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FINANCIAL NEWS

Why is natural gas so expensive in California and when will prices drop?

The price of natural gas in California has hit historic levels leaving customers with high bills. Here’s why it is so expensive and when prices will drop.

Update:
El precio del gas natural en California ha alcanzado niveles históricos. Te explicamos por qué está tan caro y cuándo bajarán los precios.
FAYAZ AZIZREUTERS

Natural gas prices in California have skyrocketed to levels not seen in 20 years. In January, some utility companies began warning customers about rising rates on their bills.

SoCalGas told customers that the January and February bills could be “surprisingly high”. On the other hand, Pacific Gas and Electric Company (PG&E) projected that residential energy bills would be 32% higher from November to March, compared to the same period last year.

The skyrocketing numbers on bills for thousands of Californians have sparked discussions among families about whether they have increased their consumption or whether the increase is due to other reasons. We explain.

Why is natural gas so expensive in California and when will prices drop?

Generally speaking, fuel prices, including natural gas, have been affected by Russia's invasion of Ukraine. In addition, the price of natural gas has been increasing due to higher demand, as well as tighter supply on the West Coast and inflation.

According to the Los Angeles Times, California imports about 90% of its natural gas. Supply recently took a hit following capacity reductions on a West Texas pipeline that slowed the amount of gas flowing west. In addition, natural gas storage in the Pacific region also fell.

This may interest you: How to claim unemployment benefits in California: Who is eligible?

When will gas prices in California go down?

Since December, natural gas prices have fallen; however, customers of utility companies will not see lower prices reflected on their bills until late February or early March. Meanwhile, California Gov. Gavin Newsom has called for a federal investigation into the wholesale pricing of natural gas.

Aid for the payment of natural gas in California

The California Public Utilities Commission provides relief through so-called Climate Credits. These come from a state government program that requires power plants, natural gas providers, and industries that emit greenhouse gases to buy “carbon allowances”.

Generally, these credits are sent twice a year, in April and October. The credit for the payment of natural gas is sent in April, but some clients have already begun to receive it. Natural gas credits automatically appear on Californians' utility bills. Regarding the amounts of the credits, these vary depending on the public service provider:

  • PG&E: $52.78
  • SDG&E: $43.40
  • Southwest Gas: $56.35
  • SoCalGas: $50.77

For more information, visit the California Public Utilities Commission website.