Company Response
2/17/2023
Dear Ms. Essman:
Your complaint regarding the natural gas rate increase has been forwarded to our department for follow-up and review. Please know that we take your concern seriously and will do everything we can to make sure your bill is accurate while also making you aware of programs that may help lessen the impact of higher bills during winter.
SoCalGas does not set the price for natural gas. Instead, natural gas prices are determined by national and regional markets. SoCalGas buys natural gas in those markets on behalf of residential and small business customers, and the cost of buying that gas is billed to those customers with no markup, meaning SoCalGas does not profit from the movement of gas commodity prices. The price we pay for natural gas in the market is the price we charge you, plus transportation costs and other state-mandated charges.
Most of the natural gas consumed by our customers comes from natural gas production fields in New Mexico, west Texas and Oklahoma, as well as in the Rocky Mountains and Canada. The remaining natural gas supply percentage is produced locally in Central and Southern California from onshore and offshore fields.
The Gas Commodity Rate (the price you pay for natural gas), varies monthly depending on the market prices. SoCalGas does not set the price for natural gas. Instead, natural gas prices are determined by national and regional markets. SoCalGas buys natural gas in those markets on behalf of residential and small business customers, and the cost of buying that gas is billed to those customers with no markup, meaning SoCalGas does not profit from the movement of gas commodity prices. The price we pay for natural gas in the market is the price we charge you, plus transportation costs and other state-mandated charges.
According to the US Energy Information Administration (EIA), several factors are contributing to higher natural gas commodity prices.
• 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 and the Rocky Mountains.
• Reduced interstate pipeline capacity to the West Coast because of pipeline maintenance activities in West Texas.
• Low natural gas storage levels on the West Coast. For clarification, our storage facilities were at the approved capacity by the California Public Utilities Commission (CPUC), but demand was higher than expected.
Natural gas purchased during the summer months is normally less expensive than natural gas purchased during the winter (peak) months. The less expensive supply that is not used at the time of purchase is stored for future use in our natural gas storage facilities. The blending of lower priced stored gas with the more expensive gas purchased during the winter helps to keep the natural gas prices at the lowest possible rate during the peak season. As previously stated, the demand has been higher than the available storage. Consequently, SoCalGas, as well as other natural gas utilities in California and the west, must purchase natural gas at the higher winter prices.
Our rates are regulated by the CPUC based on the cost of natural gas itself. It’s also based on the cost of natural gas delivery (Transportation) and the cost to fund natural gas-related programs (Public Purpose Surcharge). Periodically, our customers can expect key rate changes. All requests for rate changes must be submitted by SoCalGas to, and approved by, the CPUC pursuant to a four-year General Rate Case (GRC) application process, as well as other proceedings. At a minimum, there is a rate change at the beginning of each year. For more information on this and how our rates are calculated, please visit: www.socalgas.com/pay-bill/understanding-your-bill/natural-gas-prices-explained#rate-change.
The following statement was included in customers October and November bills, advising of the rate increase:
We know things are getting more expensive. Natural gas costs have increased nationwide and are expected to remain high. We can help you manage higher bills with our assistance programs, Ways to Save tool, and Level Pay Plan at socalgas.com/ManageHigherBills
For your reference, we will mail you this correspondence which includes a comparison of your December and February bills from 2019 to 2023. According to the data, your recent consumption is in line or higher than your historical consumption. However, with the higher energy price, it costs more to use the same amount of gas than previous years.
Because we understand the financial impact the natural gas rate increase has had on our customers, SoCalGas has many options available on our website at socalgas.com/Assistance to help customers with financial assistance programs and services. For more information on available assistance and how to manage winter bills, please visit socalgas.com/ManageHigherBills.
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