information a public utility must submit when it makes application to sell or lease its property. This application contains the necessary information.

The proposed transaction involves property which has a value in excess of $10,000 and is no longer useful for providing utility services to the public. Commission approval of the accounting treatment for this transaction does not constitute approval for ratemaking purposes. There is no indication that the proposed transaction will impair the Company’s ability to provide public utility service in Oregon.

CONCLUSIONS

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

The Company’s proposed transaction meets the requirements of ORS 757.480.

The application should be granted.

ORDER

IT IS ORDERED that the supplemental application of Northwest Natural for authority to lease certain utility property alleged to be no longer necessary or useful for providing utility services to the public in Oregon is granted, subject to conditions, if any, stated in Appendix A.

DATE: April 28, 1999

TO: Bill Warren through Mike Myers and Marc Hellman

FROM: Thomas P. Riordan

SUBJECT: Northwest Natural (NWN) Supplemental Application for Authority to Lease Property

SUMMARY RECOMMENDATION:

The Commission should approve the supplemental application for NWN to lease real property to the City of Portland for the purposes of establishing a Classical Chinese Garden.

DISCUSSION:

On February 4, 1999, NWN filed a supplemental application to substitute a parcel of land, Block 16, in Portland’s Old Town to be leased to the City of Portland (the City) for Block 24, owned by NWN. The Commission, in Order No. 96-022, approved the prior application in UP 124 for a real property lease between these same parties for Block 24. The company states that recently, the City and the Chinese Classical Garden Society determined that Block 24 was less suitable than Block 16 for the Classical Chinese Garden (Garden). Both blocks are currently used as parking lots for NWN employees and company vehicles. A few years ago, NWN upgraded Block 16, directly south of Block 24, with landscaping and paving.

NWN has accepted the City’s proposal that the Garden be built on Block 16. The City plans to amend the Option to Lease Real Property (Option) for the transaction. This amendment allows NWN to then substitute a new parcel, conditional upon the City reimbursing NWN for costs incurred by the company in improvements to Block 16.

The Option contains the same basic lease terms, except for the additional protection provided NWN for the City to reimburse costs for having improved the new parcel, Block 16. The lease of property, as amended, will not impose additional costs on Oregon customers. Furthermore, the company is likely to have reduced property taxes, as well as a reduced rate base in the amount of approximately $387,000.

The Option includes provisions that may result in additional revenues or expenses accruing to NWN. To ensure that the company’s accounting treatment is in the public interest, NWN should annually report the Commission a summary of its revenues and expenses associated with this transaction.

STAFF RECOMMENDATION: