SoCalGas just sent customers an ominous note: Monthly bills are about to increase by more than double compared to last month and this time last year. Gas prices always go up in winter, but this dramatic spike is far beyond the norm.
Natural gas prices are down across the country, except in California and the Southwest. According to Severin Borenstein, UC Berkeley Business School Professor and Director of the Haas Energy Institute, this is the result of insufficient transportation and storage capacity.
“We have a pipeline that brings gas out west, [but] it has never been large enough to actually fulfill the demand on the highest demand days of the year. We rely on having storage out here as well as more gas coming in on the pipeline to meet demand on those days.”
The current crisis is exacerbated by a loss of local gas storage facilities, partially as a result of the Aliso Canyon disaster in 2015.
There is also concern that companies are reducing the volume of gas being sent west to squeeze the market. Borenstein notes, “Pipelines are owned by companies trying to make money,” and there was evidence of this type of price gouging during a similar spike 20 years ago.
However, Borenstein points out, “The fundamental issue is that we don't have as much storage, and we don't have enough pipeline capacity to meet the demand. So we have seen prices in California that are holding at four times higher than they are in the middle of the country.” The combination of strained infrastructure and exceptionally cold winter weather creates the perfect storm.
The rising price of natural gas also has an impact on the cost of electricity as it's burned in many California power plants. Luckily, ratepayers shouldn’t expect as big of price increases in their electricity bills. As Borenstein explains, “Unlike our natural gas supply, [utilities] have some hedging that allows them to buffer the ups and downs of electricity prices.”
So what can folks do to weather increased utility costs?
Jon Healey, senior editor for the LA Times’ Utility Journalism Team, suggests starting by taking advantage of SoCalGas’ “Level Pay Plan.”
“The Level Pay Plan takes your average monthly use over the course of a year, and then has your bill spread out so that your low summer month usage helps you in the winter. … They look at your use from last year over the course of the year, average it out, and then apply that [rate] every month.”
Low-income Angelenos can also seek state and federal assistance to manage their gas bills.
According to Healey, “California has a California Alternate Rates for Energy Program, and in that you can get a 20% discount if your household is qualified in terms of your income. … You don't have to fill [out] a bunch of paperwork, you're just telling them, ‘I receive CalFresh, food stamps, or I'm on Medi-Cal,’ and that should enable you to qualify for these discounted rates.”
The federal government offers support through something called the Low Income Home Energy Assistance Program (LIHEAP). It offers immediate cash payments to qualified individuals based on their income that can range from $250 to $3000 depending on your circumstances. Healey notes that the program is “provided through community groups, and those groups vary from neighborhood to neighborhood. The State of California has a site that'll help you find the local groups that offer it.”
Another way to cut your gas bill is to switch to more efficient appliances and better insulate your home. Fortunately, there is money available to help with those transitions. Healey notes, “There are rebates and other incentives that the gas companies offer to help you buy appliances that use less energy and do weatherization to reduce the amount of heat that you have to use to keep your home livable.”
Looking to manage your own gas bills? See this list of links to get started.
Set up your SoCalGas payment plan by logging into your account.
California Alternate Rates for Energy program
Other SoCalGas assistance programs
Apply for federal assistance through LIHEAP
SoCalGas energy efficiency rebates
LADWP rebate programs