Why is SoCalGas asking for such a big rate increase?

As Southern Californians gape at the highest natural gas bills they’ve ever received, SoCalGas is asking for a rate increase.

The investor-owned utility wants the California Public Utilities Commission to approve its 2024 General Rate Case application (A.22-05-015), seeking authorization for increased revenue through 2027. SoCalGas is required to file a GRC application every four years.

The company is seeking to increase its 2024 revenues by more than 20% over 2023 expected revenues, which would bring in an additional $738 million. The application also seeks increases of another $295 million in 2025, $261 million in 2026 and $379 million in 2027. That’s a total of $4.74 billion dollars in additional revenues above what current rates would bring.

This rate increase request is separate from the price of gas. The cost of the commodity is passed through to customers already. It’s because of scarcity this winter that gas bills have been so high.

Many reasons have been offered for the lack of supply, including maintenance on a gas pipeline from Texas, increased exports of liquefied natural gas and lower reserves due to higher demand for electricity.

About 50% of California’s electricity is generated with natural gas, according to the CPUC.

Why does SoCalGas need another $4.74 billion in revenue? According to a fact sheet released by the utility, it has a need to “invest” in its gas delivery system, in technologies that “advance clean energy,” in capabilities “to empower customers with information and tools to better manage their gas use,” in meeting “regulatory and compliance requirements” including “environmental compliance” and in “efforts and programs” to maintain its workforce, meaning pay raises.

In February, the California Public Utilities Commission held a meeting to discuss the high price of natural gas, the high electricity costs that would result and the views of experts on how to address the impact. CPUC President Alice Reynolds said, “We need to be mindful that we’re undertaking a really monumental transition in California to decarbonize our economy right now, which means transitioning away from our dependence on gas.”

But with natural gas needed to heat homes and run appliances, as well as to generate half the electricity used in California, we’re not close to that goal. Utility experts stressed the need for what they called “demand-side management.” That means they want customers to use less energy.

In the rate increase request, that proposed investment is called “information and tools” to help customers “better manage their gas use.”

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The outrageous natural gas bills that Southern Californians are paying could be addressed by increasing production of natural gas in California, instead of making an unsuccessful and costly effort to “transition” away from it.

In the meantime, the policy choice to address a supply-and-demand imbalance only by decreasing demand, and not by increasing supply, will continue to drive up the cost of monthly gas bills in California. Residents will be subjected to “rationing by price,” meaning it will be too expensive for many people to use heat and air conditioning. The solution to this problem will likely be a new program to provide financial aid to low-income households, probably at the expense of other ratepayers who will be hit with higher bills.

The CPUC will hold an online public hearing about the proposed rate increases on Monday, March 6, at 2 p.m. and Wednesday, March 15, at 6 p.m. The call-in number is 800-857-1917 and the participant passcode is 1767567#, or contact public.advisor@cpuc.ca.gov. To view the webcast, go to http://www.adminmonitor.com/ca/cpuc

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