The Mercury News

PG&E bills are shocking for customers amid state's soaring natural gas prices

- By George Avalos gavalos@bayareanew­

Soaring prices for natural gas and this winter's icy blasts have jolted PG&E customers with brutal — and fast-rising — monthly utility bills.

“I almost fell over when I got my bill,” said Pleasanton resident Nicole Murray, who was astounded at the total for PG&E gas and electricit­y services. “It was horrifying.”

For years, Murray said her PG&E bill typically ranged from $300 to $400 a month. Starting late in 2022 and so far this year, her PG&E bill is closer to $800 a month.

Experts point to an array of factors driving California's crushing surge in monthly utility bills — with natural gas prices, especially, a culprit.

“The natural gas costs are really high, but just in California and on the West Coast,” said Severin Borenstein, director of UC Berkeley's Energy Institute at Haas. “In the rest of the U.S., natural gas has become cheap, very cheap.

“One factor is gas pipeline capacity,” he continued. “If we had more pipeline capacity, you would see more gas going from low-cost areas to the West Coast.”

Plus, reserves of natural gas aren't available to the same extent as in years past.

“We have less storage on the West Coast than in past years,” Borenstein said. “When we don't have as much storage of natural gas, prices can go through the roof.”

One major complicati­on: The gas storage field at Aliso Canyon in the San Fernando Valley region of Los Angeles County suffered a massive leak in 2015 that forced the shutdown of the energy complex in 2016. In 2017, Southern California Gas resumed storage in the field, although on a limited basis.

In January, Bay Area prices for natural gas piped into the home —

roughly equivalent to PG&E gas services — rocketed higher by 24.4% compared to January 2022, according to the U.S. Bureau of Labor Statistics. That was a big jump from December's annualized increase of 14.7%. And it was the largest year-to-year increase since September 2022, this news organizati­on's analysis of the federal agency's report determined.

The Bay Area's recent frigid weather, punctuated this month by unusual snow storms, also has contribute­d to the jump in PG&E bills.

“We had a very cold November and December, and that drove up demand as supply was constraine­d,” Borenstein said. Frank and Adele Frausto thought they had successful­ly warded off soaring utility bills after they installed a solar panel system for their house in San Jose's Evergreen district.

“Our combined gas and electric bill used to be $200 a month,” Frank said. “Now, gas only is $300 a month. And that's with solar. … It's crazy how high our PG&E bills are.”

Oakland-based PG&E also appears to have harvested a big increase in revenue from recent gas operations.

During 2022, PG&E generated $6.62 billion in revenue from its gas utility operations, up 20.1% from the $5.51 billion PG&E realized in 2021 from gas revenue.

During the Octobert-hrough-December fourth quarter of 2022, PG&E generated $2.05 billion in revenue from natural gas utility operations, up 24.2% from the $1.65 billion in revenue in the fourth quarter of 2021.

Gas revenue is rising at a much faster rate than the utility's overall revenue, the company's annual report shows. In 2022, PG&E realized total revenue of $21.68 billion from electricit­y and gas operations, an increase of 0.5% from the $20.64 billion in revenue in 2021.

“PG&E doesn't control the market prices for natural gas,” said Lynsey Paulo, a PG&E spokespers­on. “We don't mark up the price. From November through January, our natural gas market prices were extremely high, in some cases, six times higher than the U.S. benchmark.”

California's major utilities also are obliged to transport the vast majority of their wholesale natural gas for use by their customers.

“The huge price differenti­als between the West Coast and the rest of the country tells us that transport capacity between the areas is constraine­d. In fact, we knew this coming into the winter,” Borenstein wrote in a blog post. “A pipeline explosion from 2021 reduced capacity to move gas from the producing regions in and around Texas, the source of much of our supply.”

And while utility gas prices have zoomed higher for PG&E customers in the Bay Area, this region appears to be better off than Southern California, where massive increases in gas utility costs have been reported.

“Customers of Southern California Gas have seen a quadruplin­g in their commodity cost of gas, while customers of PG&E in the north have seen slightly less than a doubling,” Borenstein stated in his Jan. 30 blog post.

Spot prices for natural gas hit a peak in December 2022 and have drifted steadily lower since then, according to informatio­n posted by the Natural Gas Intelligen­ce website.

“After three months of higher-than-normal natural gas market prices driving up energy costs, PG&E customers will see, on average, a 76% decrease in their March natural gas bill,” Paulo, the PG&E spokespers­on, said. Declining market prices and a one-time climate credit are two key factors behind the decrease.

That's cold comfort, however, for numerous PG&E customers. Many of the electricit­y-generating plants that PG&E operates run on natural gas, and even as gas prices come down, some experts say a jump in electricit­y costs could be ahead.

For now, many Bay Area residents are bundling up.

“The last few months, we've seen some huge bills,” said Jeanette Ingalls of San Jose, whose bills for her residence used to be around $200 to $250 a month, but are now more like $500 a month. “We are just keeping the heat down to a low level.”

Some customers said they have set thermostat­s down to 65 degrees or even less. Others said they simply have gotten used to wearing double layers of clothing when they are home this winter.

“I was definitely shocked by my bill,” said Eric Morgon, a Dublin resident. “I used to pay $200 to $300 a month. Now it's $500 to $600. I've never had a bill this high. I feel like we're paying for all of PG&E's past problems.”

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