Oregon regulators approved an integrated resource plan for Northwest Natural Gas Co. that focuses on hybrid heating and programs that evaluate customer costs across gas systems and alternative technologies.
At an April 28 meeting, the Oregon Public Utility Commission adopted the 2025 integrated resource plan (IRP) for the Northwest Natural Holding Co. subsidiary, authorizing both a long-term resource strategy and a near-term action plan, subject to conditions.
In the near term, the PUC requires the company, which does business as NW Natural, to work with the Energy Trust of Oregon to file updated IRP targets for cost-effective energy efficiency programs for transportation customers within 90 days of IRP acknowledgement.
NW Natural must also establish a work group to develop a hybrid heating model by January 2027 aimed at encouraging customers to install electric heat pumps instead of central air conditioning. The company must provide an update on the development of the hybrid heating work plan by December 2026. Energy Trust's evaluation of NW Natural's hybrid heating measures and forecasts will be in the company's next IRP.
Separately, proposed changes to Oregon building codes could require electric heat pumps in many new residential buildings while still allowing some natural gas heating. An advisory board for the Oregon Building Codes Division (BCD) on Feb. 18 voted 7-1 to approve updates to the Oregon Residential Specialty Code, including the heat pump requirement. The proposal will undergo rulemaking, with a final decision by the BCD expected in October.
Stakeholder feedback
During the meeting, environmental and climate advocates said NW Natural's past IRPs delayed much of its emissions reductions until late in the planning horizon.
Carra Sahler, director and staff attorney at the Green Energy Institute at Lewis & Clark Law School, said NW Natural's current planning process relies on unproven, risky technologies that continue to support investment in fossil fuel infrastructure and do not support electrification as a decarbonization tool. Sahler also said NW Natural may be overinvesting in community climate investments (CCI), part of Oregon's Climate Protection Program. CCI include efforts such as building electrification and renewable natural gas (RNG) projects to comply with state climate regulations.
"The company's emissions in 2025 were well below the number of allowances it received; in other words, if the company did nothing in the rest of the compliance period, it would be in compliance with the Climate Protection Program," Sahler said. "Those extra allowances can themselves be banked, and they can constitute more than 15% of the company's emissions. Those available allowances, together with Northwest Natural's admissions around slow load growth due to expected employment and population growth declines, and the fact that it has historically always overestimated what its load growth will be, indicate that the commission should be cautious around acknowledging the level of CCI investment sought by Northwest Natural."
Despite these concerns, the PUC noted NW Natural's inclusion of non-pipeline alternatives (NPAs), which were not part of the company's last IRP. The utility conducted an NPA analysis in Creswell, Dallas, and McMinnville, Oregon. The PUC said NW Natural is on the right path by evaluating the cost-effectiveness of NPA options in these areas compared to traditional gas investment, including efficiency programs, demand response tools, and distributed energy resources.
"While [PUC] staff acknowledges the uncertainty surrounding electrification, alternative fuels, and [Climate Protection Program] compliance trajectories, [NW Natural's] proposed long‑term strategy is a reasonable foundation for meeting reliability and emissions‑reduction obligations in a cost‑effective and flexible manner," PUC staff said in an April 8 report that led up to the commission meeting and decision.
Next plan
For the next IRP, NW Natural must hold at least one workshop addressing the company's load forecast and demand scenarios. At the workshop, The company must explain how the line extension allowance (LEA) phase-out will be incorporated into the load forecasting approach. The company should be prepared to adjust the load forecast in response to feedback from PUC staff and stakeholders.
In 2024, the PUC directed NW Natural to wind down its residential line extension allowances by 2027, a move that will incentivize electric options by making it more expensive for potential customers to connect to the gas grid. The gas utility will also be required to work with commission staff and stakeholders to further consider factors that could impact the energy outlook across various scenarios, such as the LEA phase-out, electrification, and future gas demand. NW Natural must continue collaborating with Energy Trust to examine fuel-switching trends, including how Energy Trust's incentives, market transformation efforts, and heat pump adoption programs may affect NW Natural's load forecast.
PUC staff and stakeholders expressed support NW Natural's efforts to pursue joint system planning among gas and electric distribution systems, but did not make any specific recommendations for the company to follow.
