The California Public Utilities Commission and its independent arm that looks out for ratepayers is looking at measures — at least in the short term — to blunt some of the sticker shock that customers with natural gas hookups will soon see.
The commission on Thursday also vowed to launch an examination into the root causes of the recent spike in natural gas prices. S235 JR Spiral Steel Pipe
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“This January we are seeing unprecedented commodity price increases for natural gas that will be automatically passed onto consumers and we’re extremely concerned about that,” said Matt Baker, director of the Public Advocates Office.
San Diego Gas & Electric recently warned its 905,000 customers equipped with gas heating and stoves that their January bills are estimated to double, blaming the increase on a recent and dramatic spike in natural gas wholesale prices in California.
In an emergency motion filed with the commission, the Public Advocates Office requested the commission, known as the CPUC for short, move up the California climate credits that natural gas customers across the state receive each year.
The climate credit usually ranges from $40 to $55 and is automatically deducted from the bills of natural gas customers in April. The proposal from the Public Advocates Office calls for applying the credit to the February billing cycle.
“We were just trying to think of the fastest short-term actions,” Baker said. “This is by no means the end-all and be-all but moving the climate credit up might allow households that are on a tight monthly budget to reduce their gas bills by $50 or so.”
San Diego Gas & Electric estimates the natural gas credit in its service territory will come to about $43 this year.
While presiding over a voting meeting Thursday, CPUC President Alice Reynolds made remarks about high natural gas prices and said the commission will consider shifting the timeline for the climate credit “as soon as possible to (give) immediate relief for customer bills.”
SDG&E officials said they support the request.
“We agree that moving up the timing of the gas climate credit is the right thing to do for our customers,” spokesman Anthony Wagner said in an email. “The change in timing must be approved by the CPUC. Once we have approval, we will apply the credit as soon as possible. “
The Public Advocates Office’s motion also suggested a mechanism in which customers affected by the price spike can pay their monthly balances over a period of, say, three to six months.
The CPUC adopted a similar plan in the spring of 2020 in the wake of COVID-19 lockdowns that led millions of Californians to fall behind on their utility bills.
“We think that probably the easiest and most administratively simple way to do it is to either amortize the whole increase and then spread it out over the billing,” Baker said, “or do it on a customer-by-customer basis where customers are automatically enrolled into a budget billing program that’s spread out over a number of months.”
The Utility Reform Network (TURN), a ratepayer advocacy group based in San Francisco, likes the idea.
“There’s no point in billing people all of it right now when we expect (the commodity price for natural gas is) going to be much lower next month,” said TURN’s executive director, Mark Toney. “It really makes more sense when you get this kind of one-time increase, that we know is isolated, to just spread it out.”
CPUC president Reynolds said the commission will convene a meeting to examine what led to natural gas bills shooting through the roof.
“The date will be announced soon and we will be using this to bring in market experts to highlight publicly what we are seeing with gas prices and electric prices, examining all the possible drivers behind the gas price spikes and exploring potential actions that can be taken,” Reynolds said.
Reynolds said CPUC staff will also contact the Federal Energy Regulatory Commission — which oversees transmission and wholesale sale of electricity and natural gas in interstate commerce — and ask “that their market surveillance and enforcement staff take a serious look at what is going on in the gas and electric markets in the West.”
The Public Advocates Office also called for an examination of the sudden hike in prices.
“We do not see any evidence” of market manipulation, Baker said. “That doesn’t mean it’s not there, but we need a thorough investigation.”
Given the surge, Wagner of SDG&E said, “we understand the desire to examine the root causes of the high increase in natural gas market prices to determine if further action is needed.”
Skyrocketing natural gas commodity pricing has hit Southern California customers hard.
The rate SDG&E charges customers for natural gas has doubled compared to last month, with the price per therm (a unit of natural gas) jumping from $2.55 in December to $5.11 in January.
A household gas bill that came to about $105 in January 2022 is estimated to leap to about $225 this month. That’s an increase of 114 percent. A typical SDG&E residential customer uses an average of 44 therms of gas in January — usually the coldest month of the year — and drops to 39 therms in February, 35 in March and 26 in April.
The utility has listed multiple reasons for the sharp rise in the commodity price for natural gas, including wet weather and colder-than-normal temperatures that have led consumers to use more gas in their home heating systems than they normally would.
The U.S. Energy Information Administration has also pointed to inventories on the West Coast that are well below the five-year average, reduced pipeline capacity and constraints in gas deliveries from other states.
As reported by the Wall Street Journal, a Kinder Morgan pipeline that is a major source of natural gas delivery to California has been closed since an explosion in August 2021 in the town of Coolidge, Arizona, killed two people and injured another. The pipe is expected to reopen in the spring.
An energy analyst in Oregon told the Union-Tribune last week that cold and dry weather in the Pacific Northwest has reduced the number of megawatts of hydroelectric power the area would normally export to California’s electric grid.
While natural gas prices have zoomed in California, they have plummeted in most of the U.S., due in part to warmer-than-usual weather in large parts of the country that has led to consumers reducing their use of gas for home heating.
“It’s a big country and there are regional differentials that will spike — or slide for that matter — and right now, because of the weather situation in California, you’re getting some big spikes,” said Robert Yawger, managing director and energy futures strategist based in New Jersey at the investment firm Mizuho Securities.
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