While natural gas prices in California have returned to a fairly normal rate, some San Diego city leaders believe there are unanswered questions as to how and why prices doubled this winter.
City Councilman Joe LaCava read a statement at the council meeting Tuesday reiterating concerns he raised as chair of the council’s Environment Committee and demanding an investigation into not only why natural gas prices skyrocketed, but why San Diego Gas & Electric did not have measures in place to protect rate payers.
“Other investor-owned utilities apparently employed strategies such as stockpiling, rate stabilization reserves, hedging purchases, and reducing their profits to protect rate payers,” LaCava said. “The committee’s investigations revealed that with no proactive measures in place, SDG&E faced the choice of protecting San Diego families or protecting shareholders. They chose shareholders and passed along the high rates to the public.”
The utility, owned by San Diego-based Sempra Energy, alerted rate payers in October to a coming increase and subsequently offered $1 million in customer assistance funding for those experiencing financial hardship as well as $104 for each rate payer in bill credits for February and March — actually California Climate Credits rate payers were due later in the year but advanced by the California Public Utilities Commission.
“While SDG&E doesn’t control the natural gas market, we feel it’s very important for us as a company to dedicate shareholder dollars to help our customers who are struggling to absorb significant increases in winter energy bills due to extreme commodity market conditions in the West,” SDG&E CEO Caroline Winn said in January. “We are committed to make every effort to help our customers prepare and take action to manage their energy use and provide access to programs and services.
“Additionally, as a company, we want to contribute financially to those in need in the communities we serve,” she said.
SDG&E’s residential gas customers will see a $43.40 credit on their February bill. Electric customers will see a $60.70 credit on their March bill and the same amount on a bill in the second half of the year. Customers will see the climate credit reflected on their next bill.
But for many San Diegans who saw utility bills grow by hundreds of dollars, these efforts leave unanswered questions.
Councilwoman Marni von Wilpert, also an Environment Committee member, said none of the members of that committee held last week was satisfied with the answers they did get and they are moving forward with requests to the CPUC and Gov. Gavin Newsom.
“We are not sleeping on this,” she said. “We are demanding answers.”
New gas and electric rates went into effect Jan. 1 and stabilized in recent weeks. According to SDG&E, the cost per unit of natural gas — known as a therm — more than doubled over the past year, increasing from $2.36 per therm in January 2022 to $5.11 per therm in January 2023.
Natural gas is not just used for heating and cooking, it’s also used to generate 40% of the country’s electricity. The reasons for the spike in prices were varied, according to the U.S. Energy Information Administration, including widespread, below-normal temperatures; high natural gas consumption; reduced natural gas flows; pipeline constraints, including maintenance in West Texas; and low natural gas storage levels in the Pacific region.
“While the extraordinary gas rates are behind us, today we still have no answers; there is no protection for San Diegans under the current structure to prevent this from happening again,” LaCava said. “The Environment Committee started the conversation, I urge Governor Newsom and the California Public Utilities Commission to use their authority and investigative powers to finish the conversation and ensure the public is protected going forward.”
According to the utility, more than 90% of the increase in the overall gas rate is driven by the market price for gas — the amount SDG&E pays suppliers to buy the gas on behalf of its customers.
SDG&E leaders said they do not charge any markup for natural gas — if the utility pays $1 for natural gas in the commodity market, that’s what customers pay, they said.