Wholesale prices for natural gas have gone through the roof, soaring higher than predicted for the month of January, and San Diego Gas & Electric officials warn customers with gas hookups to prepare for price shocks.
The rate for natural gas has doubled compared to last month, with the price per therm jumping from $2.55 in December to $5.11 in January.
A therm is a measurement of natural gas use. It equals 100,000 BTUs, or British Thermal Units, which is the quantity of heat needed to raise the temperature of one pound of water by one degree Fahrenheit.
A typical SDG&E residential customer uses an average of 44 therms of gas in January — usually the coldest month of the year.
If your household gas bill came to about $105 last January, SDG&E now estimates this month’s bill will come to about $225. That’s an increase of 114 percent.
Lower income customers on the California Alternate Rates for Energy, or CARE program, who use natural gas can expect to see their January gas bill go from $60 to $130.
Reporter Rob Nikolewski on the San Diego News Fix podcast:
SDG&E last month cautioned that average natural gas s should expect to see an increase in their January bills but did not anticipate the price soaring to $5.11 per therm.
“Never before have we seen such a jump in the commodity price,” said SDG&E spokesman Anthony Wagner.
Natural gas use in Southern California usually goes up during the winter months, as homes and businesses use gas for heating. Typical SDG&E residential gas customers use 39 therms in February, 35 in March and 26 in April.
SDG&E officials would not hazard a guess on whether the commodity price will stay high in February but historically, the monthly procurement price declines as the winter progresses.
So why have natural gas prices skyrocketed? Colder than usual weather in California and the West has combined with frigid conditions in the East and North to draw down inventories across the country as consumers turn up the heat. An Arctic blast that blew through Texas around Christmas didn’t help matters, either.
The U.S. Energy Information istration also pointed to reduced capacity because of pipeline maintenance in West Texas that lowered westbound natural gas flows. The EIA reported that Pacific region natural gas storage inventories in December were 30 percent below the five-year average.
The wholesale — or commodity — price of natural gas s for more than 90 percent of the increase that utility customers pay.
SDG&E’s natural gas is purchased by Southern California Gas, a fellow subsidiary of San Diego-based Fortune 500 energy company Sempra.
The price for what’s called “core procurement” that goes to residential and small commercial customers is set at the start of each month. The price soared from $1.05 in December to almost $3.45 on Jan. 1. A new price will be posted Feb. 1.
Of SDG&E’s 3.6 million customers, about 873,000 have gas meters.
“We understand the challenges customers are facing as the cost of goods and services across the board continues to increase,” said Dana Golan, SDG&E’s vice president of customer services. “While not good news, we want to make sure our customers are prepared for significantly higher winter bills, and more importantly, that there are tools and resources, including financial assistance available, given the severity of natural gas market conditions.”
For customers who do not have gas hookups, there is a tiny bit of good news.
SDG&E in October predicted that a typical residential electricity customer would see an increase in their bills of about $28 more starting Jan. 1. The utility on Tuesday adjusted those numbers down to $25 more per month.
The average residential customer using 400 kilowatt-hours of electricity should expect to see their monthly bill increase from around $160 to $185. For CARE customers, the increase will go from about $105 to $120.
For typical residential customers enrolled in either of the region’s two community choice aggregation programs — San Diego Community Power and the the Clean Energy Alliance — the delivery portion of their electric bill is estimated to increase $10 per month. The generation portion of their bill is determined by what San Diego Community Power or the Clean Energy Alliance contracted for.
The increases come as energy bills keep going up across California.
Edward Lopez, executive director of the San Diego-based Utility Consumers’ Action Network, or UCAN, said before the holidays his organization received complaints about higher bills.
“If in fact SDG&E customers see that type of hike (in gas bills), that is just so unreasonable and so painful,” Lopez said. “It’s creating tough, tough choices for SDG&E customers in of not only how they pay their bill but making choices as to exactly what bills, including bills for other essential items, that they can afford to pay.”
San Diego has the highest average electricity price of metro areas in the 48 contiguous states, according to the U.S. Bureau of Labor Statistics. In November, urban Hawaii posted the highest price at 45.4 cents per kilowatt-hour, ahead of San Diego at 41 cents.
The average price in the U.S. in November came to 16.3 cents per kilowatt-hour.
The California Public Utilities Commission approves rates charged by SDG&E and the other major power companies in California.
“The commission for some time now has tried to focus on trying to bring energy costs in line, make them much more affordable, but we still haven’t seen a significant difference yet,” Lopez said.
As per utilities commission rules, investor-owned utilities such as SDG&E do not make a profit on the price of electricity or natural gas. The cost is a direct -through — meaning if a California utility pays $1 for natural gas in the commodity market, that’s what customers pay.
In the wake of the natural gas price spike, SDG&E officials said they will work with customers who are struggling financially and offered suggestions to save energy and reduce bills:
- Keep your furnace clean. Dirty air filters can increase costs and cause problems with equipment so check furnace filters each month and replace them regularly.
- Wash clothes in colder water. Using warm water instead of hot can cut the energy use of a load of in half and washing clothes in cold water saves even more money.
- Lower the thermostat on the water heater: Reducing the thermostat to 120 degrees Fahrenheit can save energy.
