DLNews Consumer Report:

There has been a lot of controversy surrounding the rise in gas prices. As a result, the California Energy Commission recently announced that natural gas prices are expected to increase throughout the state, including in Southern California.

“Consumer Watchdog Calls for Investigation Into So Cal Gas Natural Price Spikes; Points to Evidence Utility Colluded with Parent Company Sempra To Drive Up Price On Customers,” "Southern California Gas's curious failure to plan for winter left its customers with huge bills and its parent company SEMPRA and its gas trading subsidiaries with huge profits," said Jamie Court, President of Consumer Watchdog. "The company owes the public answers, and it is up to our public prosecutors to ask the key questions on their behalf." 

The consumer group wrote the doubling of natural gas prices is unique to California and that So Cal Gas "has purchased gas at unreasonably high prices, with higher profits for So Cal Gas's parent company SEMPRA, which sells natural gas to So Cal Gas through its other subsidiaries. We believe So Cal Gas's conduct in implementing natural gas rate hikes may constitute an unfair business practice, and we are calling upon you to investigate."  

"Southern California Gas doubled consumers' natural gas bills with virtually no notice, leaving its customers with large, unexpected bills," the letter continued. "They are now forced to choose between paying their utility bills and their rent, food costs, and other monthly obligations with no warning."

The letter asks the prosecutors to investigate the following issues:

1) Did So Cal Gas fail to notify its customers promptly to drive up natural gas sales for SEMPRA's subsidiaries? Without adequate notice, customers would use more gas, and SEMPRA subsidiaries would make more money.

2) Does So Cal Gas have a duty to acknowledge its financial relationship with SEMPRA and its other subsidiaries as sellers of natural gas to the utility? How much did SEMPRA profit from selling gas to So Cal Gas at increased costs?

3) What role did SEMPRA and its subsidiaries play in doubling natural gas prices on the West Coast? Natural gas prices in the East are significantly less than West Coast prices. Did SEMPRA deplete inventories to drive up the price on the West Coast, knowing it had a guaranteed market for higher price gas from its subsidiary utilities?

4) What role did SoCal gas play in its customers' scarcity of natural gas? Evidence shows that So Cal gas did not adequately purchase gas for the 2022 – 2023 season. Ordinarily, the utility would buy, transport and store ahead of the season to plan for winter surges. This failure of planning created conditions where it had to buy from its parent company SEMPRA's subsidiaries, on the spot market at twice the regular price, passing the costs on to its customers.

The California Air Resources Board has also warned of high prices and has said that prices will continue to climb through 2030. At the same time, the state's Public Advocate's office is urging the Public Utilities Commission (PUC) to investigate why there are such sudden price spikes in the natural gas market. They suggest the PUC issue consumer credits and automatic enrollment in COVID-19-type relief payment plans help consumers avoid being caught up in a rate hike.

The sudden spike in natural gas prices has been blamed on the cold snap and supply constraints. Although SoCalGas typically purchases gas before the winter season, it failed to do so. Instead, they had to buy gas on the spot market, which meant they had to pass the cost to customers.

What an irony: “But in many other parts of the country, natural gas futures prices have plunged, with traders Friday seeing a 17-month low at Henry Hub, a Louisiana natural gas pipeline that serves as the benchmark for the North American natural gas market on the New York Mercantile Exchange. “It’s the exact opposite of what’s happening in California today,” said Robert Yawger, managing director and energy futures strategist based in New Jersey at investment firm Mizuho Securities.”

Regional and national markets determine the wholesale price of natural gas that SoCalGas uses. For example, most of the gas used in California comes from Wyoming, but the company buys supplies from New Mexico and parts of Canada.

Your friendly SoCalGas Newsroom Greetings: “A Note to Our Customers: High Bills May Come as a Shock in January, But We Have Some Tips and Tools to Help You Save - Market conditions caused natural gas rates to increase 128% since December.”

SoCalGas has offered several ways for customers to save money. For example, they are offering $100 rebates on energy-efficient appliances. Another way to save is to lower your thermostat by three to five degrees. Water heaters, too, can be reduced by a few degrees. Other suggestions include not using gas-powered fireplaces, washing clothes in cold water, and adequately weather-stripping your home. These tips can save up to 10% on heating costs.

The company also promotes a "Ways to Save" tab for its customers. In the past, it has given out $1 million to the Gas Assistance Fund, a program for low-income families.

Customers can access the SoCalGas website to learn how to save money on their utility bills. In addition, several programs are available, including the Residential Advanced Clean Energy Program, which offers free energy assessments and the installation of energy technologies. The company also has an assistance fund that gives qualifying applicants a one-time grant of $100.

 Facts:

Effective January 1, 2023, the procurement component of the core sales rate will increase from 239.563 ¢/therm to 344.892 ¢/therm. This increase resulted from an overall 270.869 ¢/therm increase in commodity price and a decrease of 31.306 ¢/therm in account adjustments. As a result, compared to a year ago, the procurement rate is about 312.7% higher (83.569 ¢/therm) than it was effective January 2022.

Gas Procurement Prices Monthly Price

Source: SoCalGas

Source: Consumer Watchdog

Editors note:

Sempra Declares Quarterly Dividend, Payable January 15, 2023

Sempra announced that its board of directors has declared a $1.145 per share quarterly dividend on the company's common stock, payable January 15, 2023, to common stock shareholders of record at the close of business on December 22, 2022.