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This time last year, energy prices suddenly shot up, sparking a barrage of criticism and even an audit of San Diego Gas and Electric. This January, it’s way worse.
The cost of natural gas is up 116 percent from last January and utilities are blaming a slew of factors including the global gas market, a spike in demand from a winter cold snap, a pipeline capacity problem in West Texas and low stockpiles of the fossil fuel. If a San Diegan paid $105 on their gas bill last January, expect this month’s bill to be $225, according to an SDG&E news release.
SDG&E spokeswoman Helen Gao pointed to the U.S. Energy Information Administration, the federal government’s energy statistics office, for answers.
“What the EIA is saying about overall market conditions is what we’re experiencing locally,” Gao said. “If you’ve been following the natural gas market over the past year, it’s been very volatile and high over 2022 and went up significantly just in the last few weeks.”
As part of a new contract with the city of San Diego, SDG&E presented its rate increase forecast for this January to the City Council back in October. But that estimate was missing a key element of how much the actual gas product would cost. That price is controlled by the principles of supply and demand in the global gas market, which changes daily, even hourly. But investor-owned utilities like SDG&E typically adjust their customer’s price per therm — a unit of heat — monthly.
So back in October it was “TBD” what gas would cost in January. Now we know each therm, or unit of gas heat, will be $5.11 per therm. It was $2.55 in December. Voice of San Diego wrote this guide to understanding an energy bill, where residents can find information about their gas use.
Currently about 25 percent of SDG&E’s residential customer base are behind on their bills. But the problem of peak gas prices isn’t constrained to San Diego. Pacific Gas and Electric, northern California’s utility, reported the highest gas prices in 23 years, the EIA reported.
Gao couldn’t comment on whether geopolitical factors, like Russia’s invasion of Ukraine, were a factor. SDG&E’s parent company and liquified natural gas exporter, Sempra, has been making deals in recent months to supply natural gas to an energy-starved Europe as a consequence of the foreign dispute. Increased exports to Europe and Asia to meet demand have meant gas inventories domestically depleted faster-than average since early last year, Reuters reported.
It’s currently unclear how high gas prices might affect rates for community choice or public power companies in San Diego whose goal is providing 100 percent renewable energy. These companies, San Diego Community Power and Clean Energy Alliance, only buy and sell electricity to their customers — not gas. But a portion of their power portfolios still includes energy sourced by fossil fuels.
Byron Vosburg, managing director of power services for San Diego Community Power, said the goal is to eventually shed the cost risk driven by gas prices by adding renewables.
“As gas prices rise and the more volatile the market gets, that hits us,” Vosburg said. “What we try to do is reduce our reliance on natural gas.”
San Diego Community Power is expected to review its 2023 rates at a public meeting on Jan. 23.