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Utility companies and elected officials try to pinpoint why natural gas costs increased for residents this winter

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In the 57 years he's lived in Pismo Beach, Cliff Henley has never paid a natural gas bill as high as the one he got in January.

"My bill for December is $75 average. Now it's $435!" he told New Times on Feb. 20. "It's like buying a car or taking out a loan and not knowing about it."

GAS GRIEF SoCalGas' natural gas prices hit 344 cents per therm this January—a whopping rise compared to the 84 cents per therm charged for gas in January, 2022. - GRAPH COURTESY OF SOCALGAS
  • Graph Courtesy Of Socalgas
  • GAS GRIEF SoCalGas' natural gas prices hit 344 cents per therm this January—a whopping rise compared to the 84 cents per therm charged for gas in January, 2022.

The new amount was automatically deducted from his bank account, and left Henley adding roughly $375 to his potential gas bill budget every month. An uncharacteristically chilly winter in San Luis Obispo County did compel residents to use more heat than usual, but the usage amount and SoCalGas' calculation rates still left Henley confused.

"The day I got that bill, I told my wife to not turn the fireplace on," he said. "I think we used more gas in January than we did in December but not six times as much. That would be impossible."

Gas prices on the West Coast increased at the beginning of the year. Measured in therms, the commodity cost per unit of gas from SoCalGas—the company that delivers natural gas to residents and businesses throughout Central and Southern California—tripled from $1.05 in December 2022 to $3.45 in January 2023.

Similarly, customer bills from Pacific Gas and Electric Company (PG&E), which serves the Bay Area and Northern California, showed that the gas procurement cost rose from 98 cents per therm in December to $1.37 per therm in January. PG&E defines procurement cost as the price of buying natural gas and transporting it to the local transmission system.

While natural gas bills are decreasing for February and March, California's customers are still reeling from sticker shock. SoCalGas data shows that customer usage spiked in early December compared to the same month in 2021 and the five-year average. However, usage plummeted below 2021 demands and the five-year average during the last week of December.

In a notice to customers dated Dec. 29, SoCalGas attributed the price hike to unstable national and regional markets where companies buy natural gas. Other reasons include reduced natural gas supplies to the West Coast from Canada, diminished interstate pipeline capacity to the West Coast because of pipeline maintenance work in Texas, and low natural gas storage on the coast.

Storage levels for both SoCalGas and PG&E decreased, according to Aleecia Gutierrez, the director of the California Energy Commission's Energy Assessments Division. She made the announcement at the state's Feb. 7 Public Utilities Commission (CPUC) meeting, adding that inventory storage for SoCalGas was the highest it had been in six years, but that changed this winter.

From Nov. 1, 2022, to Jan. 24, 2023, SoCalGas' natural gas reserve sank from 88 billion cubic feet (bcf) to roughly 58 bcf. PG&E's levels dropped from almost 6 bcf to approximately 4 bcf over the same time period.

Jamie Court, president of a Santa Monica nonprofit called Consumer Watchdog, told the Los Angeles Times that SoCalGas could have managed their reserves better in preparation for the winter and offset costs for customers.

"SoCalGas' storage inventory requirements for winter are regulated by the CPUC," utility spokesperson Brian Haas told New Times in response to questions about the mismanagement allegations. "As of Oct. 31, 2022, SoCalGas had about 88 bcf in its storage inventory, including the inventory space used for system balancing and the inventory held by wholesale customers and core aggregators—fully meeting state requirements."

Haas later added that it would take time to quantify SoCalGas' inventory versus the state requirements, according to "subject matter experts."

"Our inventory was 97 percent full at the beginning of the winter," Haas said. "We quite literally didn't have room for much more than we had."

Rising natural gas prices alarmed Californians so much, that it caught the attention of U.S. Rep. Salud Carbajal (D-Santa Barbara) in the 24th District, which includes Santa Barbara County and parts of SLO and Ventura counties. During the week of Feb. 22, he led a group of 15 members of California's congressional delegation to call for a Federal Energy Regulatory Commission (FERC) investigation into the increased home energy costs.

Carbajal spokesperson Ian Mariani said that mismanagement of inventory controls isn't necessarily on the congressman's radar at the moment.

"His primary focus in this effort is ensuring FERC investigates any potential anti-competitive practices to confirm that market manipulation is not one of the reasons for this recent spike," Mariani said.

Earlier this month, Gov. Gavin Newsom also wrote a letter to the FERC chair calling for an investigation.

Haas from SoCalGas said the company was cooperative.

"We support Gov. Newsom's call for a review of the natural gas supply and storage constraints, and cold weather conditions that drove up commodity prices in the Western United States recently and that left many SoCalGas customers facing unprecedented winter heating bills," he said.

Chris Read, the city of SLO's sustainability manager, said that local governments are also feeling the pain of increased bills because SoCalGas heats some facilities like the pools at SLO Swim Center.

"We are making a concerted effort to lead by example as we switch from natural gas to all-electric energy, both because it is cost-effective and because it will help us achieve our goal to have carbon-neutral municipal operations by 2030," Read said.

Santa Barbara County spokesperson Kelsey Buttita said that she's come across complaints from residents on social media about natural gas bills that have doubled and tripled. But there's some respite, she said.

"The county of Santa Barbara is part of the Tri-County Regional Energy Network (3C-REN), which offers incentives to single- and multi-family residents to make energy efficiency improvements and switch to efficient all-electric appliances, which can reduce greenhouse gas emissions and mitigate high natural gas prices," Buttita said.

SoCalGas also offers some help for customers struggling to pay their gas bills. They can apply to the Gas Assistance Fund for a one-time grant to cover a bill amount, as long as it doesn't exceed $400. Then there's the Level Pay Plan program that averages a customer's annual natural gas use and costs over a 12-month period.

In February, the CPUC also tacked on a California Climate Credit to gas bills worth $52.78 and $50.77 for PG&E and SoCalGas, respectively.

"That doesn't help with anything," said Pismo Beach's Henley. "If my bill is $435 again, that means it'll still be $385. They [SoCalGas] could have done a better job notifying people." Δ

Reach Staff Writer Bulbul Rajagopal at [email protected].

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