High natural gas bills have some families and businesses struggling but a shift is coming.
From December 2022 to January 2023, the market price more than doubled but now, it's quickly dropping. That means the average San Diego Gas & Electric customer's bills are likely to be cut significantly -- some even halved -- in February.
After reaching historic highs this winter due to what SDG&E called "unprecedented market conditions in the Western United States," the commodity price of natural gas decreased by 68% from January's prices, from $3.45 per therm to $1.11 per therm. The price per therm was $2.36 in January 2022, as a comparison.
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What this means for the typical residential customer is a gas bill -- comprised of the commodity cost plus delivery charges and other mandated fees and taxes -- is expected to decrease from about $225 in January to about $110 in February, according to a statement from the utility. That's still slightly higher than last winter's average gas bill of $105 in January 2022.
"Lower gas prices are certainly welcome news, but we recognize many of our customers still need support to deal with higher gas bills, and we've developed solutions to ease the financial strain," said Dana Golan, SDG&E vice president of customer services. "We are here to help and encourage customers to take advantage of our assistance programs, bill discounts and energy efficiency programs that can help provide additional bill savings."
High natural gas demand caused by cold weather, coupled with the partial closure of a major third-party pipeline that provides gas to the west and limited gas storage in California, has caused the extreme volatility in gas prices. Natural gas is not just used for heating and cooking, it's also used to generate 40% of the country's electricity.
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According to SDG&E, more than 90% of the increase in the overall gas rate is driven by the market price for gas -- the amount it pays suppliers to buy the gas on behalf of its customers.
SDG&E leaders said they do not charge any markup for natural gas -- if the utility pays $1 for natural gas in the commodity market, that's what customers pay. SDG&E began alerting customers about rising gas prices and anticipated rate changes in October so they could be better prepared.
Ratepayers were encouraged on Tuesday to use a variety of assistance programs, including bill discounts, debt relief, payment plans and energy efficiency programs.
The Neighbor-to-Neighbor program, established earlier this month and funded entirely by SDG&E shareholder dollars, is intended to provide eligible customers with up to $300 to offset their outstanding bills. The federally funded Low-Income Home Energy Assistance Program offers financial help ranging from a few hundred dollars to a few thousand dollars, depending on household income, size, and past due balances.
More information on assistance programs can be found at SDG&E's website here.
