EXHIBIT 10(B)


                                 AMENDMENT NO. 3

                                     TO THE

                          NORTHWEST NATURAL GAS COMPANY

                      DIRECTORS DEFERRED COMPENSATION PLAN

                         RESTATED AS OF DECEMBER 1, 1997

     This Amendment No. 3 to the Northwest Natural Gas Company Directors
Deferred Compensation Plan, effective June 1, 1981 and Restated as of December
1, 1997 (the "Plan"), is effective as of January 1, 2001 and has been executed
as of this 28th day of September, 2000.

     The Plan is hereby amended as follows:

     FIRST: Section 4 is amended to read as follows:

          4.   Interest. Interest shall be credited to the Cash Account balance
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     (including both principal and interest) of each participating Director
     based on the balance at the end of each calendar quarter. The rate of
     interest to be applied at the end of each calendar quarter shall be the
     quarterly equivalent of an annual yield that is two (2%) percentage points
     higher than the annual yield on Moody's Average Corporate Bond Yield for
     the preceding quarter, as published by Moody's Investors Service, Inc. (or
     any successor thereto), or if such index is no longer published, a
     substantially similar index selected by the Board. At no time shall the
     interest rate be less than six percent (6%) annually. The interest credit
     shall continue to be applied to the Cash Account of a Director, even if
     ceasing to serve as a Director, until all amounts credited to his or her
     Cash Account have been paid. Said interest shall be calculated quarterly,
     based upon the average daily balance of the Director's Cash Account since
     the preceding calendar quarter, after giving effect to any reduction in the
     Cash Account as a result of any payments. The remaining annual payments
     will be recomputed to reflect the additional interest credits.

     SECOND: Section 5(b) is amended to read as follows:

          (b)  Timing of Benefit Payment. At the time the Director elects to
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     defer Fees or NEDSCP Shares, and with respect to Retirement Benefit
     Accounts before January 1, 1998, the Director may designate the number of
     annual installments, not to exceed ten, in which the applicable Account
     balance shall be paid, or the Director may elect to receive such Account
     balance in a lump sum payment, or in a combination of a partial lump sum
     and the remainder in installment payments. A Director may elect to modify
     such election by filing a change of payment designation which shall
     supersede the prior form of payment designation for any one (1) or more
     deferral periods. If the Director's most recent change of payment
     designation has not been filed one (1) full calendar year prior to the year
     in which the Director ceases to serve as a Director of the Company, the
     prior election shall be used to determine the form of payment. For example,
     a Director leaving the Board in 2003 must file a written request with the
     Committee by December 31, 2001 to change his form of payment designation.

     THIRD: Section 5(g) is amended to read as follows:

          (g)  Accelerated Distribution. Notwithstanding any other provision of
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     the Plan, a Director shall be entitled to receive, upon written request to
     the Committee, a lump sum distribution equal to ninety percent (90%) of the
     vested Account balance as of the last day of the calendar quarter
     immediately preceding the day on which the Committee receives the written
     request. The remaining balance shall be forfeited by the Director. A
     Director who receives a distribution under this section shall be suspended
     from participation in the Plan for 12 months. The amount payable under this





     section shall be paid in a lump sum within 65 days following the receipt of
     the notice by the Committee from the Director.

     FOURTH: Except as provided herein, all other plan provisions shall remain
in full force and effect.

IN WITNESS WHEREOF, Northwest Natural Gas Company has caused this Amendment No.
3 to be executed as of the date first written above.

                                        NORTHWEST NATURAL GAS COMPANY


                                   By:  /s/ Richard G. Reiten
                                      ------------------------------------------
                                             Richard G. Reiten
                                             President and CEO