San Diego Gas & Electric on Wednesday cited a dramatic increase in natural gas prices over the past year as a major reason ratepayers will likely see a large jump on their bills this month.
New gas and electric rates went into effect Jan. 1. According to SDG&E, the cost per unit of natural gas — known as a therm — more than doubled over the past year, increasing from $2.36 per therm in January 2022 to $5.11 per therm in January 2023.
The increase means residents who had a peak winter gas bill of about $105 last January can expect the January 2023 bill to be around $225. Customers who are enrolled in the CARE bill discount program could see their January gas bills increase from around $60 to $130.
Natural gas is not just used for heating and cooking, it's also used to generate 40% of the country's electricity. A typical SDG&E residential customer who receives both electric delivery and electric generation as a bundled service from SDG&E may see their average monthly electric bill increase by around $25 from $160 to $185 starting this month, according to the utility.
"We understand the challenges customers are facing as the cost of goods and services across the board continues to increase," said Dana Golan, SDG&E vice president of customer services. "While not good news, we want to make sure our customers are prepared for significantly higher winter bills, and more importantly, that there are tools and resources, including financial assistance available, given the severity of natural gas market conditions.
"Please know that we are here to help and work with our customers who may be struggling financially," she said.
According to the utility, more than 90% of the increase in the overall gas rate is driven by the market price for gas -- the amount SDG&E pays suppliers to buy the gas on behalf of its customers.
SDG&E leaders said if the utility pays $1 for natural gas in the commodity market, that’s what customers pay.
“SDG&E buys the natural gas in the open market on behalf of our customers and the price that we pay for that natural gas is not marked up,” said Helen Gao of SDG&E. “It’s a straight pass-through to our customers.”
SDG&E began alerting customers about rising gas prices and anticipated rate changes in October so they could be better prepared. The utility says the January price is locked in, but that will be adjusted in a couple of weeks. Natural gas prices typically peak in January and then begin falling as people use less.
“At the end of this month, we’ll publish a natural gas rate for next month and that’s all based on market conditions,” Gao said. “It’s just been really extraordinary in terms of how high the natural gas market has gone over the last year”.
The reasons for the spike in prices are varied, according to the U.S. Energy Information Administration, including widespread, below-normal temperatures; high natural gas consumption; reduced natural gas flows; pipeline constraints, including maintenance in West Texas; and low natural gas storage levels in the Pacific region.
The utility offered some suggestions for relief and how to save money these winter months, including a variety of assistance programs, including bill discounts, debt relief, payment plans and energy efficiency programs.
Some tips to reduce costs include:
- Using caulk and weather-strip around drafty doors and windows, using a door sweep, door sock or towel at the bottom of doors with a gap;
- Checking furnace filters once a month and replace them regularly. A dirty air filter can increase your energy costs and cause problems with your equipment;
- Using warm water instead of hot water to cut a washing machine's energy use in half; using cold water will save even more; and
- Lowering the thermostat water heaters to 120 degrees, if possible.
Customers can visit sdge.com/MyEnergy for bill-saving and energy management resources.
