Hello and welcome to the Northwest Natural Gas, 2012 year-end and fourth quarter teleconference. All participants will be in listen-only mode. (Operator Instructions). And I would now like to turn the conference over to Kim Heiting. Please go ahead.

Thank you Amy. Good morning and welcome to our fourth quarter and full year earnings call for 2012. I’m filling in for Bob Hess today, while he’s on medical leave following a planned surgery. I’m pleased to report he’s on the mend and hopefully will be back to work soon. As a reminder, some of the things that will be said this morning contain forward-looking statements. They are based on management’s assumptions, which may or may not come true, and you should refer to the language at the end of our press release for the appropriate cautionary statements and our SEC filings for additional information. We expect to file our 10-K later today. As mentioned, this teleconference call is being recorded and will be available on our website following the call. Please note that these conference calls are designed for the financial community. If you are an individual investor and have questions, please contact our shareholder services department directly at 800-422-4012, extension 3412. Speaking this morning are Gregg Kantor, President and Chief Executive Officer, and David Anderson, Executive Vice President. Gregg and David have some opening remarks and then we’ll be available to answer your questions. Also joining us today are Steve Feltz, Senior Vice President and Chief Financial Officer and other members of our executive team who are available to help answer your question. With that, let me turn it over to Gregg.

Good morning everyone and welcome. Thanks for joining us for our fourth quarter and year-end review. I’ll begin today with an overview of 2012 and then turn it over to David to provide the financial details for the quarter and the year. Finally, I’ll wrap it up with our look forward. Clearly the headline news for 2012 was the company’s Oregon general rate case, our first case in a decade and as we reported on our last call, the results were mixed. David will review more of the financial details of the case, but the commission’s decision in late October meant a net decrease of about $6 million in utility margin annually and the one time after tax charge of $2.7 million we discussed in our last call. Without this allowance, we ended the year with net income of $60 million or earnings per share of $2.22. Needless to say, these financial results are not what we had hoped for, but they also don’t tell the whole story. Going into the case, our main objective was to renew the three key regulatory mechanisms critical to our revenue stability; decoupling, whether normalization and the system integrity tracker. All three mechanisms were successfully renewed. In addition, the OPUC approved our request for a new site remediation and recovery mechanism, that allows for recovery and rates of prudently incurred past and future environmental clean up costs, not covered by insurance. These are costs related to historic manufactured gas plant operations dating back to the 1800’s. We are pleased with the outcome on the environmental recovery mechanism; however, it’s not entirely complete. The commission also directed a new proceeding to be opened to determine how to apply an earnings test, the recovery of clean up expenses. That proceeding is currently underway and what impact…

Thanks Gregg and good morning everybody and my apologies for the phone number being wrong in the press release. Hopefully it didn’t cause you too big of a problem getting in. As Gregg said, results for 2012 were mixed. Net income was approximately $60 million or $2.22 per share, that’s compared to net income of $64 million or $2.39 per share in 2011. Utility operating results accounted for the decrease year-over-year, primarily due to the Oregon rate case impacts and warmer weather, while our gas storage and other non-utility business segments contributed small gains in 2012 over 2011. The commission’s decision concerning our Oregon rate case resulted in a net decrease of approximately $5 million in after tax net income. This decrease was driven by the previously announced $2.7 million tax disallowance or $0.10 per share that Gregg just mentioned, plus decreases in utility operating revenues of $3.9 million, from timing differences created by new billing rates to Oregon customers, and approximately $600,000 from the lower 9.5% ROE approved by the Oregon Public Utility Commission. Let me pause here for a moment and reconcile actual results to the overall $8.7 million rate increase we received in the rate case. In the expected margin decrease we discussed during the third quarter conference call, up $2 million to $3 million in the fourth quarter or $6 million annualized. First, the $8.7 million overall increase included a transfer of approximately $15 million from our Oregon decoupling mechanism into regular billing rates, meaning a net utility margin decrease of roughly $6 million annually. Included in this $6 million decrease was about $4 million from working gas inventory cost. In the final decision we were allowed to continue differing carrying cost on working gas until a new separate docket was settled. The remaining $2 million…

Thanks David. Natural Gas is shaping a new energy landscape, a landscape defined by abundant supply and lower cost. In fact, our customers have seen four consecutive years of rate decreases, and $400 million in cumulative savings. This truly is a gold age as people are saying, for our industry, with exciting opportunities for the nation and for Northwest Natural. For the first time since records were kept, as much electricity has been generated with gas as with coal, which is helping bring down U.S. carbon emissions to 20 year lows. Abundant domestic supplies and lower prices are creating jobs and helping to bring manufacturing back to the U.S. from overseas and North West Natural are seeing the positive impacts of these lower prices. In less than two years, 36 new large commercial and industrial businesses have signed up for natural gas service in our market. In the past the typical rate is about five or six a year. With our growing price advantage over other fuel options, we’ll be aggressively looking for new large commercial and industrial customer opportunities in 2013. We also believe there are additional opportunities in the residential markets and we are launching a new project to automate parts of our customer acquisition process, by developing a web based portal, accessible to customers, builders, contractors and retailers. Our vision for this multi-year initiative is to reach customers where they shop, the bigbox stores and online and to create a resource where they can quickly sign up for gas service, select equipment, take advantage of special offers and arrange financing. This year we’ll also be expanding our growth efforts beyond tradition residential and commercial customer segments. For 2013 we will focus on the transportation fuel market, including liquefied natural gas and compressed natural gas. At half the…

(Operator Instructions). Our first question comes from Dan Fidell at U.S. Capital Advisors.

Good morning Dan.

First, congrats to David, Stephen and Alex on their new responsibilities; it’s great. I have just a couple of question on my side. I guess first one is a housekeeping question. Just in terms of the forward guidance, just to be clear, no GAAP’s cost sharing numbers included in the guidance as usual, is that correct.

Yes, right now it doesn’t look there’s a lot of GAAP cost savings so far in the year Dan.

Okay, and then second, a question on the outlook for the gas storage segment, I guess in two parts. First, just fundamentally on the current ops. You had a good finish to the year fiscal ‘12 finishing up versus ’11 by a couple of pennies. How do you see that trend just on current ops for ’13? And then secondarily, as you mentioned good news on the Portland General side. Can you just kind of remind us on what you think the numbers are CapEx behind the Portland General for later in this expansion?

Yes Dan, on the first part of the question and then I’ll turn it to David on the CapEx for PGE. On the first part I will tell you, I still think we are going to be looking at a flat storage market through 2013. We see it going up and down and it depends on weather and some other issues. But at Gill Ranch anyway, I don’t see big movements one-way or the other. At Mist as you can tell, we are fully employed on utilities in the North West and I think even here that putting aside the PGE project, which is somewhat different, that we are going to see fairly flat values for storage here in the North West.

Dan on the CapEx, this is David, we are not public with an actual number. I think as I told you the last quarter, I think its fair to say that its less than $100 million for the expansion that we are talking about, just to kind of give it in the ballpark. And just so everybody knows, this is not a merchant opportunity for us. This will be in the utility. Its obviously a long term contract with PGE, a very long term contract and so, we are in the process now of working with them to start to next phase, which is to start building this with a result of their RFP. So it should be going over the next couple of years, but hopefully and then service day around 2016, all things going perfectly.

Okay, great, thanks for the color on that. And then just maybe a final question and I’ll jump back in the queue. Can you just kind of review the kind of gas reserve program, how it’s functioning. It looks like the numbers came in pretty much on target there and kind of the outlook you see for a potential layer on here sometime over the near term.

Well, it is functioning pretty much as we described it at the beginning, $50 million a year, approximately over five years, $250 million and its going as expected and we are quite happy with it. We’ve talked to the parties and the regulators about a second layer on gas reserves and I’d say they are open to it, and what they are really looking for is for us to come back to them with some analysis around what’s the right level, overall level for gas reserves. Essentially, the asset, a physical hedge on natural gas, and we are analyzing that in our IRP that we’ll be taking to the Oregon Commission later this year. So I think that’s sort of step one, but we are having conversions with others around the potential suppliers of reserves as we go forward. But I think the first step is really that IRP process and weighing out in that what we think is the right amount overall for gas reserves in the utility.

From a timings perspective you said later this year, on the IRP.

Yes the IRP Alex, when are we expecting to file the IRP?

The next Org in IRP is 2014, early 2014.

I thought the update though.

The update is in March.

So March for our update and then the full IRP will be early next year.

Dan, this is David. One of the things that we’ll also be watching carefully is what Congress does with the possible tax reform. Obviously that’s a big piece of any kind of transaction like this, with the intangible drilling cost and the other tax deductions that help make this very economical. So we’ll be watching that very closely, as well as we’ll be watching our own taxable position as we talk about before in terms of being able to utilize the tax proceeds beneficially and not be in a net operating loss because of bonus depreciation and things like that.

Terrific. Thanks for the comments guys, that’s all I had.

Our next question comes from Spencer Joyce at Hilliard Lyons.

Good morning guys. Thanks for taking my call.

Hey Spencer. Good morning.

I’ll guess I’ll piggyback off Dan’s comments and say Dave, Steve, Alex, congratulations on the promotion. That’s pretty exciting for all of us I think.

Thanks Spencer.

First question, I just want to revisit for a second, the $3.9 million of the revenue deferral. I mean, we don’t have to spend much time on this, but just to be clear, that will not create a one-time benefit in 2013. Its just sort of an adjustment for the rate case, correct?

This is Steve. That’s correct. Because of the way the rates got – the decoupling in base rates, we started how that would spread through the annual PGE more or less. So what we’ll get in 2013 is a full year, but in 2012 we lost the impact in the November, December period.

Okay, so just in that November, December we were under a bit of a new normal. So we won’t see any kind of one-time benefit in ’13.

Right, right. And Spencer this is David, just so you understand the way this is going. The nice thing about this now is that our revenues are probably a little bit more equality spread amongst the year and one of the things you will see in 2013 is the first quarter and probably the fourth quarter revenues would be down, but the second and third quarter revenues will be up. So on the net-net basis everything will be fine, but on a comparison basis you will have second and third quarter probably being higher than previous years, versus the first and fourth quarter if that makes sense. And again, that’s all related to more of the revenues are coming in on a fixed format versus a volumetric format, which obviously most of our volumes are during the winter months, so…

Yes, just a little less of the bell curve there and that’s kind of the way I was interpreting it when you said the Q’s one through three next year would see a little bit of that borrow from Q4. I guess kind of moving on, a couple more housekeeping items. Are there any plans to do any refinancings this year, either the stuff we have due in ’14 or maybe even a little bit farther out.

Want to talk about it.

Yes, this is Steve again. We do have plans for finance, and refinance and we have no maturing debt in 2013, but we do have plans. Our shorter-term debt balances aren’t extremely high, but we are investing in the business as you know with gas reserve transactions and others. So we will have plans to do some financing later this year.

Okay, and you all have the CapEx targets for this year and next year?

Well, we don’t typically give overall targets, but as I mentioned before, the kind of the core CapEx for the utility is always around $100 million and I would anticipate we’ve obviously, as we mentioned, we have a little bit of MR (ph) or the storage expansion dollars that we just chatted about that will run it up a little bit higher than that. I think you will find that its probably between $100 million and $150 million overall and then when you see the 10K that’s filed today, it will give you the three year average that we have out there, that we anticipate.

Okay, thanks for the color there. Didn’t mean to press you on the stuff you don’t really give out there. One final thing that just kind of pops into my head, discussing the 10 year energy plan that just got approved in Oregon, was there anything in there regarding solar that you all would perhaps pursue.

I’m not that focused on the electric side of the plan. We’ve got Marg Kirkpatrick, who is our General Counsel and also heads up our Regulatory or Government Affairs Operation. She worked on the plan with the Governors office, so she might have an insight on it.

Yes, thanks guys. The plan was actually at a quite conceptual high level, can you her me?

Yes, great.

The plan was at a conceptual high level and what it did say was that the state reaffirmed its commitment to renewable energy and tax credit and the renewable portfolio standard, that kind of language, but it didn’t say anything specific about new incentives for solar or a particular solar program.

And Spencer, it’s related directly to us. We have no plans at the current time for solar investments. We’ll obviously look at everything that we’ll possibly look at, but at this time we are more focused on the core utility and obviously the storage that we talked about a minute ago.

Fantastic. That’s kind of what I wanted to hear. Again, that’s all I had. Thanks for taking my questions.

Thanks Spencer.

The next question comes from Michael Bates with D.A. Davidson.

Hey, good morning. Just wanted to follow up on the question of the Mist expansion if I could. Is the expansion that we are talking about today boldly related to the new Peaking facility they’ll be building or are we also assuming the collection of their larger base load units.

I think it is purely around their peaking plant. There has not been a determination on who will build the base load unit yet. So it is exclusively relate to their peaking facility at Port Westward.

Assuming the new base load unit is constructed, would that potentially be up side for you guys as you plan out this Mist expansion.

Well, it’s hard to tell. Until you know who wins that project, its difficult to know. I’d say, if the project ends up on the west side of the cascade, it’s probably a support for our Palma pipeline project. But again, until you know, there were people on the east side of the mountains who also submitted proposals and so until you know what the outcome is, it’s kind of hard to tell.

Thank you very much.

Sure. Any other questions?

(Operator Instructions).

It doesn’t look like there are any other questions. So thanks everybody for joining us. We appreciate your attention and your support of our company. Thanks.