San Francisco Chronicle
Natural gas prices have sent utility bills soaring
California utility regulators Tuesday began to look at how the state might limit soaring natural gas prices during the next extended cold snap like the one that hit this winter, bringing widespread sticker shock to Californians trying to heat their homes.
In Northern California, average utility bills – combining both natural gas and electricity – have risen to an estimated $328 per month for the period of November 2022 through March 2023 – a 32% uptick compared to the average of $248 during winter months a year ago, according to Pacific Gas and Electric Co.
The problem was even worse in Southern California, where utility bills more than doubled this winter compared to one year ago, according to the California Public Utilities Commission.
“It’s like California doesn’t really care,” said a caller who gave his name as Troy Jackson, 66. He said it’s hard to stay warm even for those qualifying for discounted rates programs.
Although natural gas prices have already begun to fall from their December peak, utilities commissioners acknowledged they must do something to avoid similar fallout during the next enduringly cold winter.
“I heard loud and clear that the cost of inaction is increasing rapidly,” Commissioner Genevieve Shiroma said. “It’s unconscionable that consumers don’t have protection.”
The utilities commission has jurisdiction only over electricity prices, but these are partly influenced by the price of natural gas, because gas is one of the fuels that produce electricity. It accounted for about 38% of electricity consumption in California in 2021.
The federal government has jurisdiction over natural gas prices, and on Monday, Gov. Gavin Newsom sent a letter to the Federal Energy Regulatory Commission, urging the agency to launch an investigation into “whether market manipulation, anticompetitive behavior, or other anomalous activities are driving these ongoing elevated prices in the western gas markets.”
Utility companies including PG&E have blamed the price spike of natural gas on factors out of their control, such as problems with a critical pipeline delivering gas from Texas and storage limits.
PG&E and other utilities have said they do not make profits on the natural gas they purchase, and that utilities pass these costs onto customers without markups.
Newsom said that factors like cold weather “cannot explain the extent and longevity of the price spike.”
PG&E company representatives said at the hearing that they were aware of Newsom’s letter and “would support an investigation looking into the factors that have contributed to high market prices this year.”
At the commission hearing, natural gas industry trader Michael Williamson encouraged regulators to look more closely at how utilities manage natural gas storage systems.
“PG&E says they don’t make money on natural gas ... but they don’t lose money on the natural gas market either,” Williamson said.
William Walsh, Southern California Edison’s vice president of energy procurement and management, said he applauded Newsom’s call for a federal investigation and suggested that an investigation look beyond utilities into broader market forces impacting gas market prices.
“There’s enough there that it’s worth looking into,” Walsh said.
Commissioners heard from natural gas procurement and market experts and from government agencies and utility companies, including PG&E, SoCalGas and the city of Los Angeles’ power company.
They heard about necessary fixes on a Texas pipeline that ruptured last year, killing two people and injuring a third, that hampered natural gas deliveries to California. That project should be completed Feb. 15, allowing delivery to resume at prior levels.
The commissioners listened and asked questions, but offered no clues as to what they might do to help Californians, who were already burdened with some of the highest energy rates in the country before the recent price spike.
Residents who called into the meeting were unsatisfied that commissioners offered no sense of what they might do and many criticized regulators for failing to discuss their responsibility for keeping energy rates affordable.
“This is not fair for working class families,” said Lionel Morris, who said he was a member of the San Fernando Valley area neighborhoods council. (An operator read the commenters’ names phonetically, and the commission provided no record of accurate spellings.)
Steve Hicks of San Diego said his 90-year-old mother’s gas bill soared above $500.
“This is insane,” he said.