Feds investigating what’s behind natural gas spike in California

The head of the Federal Energy Regulatory Commission that oversees the interstate transmission of natural gas, electricity and oil on Thursday would not say whether it will launch a formal investigation into soaring natural gas prices in California but did say the agency has assigned staff to examine whether any market manipulation took place.

“Let me be clear, FERC takes serious the gas price spikes that happened in California and in the West,” acting chairman Willie L. Phillips said during a briefing with energy reporters at the agency’s headquarters in Washington D.C.

“Our office of enforcement, the division on analytics and surveillance, they are undertaking enhanced surveillance right now regarding market participants (to) determine whether they contributed to or benefited from the high gas price spikes in California,” Phillips said.

In the natural gas industry, market participants are commonly understood to include — but not limited to — producers, marketers and traders, utilities, owners of capacity rights, storage providers, pipeline companies and other associated infrastructure.

California utility customers experienced unprecedented hikes in natural gas bills in January.

San Diego Gas & Electric last month warned that typical customers with natural gas hookups in their homes should brace for January statements rising 114 percent compared to January of 2022.

Earlier this month, SDG&E posted a big drop in the commodity price of natural gas and predicted typical customers would see their February bills cut by about half.

But prices in the San Diego area will still be about twice as expensive as they were in February 2022. Gov. Gavin Newsom on Feb. 6 sent a letter to Phillips, requesting FERC “focus its investigatory resources on assessing whether market manipulation, anti-competitive behavior, or other anomalous activities are driving” the run-up in natural gas prices across the West.

Utilities have blamed the sudden increase on a combination of circumstances, including abnormally cold weather in California that has caused customers to crank up their gasfired heating units. But, Newsom said in his letter, “those known factors cannot explain the extent and longevity of the price spike.”