Gov. Gavin Newsom on Monday jumped into the debate over the spike in natural gas prices affecting millions of California utility customers, calling on federal regulators to look at whether gouging or market manipulation is at work.
And on the local level, a few dozen protesters vented their frustrations in front the headquarters of San Diego Gas & Electric while a coalition of environmental, political and consumer groups called on the San Diego City Council to hold hearings into why SDG&E's natural gas prices soared to record highs in January.
The state's investor-owned utilities have pointed to a confluence of reasons for the dramatic increase in natural gas commodity prices, including abnormally cold weather that caused Californians to crank up their heating units. But "those known factors cannot explain the extent and longevity of the price spike," Newsom said in a letter to the chairman of the Federal Energy Regulatory Commission — the agency that oversees transmission and wholesale sale of electricity and natural gas in interstate commerce.
The California Public Utilities Commission and the California Energy Commission will hold a special hearing Tuesday but Newsom asked FERC to "focus its investigatory resources on assessing whether market manipulation, anticompetitive behavior, or other anomalous activities are driving" the high prices in gas markets in the West.
The commodity, or wholesale, price of natural gas tripled last month for the 905,000 customers in SDG&E's service territory who have natural gas hookups.
Bills for January are starting to arrive in customer's mailboxes and the utility has warned that a typical residential gas customer should brace for statements rising from $105 to about $225 — a 114 percent increase compared to January 2022.
Last week, SDG&E posted a big drop in its natural gas commodity price, predicting that it will cut February bills to $110 for a typical customer. But prices in the San Diego area will still be about twice as expensive as they were in February 2022.
The sticker shock mobilized utility customer Christine Brown to demonstrate along the streets of Kearny Mesa in front of the SDG&E building.
"This is ridiculous," said Brown, a retired businesswoman from La Mesa who helped organize the protest. "This is feels like we are living in a third world country. That's what motivated all of us to do this because we don't want to live in a backwards, regressive society. If it is not water (bills), it is electric. If it is food (prices), it is eggs. It's like, what else?"
Brown said the protest was not affiliated with any political or energy groups, saying it was a grassroots demonstration.
"We know that this is not just SDG&E," said Brown, who said her family of two has seen their bill rise from $90 to about $250. "We know that this is in partnership with the CPUC (the California Public Utilities Commission) and regulators and politicians and the crumbs they throw at us."
Amy Le of Kearny Mesa held a sign that said, "Stop the Gouging from Us," which drew honks from some motorists driving by. Le said her gas and electric bill went from $280 in December to $450 in January.
"The pricing is outrageous," Le said. "It's just skyrocketing and it's affecting everyone. It's hard for us to pay that much and there are people that can't afford it."
Dianne Brooks, who drove in from San Marcos to join the protest, said she wants more transparency. "We should be able to see the books," she said.
Her neighbor, retired physician Leonard Mehlmauer, said his gas and electric bill is typically $350 but hit $944 this month. "I want to know what happened," he said.
"For the customers who are angry and upset, we get it," said SDG&E spokesman Anthony Wagner. "We validate every emotion they are feeling and know that we are in this together. For the customers who are struggling, reach out to us. You don't have to feel alone. We can help you with a tailored solution to get through this together."
At about the same time, seven groups gathered in front of City Hall. They say SDG&E did not do enough to protect customers and want the San Diego City Council to conduct public hearings into the surge in prices.
"I'm a member of the community that is highly impacted by these high rates; the community that has to choose between to heat or to eat," said Yusef Miller, executive director of Activist San Diego and the North County Equity and Justice Coalition.
The groups say the City Council should conduct hearings because the city of San Diego in 2021 signed a 20-year franchise agreement with SDG&E that retains the utility as the exclusive provider of electric and gas services within the city limits.
"As far as we can tell, there's not been a serious examination of what happened," said Craig Rose of Public Power San Diego, a group that wants the city to ditch SDG&E and create its own publicly owned and operated municipal utility, such as Los Angeles Department of Water and Power.
"We don't have a lot of answers," Rose said. "We've got a bunch of questions and ... we think it's incumbent on the City Council to ask those questions."
SDG&E sets its monthly price for wholesale natural through its Southern California Gas, the nation's largest natural gas distribution utility. The two companies are subsidiaries of Sempra, the Fortune 500 energy giant with headquarters in San Diego.
SoCalGas and SDG&E officials say the price spike is due to multiple reasons, including a downed pipeline that sends gas from West Texas to Southern California and higher demand due to cold weather.
They've also cited reports from the U.S. Energy Information Administration of reduced pipeline capacity and inventories on the West Coast that are well below the five-year average. About 90 percent of California's natural gas comes from outside the state.
The CPUC's special hearing on natural gas prices is scheduled to run for four hours Tuesday. The agenda calls for an examination into what drove the sudden upturn, an overview of pipeline outages, and what effect high natural gas prices will have on electricity rates across California.
But the groups calling for City Council hearings say the increase in Southern California is higher than in other areas.
Pacific Gas & Electric — the investor-owned utility in Northern and Central California — is projecting residential energy bills will be about 32 percent higher from November 2022 through March 2023 compared to the same months last winter. That works out to an estimated $79 more per month.
And while storage levels on the West Coast are almost one-third lower than the five-year average, PG&E said as of Jan. 27 its levels for its residential and small business customers are at normal levels.
Rose of Public Power San Diego cited a story from the Arizona Daily Star in Tucson that reported most customers of Southwest Gas in Arizona "will see an average monthly increase of less than $3 starting in February." Rose also pointed to an official from Portland General Electric in Oregon who said that due to "pre-emptive financial practices to protect customers, including financial hedging, we are able to keep this increase substantially below the actual market increases."
"I know that gas markets are very regional," Rose said, "but let's get an explanation for why SDG&E's increase is so out of line with everybody else's — and it is, as far as we can tell."
"We don't control the natural gas market," Wagner of SDG&E said. "That price is set by the current market and what the current market bears. We are a pass-through, meaning San Diego Gas & Electric does not profit off the commodity. If it's a dollar, we pass that dollar cost onto our customer."
Since 1982, California has decoupled the profit power companies make from the amount of power they sell to customers. The price of gas and electricity is passed through without markup. Instead, the Public Utilities Commission sets a predetermined amount the utilities can make.
The organizations calling for City Council hearings also include the Protect Our Communities Foundation, Democratic Socialists of America, SanDiego350, Hillcrest Indivisible and the Utility Consumers' Action Network.
