At Annual Meeting of Shareholders, NW Natural Reports Year of Growth in 2006, Increased Operating Efficiency.

PORTLAND, Ore. -- Northwest Natural Gas Company (NYSE:NWN), dba NW Natural, reported today at its annual shareholder meeting that the company delivered strong results in 2006 and has begun to see results from operating improvements that should contribute to company performance in 2007 and beyond.

"In 2006, we realized outstanding results, producing a total shareholder return of 29 percent," said Mark Dodson, NW Natural's chief executive officer. "At the same time, we launched a major restructuring effort that led us to re-examine every aspect of the company so we can continue to give customers and investors successful results into the future."

Dodson also pointed to excellent results from the JD Power & Associates survey in 2006 that placed NW Natural third in overall customer satisfaction among gas utilities and ranked the company first in the nation for ease of billing and payment services.

Steady customer growth continues to drive the company's bottom line, he said. "We continued to grow by more than 3 percent for the 20th consecutive year," Dodson added. In addition, the company's operational model changes created greater efficiencies and helped keep O&M costs below the customer growth rate, which is a key strategic objective going forward.

NW Natural earned $2.29 per share in 2006, up 9 percent from $2.11 per share in 2005. The performance was largely driven by customer growth, gas commodity savings and continued cost controls. The company increased dividends paid on its common stock in 2006 to $1.39 per share, marking the 51st consecutive year of increasing annual dividends paid. The current annual indicated dividend on the common stock is $1.42 per share.

Also, for the first time in many years, the company's cash flows funded its capital and dividend requirements, said David Anderson, senior vice president and chief financial officer. "Revenues grew to more than $1 billion for the first time in our history, which helped generate free cash flow of nearly $20 million," he said. "This is a remarkable accomplishment for a company like ours that has significant capital requirements to serve new customers."

Dodson also reported that NW Natural continues to study a proposed interstate transmission project with TransCanada's GTN system in Oregon. "If built, the Palomar pipeline will increase the reliability of our region's gas infrastructure and provide NW Natural with a new avenue for earnings growth," he said.

For the quarter that ended March 31, 2007, NW Natural reported consolidated earnings of $48.1 million, up from $41 million in the first quarter of 2006. Earnings in the first quarter were $1.76 per share, up nearly 19 percent from $1.48 per share in the first quarter of 2006.

During the meeting, shareholders re-elected Tod R. Hamachek, Kenneth Thrasher and Russell F. Tromley to three-year terms as directors, re-approved the company's restated stock option plan and ratified the appointment of PricewaterhouseCoopers LLP as independent auditors of the company for 2007.

Forward-Looking Statements 

This report and other presentations made by NW Natural from time to time may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and other statements that are other than statements of historical facts. The company's expectations, beliefs and projections are expressed in good faith and are believed to have a reasonable basis. However, each such forward-looking statement involves uncertainties and is qualified in its entirety by reference to the factors described in Part I, Item 1A, "Risk Factors," and "Forward-Looking Statements" following Part II, Item 7A, in the company's 2006 Annual Report on Form 10-K, and in "Forward-Looking Statements" following Part I, Item 2, of the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, that could cause the actual results of the company to differ materially from those projected in such forward-looking statements.

All subsequent forward-looking statements, whether written or oral and whether made by or on behalf of the company, also are expressly qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for the company to predict all such factors, nor can it assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.

About NW Natural

NW Natural is headquartered in Portland, Oregon, and serves about 640,000 customers in Oregon and southwest Washington. It is the largest independent natural gas utility in the Northwest and one of the fastest-growing local distribution companies in the nation. The company has more than 14 billion cubic feet of underground gas storage capacity within its service territory at Mist, Ore., and has in place rate mechanisms that help to protect revenues from warmer than average weather and declining consumption.