SoCalGas Updates Customers on Current Natural Gas Prices

Rhea-AI Summary

SoCalGas announced a significant drop in natural gas prices, aligning closer to 2022 figures after unprecedented spikes in January. Contributing factors include improved weather conditions and reduced demand. The restoration of out-of-state pipeline service is poised to boost supply capacity by up to 500 million cubic feet per day. However, natural gas markets remain volatile, influenced by weather changes and ongoing maintenance updates. SoCalGas will file March procurement prices with the California Public Utilities Commission, reflecting the costs incurred for residential and business customers. Customers will see a $50.77 credit on their bills due to accelerated California Climate Credit.

Positive

• Natural gas prices have dropped significantly, nearing 2022 levels.
• Restoration of out-of-state pipeline service will enhance supply capacity by 500 million cubic feet per day.
• Customers to receive a $50.77 credit in their February or March bill from the California Climate Credit.

Negative

• Natural gas markets remain volatile and sensitive to weather changes.
• Ongoing maintenance updates could impact supply consistency.

Market conditions improve: critical out-of-state pipeline service restored; experts also cite improved weather conditions and related decrease in natural gas demand as contributing to lower market prices

SoCalGas continues to encourage customers to conserve as natural gas markets remain sensitive to changing weather and maintenance updates

LOS ANGELES, Feb. 15, 2023 /PRNewswire/ -- Southern California Gas Company (SoCalGas) today provided customers with an update on natural gas prices across the West Coast. After a significant drop from unprecedented January natural gas commodity prices, market prices for March, 2023 are currently trending closer to 2022 prices.

Improved weather conditions and a related reduction in natural gas usage have led prices to continue to fall along the West Coast, according to the U.S. Energy Information Administration (EIA), which is charged with collecting, analyzing and disseminating independent and impartial energy information. In addition, the restoration of service to the out-of-state pipeline, which has been offline for two years, is expected to increase supply capacity to the Southwest by as much as 500 million cubic feet per day. However, the markets where SoCalGas purchases natural gas remain volatile and sensitive to changing weather and maintenance updates.

"It is still too early to tell if this positive trend will continue, but with warmer weather ahead, we do not expect to see price swings as large as we saw earlier in the winter," said Gillian Wright, chief customer officer for SoCalGas.

Consistent with regulatory requirements, SoCalGas will file March core procurement prices (rates) with the California Public Utilities Commission (CPUC) at the end of February. The core procurement rate reflects the price SoCalGas pays for natural gas for residential and business customers. That rate changes each month. SoCalGas does not set the price for natural gas. Instead, natural gas prices are determined by national and regional markets. SoCalGas buys natural gas in those markets on behalf of residential and small business customers, and the cost of buying that gas is billed to those customers with no markup.

The markets where SoCalGas purchases natural gas remain volatile and sensitive to changing weather and maintenance updates. For example, consistent with applicable rules and regulations, SoCalGas issued a notice Tuesday about a about a safety related condition resulting in a capacity reduction on another natural gas pipeline - Line 235.

What caused prices to spike in the first place?

According to the EIA, several factors contributed to higher natural gas commodity prices: 

• Widespread, below-normal temperatures on much of the West Coast, including Washington and Oregon;
• High natural gas demand for heating by customers in areas with below normal temperatures;
• Reduced natural gas supplies to the West Coast from Canada;
• Reduced interstate pipeline capacity to the West Coast because of pipeline maintenance activities in West Texas (the out-of-state pipeline mentioned earlier in this release); and
• Low natural gas storage levels in the Pacific Region.

A detailed report about these market conditions can be found here: https://www.eia.gov/naturalgas/weekly/archivenew_ngwu/2022/12_22/.

Experts weigh in on natural gas market conditions

A number of experts have weighed in on the market conditions that led to unprecedented natural gas prices in December. The California Public Utilities Commission last week held a public hearing to discuss those conditions.

Alan Mayberry, associate administrator for pipeline safety for the United States Pipeline and Hazardous Materials Safety Administration (PHMSA) told the CPUC his agency authorized the return to service of the out-of-state pipeline identified by EIA as one source of high January's high prices. "As of yesterday, we gave Kinder Morgan (the pipeline's owner and operator) the go-ahead to return Line 2000 to their normal operating pressure," Mayberry told the CPUC. On Tuesday, Feb 15 Kinder Morgan lifted operational restrictions on the out-of-state pipeline.

According to the EIA, the pipeline's return to full service will increase natural gas takeaway capacity out of West Texas by close to 500 million cubic feet per day, increasing supply into the Desert Southwest.

What is SoCalGas doing for its customers?

In January, SoCalGas tripled its contribution to the Gas Assistance Fund, increasing it to $1 million. This program helps income-qualified customers pay their natural gas bills with a one-time $100 grant.

Customers also should see some relief soon, courtesy of the CPUC accelerating the California Climate Credit. SoCalGas customers will receive a credit of $50.77 in their February or March bill, depending on their billing cycle.

In addition, SoCalGas continues to encourage customers to take advantage of programs and services that can help manage and save costs.

SoCalGas' free Ways to Save tool may also help customers find ways to save on natural gas bills, with a personalized savings plan that offers a household energy analysis, customized energy-efficiency recommendations, bill comparisons and energy usage comparisons. Ways to Save can be found at socalgas.com/WaysToSave. Customers can also sign up for weekly Bill Tracker Alerts to monitor natural gas consumption, take steps to reduce usage, and avoid bill surprises.

Eligible customers may sign up for a Level Pay Plan (LPP), for example, which averages their annual natural gas use and costs over 12 months. There are also financial assistance programs for eligible customers who are experiencing hardships.

SoCalGas also offers the following tips to help potentially reduce energy usage:

• Lowering your thermostat three to five degrees – if health permits – can save up to 10 percent on heating costs.
• Installing proper caulking and weather-stripping can save roughly 10 to 15 percent on heating and cooling bills.
• Washing clothes in cold water to save up to 10 percent on water heating costs.
• Considering turning down the temperature on your water heater, keeping in mind that most hot water heaters require a temperature of 120 degrees or higher.
• Limiting use of non-essential natural gas appliances such as spas and fireplaces.

Customers can visit socalgas.com/ManageHigherBills for more information on the factors that lead to higher bills and ways we can help.

About SoCalGas 
Headquartered in Los Angeles, SoCalGas® is the largest gas distribution utility in the United States. SoCalGas delivers affordable, reliable, and increasingly renewable gas service to 21.8 million consumers across 24,000 square miles of Central and Southern California. Gas delivered through the company's pipelines will continue to play a key role in California's clean energy transition—providing electric grid reliability and supporting wind and solar energy deployment. 

SoCalGas' mission is to build the cleanest, safest and most innovative energy company in America. In support of that mission, SoCalGas aspires to achieve net-zero greenhouse gas emissions in its operations and delivery of energy by 2045 and to replacing 20 percent of its traditional natural gas supply to core customers with renewable natural gas (RNG) by 2030. Renewable natural gas is made from waste created by landfills and wastewater treatment plants. SoCalGas is also committed to investing in its gas delivery infrastructure while keeping bills affordable for customers. SoCalGas is a subsidiary of Sempra (NYSE: SRE), an energy infrastructure company based in San Diego. 

For more information visit socalgas.com/newsroom or connect with SoCalGas on Twitter (@SoCalGas), Instagram (@SoCalGas) and Facebook. 

This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on assumptions with respect to the future, involve risks and uncertainties, and are not guarantees. Future results may differ materially from those expressed or implied in any forward-looking statement. These forward-looking statements represent our estimates and assumptions only as of the date of this press release. We assume no obligation to update or revise any forward-looking statement as a result of new information, future events or other factors.

In this press release, forward-looking statements can be identified by words such as "believes," "expects," "intends," "anticipates," "contemplates," "plans," "estimates," "projects," "forecasts," "should," "could," "would," "will," "confident," "may," "can," "potential," "possible," "proposed," "in process," " construct," "develop," "opportunity," "initiative," "target," "outlook," "optimistic," "maintain," "continue," "progress," "advance," "goal," "aim," "commit," or similar expressions, or when we discuss our guidance, priorities, strategy, goals, vision, mission, opportunities, projections, intentions or expectations.

Factors, among others, that could cause actual results and events to differ materially from those expressed or implied in any forward-looking statement include risks and uncertainties relating to: decisions, investigations, regulations, issuances or revocations of permits or other authorizations, renewals of franchises, and other actions by (i) the California Public Utilities Commission (CPUC), U.S. Department of Energy, and other governmental and regulatory bodies and (ii) the U.S. and states, counties, cities and other jurisdictions therein in which we do business; the success of business development efforts and construction projects, including risks in (i) completing construction projects or other transactions on schedule and budget, (ii) realizing anticipated benefits from any of these efforts if completed, and (iii) obtaining the consent or approval of partners or other third parties, including governmental and regulatory bodies; civil and criminal litigation, regulatory inquiries, investigations, arbitrations and other proceedings, including those related to the natural gas leak at the Aliso Canyon natural gas storage facility; changes to laws and regulations; cybersecurity threats, including by state and state-sponsored actors, by ransomware or other attacks on our systems or the systems of third-parties with which we conduct business, including to the energy grid or other energy infrastructure, all of which have become more pronounced due to recent geopolitical events, such as the war in Ukraine; failure of our counterparties to honor their contracts and commitments; our ability to borrow money on favorable terms or otherwise and meet our debt service obligations, including due to (i) actions by credit rating agencies to downgrade our credit ratings or place those ratings on negative outlook and (ii) rising interest rates and inflation; the impact on our cost of capital and the affordability of customer rates due to volatility in inflation, interest rates and commodity prices and our ability to effectively hedge these risks; the impact of energy and climate policies, laws, rules and disclosures, as well as related goals and actions of companies in our industry, including actions to reduce or eliminate reliance on natural gas, any deterioration of or increased uncertainty in the political or regulatory environment for California natural gas distribution companies and the risk of nonrecovery for stranded assets; the pace of the development and adoption of new technologies in the energy sector, including those designed to support governmental and private party energy and climate goals, and our ability to efficiently incorporate them into our business; weather, natural disasters, pandemics, accidents, equipment failures, explosions, acts of terrorism, information system outages or other events that disrupt our operations, damage our facilities or systems, cause the release of harmful materials, cause fires or subject us to liability for damages, fines and penalties, some of which may not be recoverable through regulatory mechanisms, may be disputed or not covered by insurers, or may impact our ability to obtain satisfactory levels of affordable insurance; the availability of natural gas and natural gas storage capacity, including disruptions caused by limitations on the withdrawal of natural gas from storage facilities; the impact of the COVID-19 pandemic on capital projects, regulatory approvals and the execution of our operations; changes in tax and trade policies, laws and regulations, including tariffs, revisions to international trade agreements and sanctions, such as those that have been imposed and that may be imposed in the future in connection with the war in Ukraine, which may increase our costs, reduce our competitiveness, impact our ability to do business with certain counterparties, or impair our ability to resolve trade disputes; and other uncertainties, some of which are difficult to predict and beyond our control.

These risks and uncertainties are further discussed in the reports that the company has filed with the U.S. Securities and Exchange Commission (SEC). These reports are available through the EDGAR system free-of-charge on the SEC's website, http://www.sec.gov, and on Sempra's website, http://www.sempra.com. Investors should not rely unduly on any forward-looking statements.

Sempra Infrastructure, Sempra Texas, Sempra Mexico, Sempra Texas Utilities, Oncor Electric Delivery Company LLC (Oncor) and Infraestructura Energética Nova, S.A.P.I. de C.V. (IEnova) are not the same companies as the California utilities, San Diego Gas & Electric Company or Southern California Gas Company, and Sempra Infrastructure, Sempra Texas, Sempra Mexico, Sempra Texas Utilities, Oncor and IEnova are not regulated by the CPUC.

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SOURCE Southern California Gas Company

FAQ

What recent updates did SoCalGas provide regarding natural gas prices?

SoCalGas reported a significant decline in natural gas prices, with March prices trending closer to 2022 levels due to improved weather and reduced demand.

How will the restoration of pipeline services affect natural gas supply?

The restoration of the out-of-state pipeline service is expected to increase supply capacity by up to 500 million cubic feet per day.

What financial relief can SoCalGas customers expect?

Customers will see a credit of $50.77 on their bills as a result of the accelerated California Climate Credit.

What factors contributed to the previous spike in natural gas prices?

Previous spikes were attributed to extreme weather conditions, high demand for heating, reduced supply from Canada, and maintenance-related pipeline capacity issues.

What will SoCalGas do in response to changing natural gas prices?

SoCalGas will file core procurement prices with the California Public Utilities Commission, reflecting natural gas costs for its customers.