Southern California Gas Co. on Tuesday, Feb. 28, announced that average residential bills will decrease by some 67% in March compared to January — the result of wholesale market prices for natural gas dropping for a second straight month.
“SoCalGas estimates that average residential bills will drop from $300 for January usage to an estimated $100 for March usage,” the utility said in a statement.
The company noted that an 83% drop in March’s “procurement rate,” compared to January’s high, drove the expected decrease in March customer bills.
“We’re pleased that we’re seeing what appears to be a trend to natural gas prices that are more in line with last year,” SoCalGas Senior Vice President and Chief Customer Officer Gillian Wright said in a statement. “Still, with the unusually cold and wet weather, we encourage customers to continue to conserve energy and take advantage of our cost-savings programs, which include recently improved direct financial relief for eligible customers.”
Natural gas prices are determined by wholesale national and regional markets, from which SoCalGas and other utilities make purchases. The cost of buying that gas is billed to customers with no markup, according to SoCalGas. A late-December cold snap across the country was one factor that drove natural gas market prices in the West to increase by some 128% between December and January — leading SoCalGas to warn residential customers in a Dec. 29 statement that “January bills are likely to be shockingly high.”
Other factors contributing to the spike in prices, according to SoCalGas, were:
— widespread, below-normal temperatures on much of the West Coast;
— high natural gas demand for heating by customers in areas with below normal temperatures;
— reduced natural gas supplies to the West Coast from Canada;
— reduced interstate pipeline capacity to the West Coast because of pipeline maintenance activities in West Texas, and,
— low natural gas storage levels on the West Coast.
Tuesday’s announcement by SoCalGas came as the utility is also looking to increase its rates in 2024, per a request filed last May with the California Public Utilities Commission — part of a rate-setting process that takes place every four years. SoCalGas, on its website, said that if its request is approved in its entirety by the CPUC, “the average residential monthly bill using 36 therms per month would increase by approximately $8.62 per month in 2024, when compared to estimated 2023. Individual customer bills may vary.”
The company said the request for a rate increase “will allow us to modernize and upgrade our infrastructure so that we can maintain and enhance long-term reliability and safety for our customers (and) support the growth of more diverse renewable energy options” — as well as “retain and reward” the company’s workforce. The CPUC has set a public hearing on the SoCalGas request for March 6. The hearing can be live-streamed at https://adminmonitor.com/ca/cpuc/hearing/20230306/.
On Monday, Feb. 27, SoCalGas announced the availability of $10 million in funding to help customers pay their bills. The company said it committed $5 million in funding to the Gas Assistance Fund, a program administered by the United Way that provides income-qualified customers with one-time grants to help pay their natural gas bills. SoCalGas also announced it will contribute $4 million to relaunch its popular Fueling Our Communities program, a collaboration with local food banks and nonprofits that has provided free meals and groceries to thousands of Californians facing food insecurity since 2020. In addition, SoCalGas said it will contribute $1 million in aid to small restaurant owners through the Restaurants Care Resilience Fund, a fund that was started in 2021 to help small restaurants with improvements, employee retention and to manage debt and rising costs.
Earlier this month, Gov. Gavin Newsom urged the federal government to investigate the recent price spike.