NW Natural reports record earnings in 2009

Northwest Natural Gas Co. achieved record-high earnings in 2009 thanks largely to savings related to lower-than-expected market prices for natural gas.

The Portland-based natural gas utility (NYSE: NWN) on Friday said it ended the year with earnings of $75.1 million, or $2.83 per share, up 8 percent from $69.5 million, or $2.61 per share, in 2008.

The utility’s ability to reach record-high earnings is the result of an Oregon utility law that allows them to share the savings from lower market prices with both ratepayers and investors. In 2009, 80 percent of those savings went to customers with the remaining to investors as profit.

Ratepayers received their share earlier than normal when the company issued refunds of nearly $36 million last spring in an effort to provide a boost to customers during a trying economy.

The gain for investors was $15.1 million, a figure that boosted year-end profit margins. It was partially offset by higher pension, health care, bonuses and severance costs.

The company outperformed the expectations of analysts polled by Thomson Reuters, who projected earnings per share of $2.79.

Earnings from the company’s utility operations jumped 12 percent to $66 million, or $2.48 per share, while gas storage earnings increased slightly to $8.9 million, or 34 cents per share. Non-utility activities added $200,00 or 1 cent per share, in earnings.

Cash from operations in 2009 jumped to $240.3 million from just $34.7 million the prior year.

NW Natural’s total gas sales and transportation deliveries in 2009, not including deliveries of gas stored for others, fell 10 percent to 1.13 billion therms, mainly from warmer weather and the weak economy’s effect on gas consumption among industrial customers. Residential sales fell to 668 million therms from 694 million therms in the prior year, while sales to industrial customers fell 18 percent to 463 million therms.

The company’s fourth-quarter results weren’t as rosy.

Quarterly income fell 5 percent to $31.4 million, or $1.18 per share, compared with $33.2 million, or $1.25 per share the prior year. The lower income was the result of higher operations and maintenance costs, including increased employee-related costs such as pensions, health care, bonuses and severance.

The company said a gradual decline in its annual rate of customer growth — falling to 0.8 percent from 1.6 percent at the end of 2008 — has stabilized.

In 2010, the utility expects earnings per share in the range of $2.60 and $2.75.

Northwest Natural shares fell less than 1 percent in afternoon trading to $43.87. Shares have traded between $37.71and $46.47 in the past 52 weeks.