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Are natural gas prices really behind recent SDG&E rate hikes?

The company said customers could expect their bills to double this month due to historically high natural gas prices.

SAN DIEGO — Earlier this week, SDG&E sounded the alarm to let customers know they can expect their bills to more than double this month.

The company says natural gas prices are mostly to blame, going from $2.55 a therm in December to $5.11 in January. Due in part to higher demand, cooler temperatures, and pipeline constraints.

SDG&E doesn't mark up the cost; the company told CBS 8 that the increase isn't in their control.

"It's important to understand with commodities; it's not something we mark up. We buy natural gas in the market. If it's a dollar, then that's what our customers pay. There's no profit involved," said SDG&E spokesperson Helen Gao.

After our story aired, many CBS 8 viewers sent us angry emails questioning SDG&E's explanation, referencing charts showing declining natural gas prices.

"People have an absolute right to be upset and outraged,” said Charles Langley with the nonprofit Public Watchdogs.

CBS 8 asked him to look over natural gas prices, and he, too raised concerns.

"Well, first of all, I'd like to know who they're buying their natural gas from. I'd also like to know if they have any natural gas in inventory that they sold into the greater marketplace at a profit and then going back and repurchasing it," said Langley.

CBS 8 went straight to the source and asked what was going on. SDG&E says they do not sell and then buy back natural gas.

Instead, they purchase it during the last five days of the month, so the price customers pay isn't reflected on daily charts-it's delayed.

The company added in a statement:

“While natural gas market prices may be lower elsewhere in the country, they remain elevated in the Pacific region where gas demand is high due to cold weather and low storage levels. There is a significant price differential between gas market prices on the East Coast and West Coast. It’s also important to know that the current prices for gas that customers are seeing are for January only. Gas prices are updated monthly based on forecasted market conditions. If prices come down, customers will see that reflected on their bills. SDG&E does not make money from rising market prices. If we pay $1 to buy gas in the market, our customers pay.” 

While that may explain the natural gas issue, Langley says there are other factors to consider, including why we pay the highest gas and electricity rates in the country.

SDG&E says wildfire mitigation and infrastructure projects, as well as modernizing the grid, all play a role.

Still, Langley suggested more government oversight and said customers need to speak up.

“The first right you have is to conserve. The second right you have is to call the governor and tell him this is a serious problem," Langley said.

Langley also suggested people contact the California Public Utilities Commission, the government agency which regulates SDG&E.

  • You can contact Governor Gavin Newsom's office here.
  • You can contact the California Public Utilities Commission here.
  • In the meantime, if you’re having trouble paying your bill, click here.

WATCH RELATED: SDG&E gas bills are expected to more than double this month (Jan. 2023).



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