Aug. 5--Northwest Natural Gas Co. is considering reducing its full-time headcount by 50 to 100 positions by year end as it struggles to maintain earnings amid the housing slump, a slowdown in industrial demand and lower conversions of customers to natural gas.

The company said Tuesday that second-quarter earnings were flat compared with a year earlier, but they were well below the consensus estimates of Wall Street analysts as the company's customer growth fell to an annualized rate of 0.8 percent versus 2.5 percent in the same period last year.

The saving grace of the year so far is falling gas prices. That has meant refunds for recession-strapped customers after NW Natural overestimated gas costs last summer amid a hyper-volatile commodity market. It also has bolstered the utility's bottom line because regulators in Oregon allow NW Natural to keep part of the savings as an incentive to negotiate low commodity costs.

So far this year, that cost sharing mechanism on gas prices accounts for about 20 percent of the company's earnings. That percentage could deflate later this year as the company plans a further 15 to 20 rate decrease in November because of falling prices.

NW Natural said net income for the quarter ended June 30 was $3.09 million, or 12 cents per share, compared to $3.30 million or 12 cents per share in 2008. Analysts surveyed by Thomson Financial were expecting earnings of 17 cents per diluted share, on average.

Revenues for the quarter declined 22 percent to $149.06 million from $191.25 million in the same period last year.

"We are currently developing plans to help mitigate the decline, and to align current staffing levels to lower customer growth levels," chief executive Gregg Kantor said in a news release. "It is likely these changes will result in the equivalent reduction of 50 to 100 positions, with the majority occurring by year-end."

Kim Heitung, a company spokeswoman, said an "equivalent reduction" could involve a variety of measures, including layoffs, voluntary severance, benefits reductions or pay cuts. Some departments were staffed for higher customer growth numbers, she said, and "the new construction market in Portland has come to a screeching halt."

As of June 30, the company served more than 662,000 customers, with a growth rate of 0.8 percent over the prior 12 months.

The company's anticipated rate decrease of 15 to 20 percent would take place in November, just in time for the winter heating season. Washington customers can expect a similar decrease. The company already refunded $35 million to customers in June.

Northwest Natural released its financial results before financial markets opened. Its shares, traded on the New York Stock Exchange, dropped $1.90, or 4.2 percent, to close at $43.09.

Ted Sickinger: 503-221-8505; tedsickinger@news.oregonian.com

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