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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report May 15, 1995
I.R.S.
Commission Employer
File State of Identification
Number Registrant Incorporation Number
001-11227 Washington Energy Company Washington 91-1005304
001-11271 Washington Natural Gas Company Washington 91-1005303
815 Mercer Street, Seattle, Washington 98111
(Address of Registrant's principal executive offices)
Registrant's telephone number, including area code: (206) 622-6767
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Item 5. Other Events
On May 11, 1995, Washington Energy Company made the following press release:
RATE-CASE AGREEMENT APPROVED BY REGULATORY COMMISSION
SEATTLE -- Washington Natural Gas, the principal subsidiary of Washington
Energy Company (NYSE:WEG), today received approval from the Washington
Utilities and Transportation Commission to implement the previously announced
settlement of its general rate case. No changes were made to the settlement
agreement, which provides for $17.7 million in additional revenue, on an
annual basis, to cover increased utility non-gas costs.
Gas customer rates will not increase, however, because in a related
action, the Commission approved two "purchased gas adjustment" filings to pass
significantly reduced gas costs through to customers. These filings, which
total $46.5 million, do not affect utility profits, yet they more than offset
the impact of the general rate-case agreement on customer rates.
In a separate decision, the Commission also approved a special contract
between the utility and The Boeing Company, assuring Boeing's use of the
utility's sales or transportation service in all 14 of Boeing's major western
Washington locations for the next 20 years.
"This series of decisions adds up to a major step forward for our
company," said Chairman William P. Vititoe.
"First, the approval of the general rate case settlement improves our
profitability," he said. "The agreement raises our return on equity to a
range of 11 to 11.25 percent, with the opportunity to earn above that range if
we can do so by controlling our cost of service. We now expect to earn in
excess of our dividend in the September 1996 fiscal year, assuming normal
weather.
"Second, the Commission now has implemented the cost-based rate design
they approved in April, which means our rates now are significantly more
economic. In general, the new rate design shifts some costs from larger-
volume and transportation rates over to residential rates. Now, the customer
groups who cause the costs tend to be the ones who pay them.
"As a result, our growth in the residential sector should be more
economic. In addition, the economic benefit to us will be the same whether a
customer buys gas under our traditional sales rates or buys gas elsewhere and
uses only our transportation service to move that gas through our system.
"Third," Vititoe continued, "the purchased gas adjustments, even in
combination with the general rate increase and rate redesign, actually improve
the competitive position of natural gas overall by reducing rates for nearly
all our customers.
"Finally," Vititoe said, "the decision to approve our special contract
with The Boeing Company virtually eliminates the threat of bypass, by which
Boeing could have left our system and hooked up directly to an interstate gas
pipeline. Bypass now is a feasible alternative for very few of our custom
ers."
As part of the negotiated settlement, Washington Natural Gas also agreed
not to file for further general rate relief before May 1997, except in certain
limited circumstances.
The rate-case agreement was a collaborative effort among the Commission
staff, the Office of Public Counsel Section of the Attorney General's Office,
representatives of industrial gas customers and the utility.
"We are greatly pleased by the Commission's approval of this compromise,"
Vititoe said. "We receive immediate rate relief, which is crucial, and have
established a firm regulatory foundation on which to build service to custom
ers and increase value for shareowners. It is clear the Commission recognized
the financial condition of the Company and moved swiftly to help us correct
it."
For residential customers, the net effect of the Commission actions is a
decrease of 2.6 percent (or $1.13 monthly) on the typical bill. Firm commer
cial and industrial customers will see an average decrease of about 10
percent, while interruptible sales and transportation customers will average a
15 percent rate decrease.
The only rates that rise as a result of these actions are those for standby
service, gas lighting, compressed natural gas, and applications with excep
tionally low usage.
The company had filed on March 3, 1995, for $35.4 million in general rate
relief, seeking $17.8 million of that total as interim relief requested for
May 1995.
Washington Natural Gas in recent years has been one of the fastest growing
gas utilities in the nation, adding customers at a compound annual rate of 6.5
percent since 1990. Currently, the utility serves more than 465,000 customers
in the central Puget Sound area of western Washington.
Signatures
Pursuant to the Requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WASHINGTON ENERGY COMPANY
by /s/ James P. Torgerson
Senior Vice President - Finance,
Planning and Development and
Chief Financial Officer
WASHINGTON NATURAL GAS COMPANY
by /s/ James P. Torgerson
Senior Vice President - Finance,
Planning and Development and
Chief Financial Officer
May 15, 1995
