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SDG&E’s natural gas price drops for a third straight month

Natural gas pipes used by San Diego Gas & Electric.
Natural gas pipes used by San Diego Gas & Electric. After the commodity price for natural gas spiked to record levels in January, prices have returned to more normal levels in recent months.
(SDG&E )

A record-setting spike in January socked 905,000 customers with natural gas meters.

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After an unprecedented spike in natural gas prices in January led to steep increases in utility bills for many San Diego Gas & Electric customers this winter, SDG&E officials said Friday the price for natural gas in its service territory has dropped for the third straight month.

The commodity price for April declined to 43 cents per therm, compared with 60 cents in March, $1.11 in February and $3.45 per therm in January. A therm refers to one unit of natural gas.

The overall price that SDG&E customers pay for natural gas — when transportation/delivery costs and expenses for state-mandated programs are added to the commodity, or wholesale, price — will total $2.09 per therm in April.

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That translates to a bill of $56 for the month of April for a typical residential customer. That’s 7 percent lower than in March and a 75 percent decrease compared with January’s record high.

“It’s good news for our customers that wholesale natural gas prices continue to trend down from their January spike,” SDG&E vice president of customer services Dana Golan said in an email to the Union-Tribune. “Even so, we recognize many families still need help with heating bills. We have a whole team dedicated to making sure customers get the financial assistance and support they need.”

Of SDG&E’s customer base of 3.7 million, about 905,000 have gas meters.

Natural gas analysts say the reason for the recent drop in prices is improved market conditions.

A major pipeline operated by Kinder Morgan was offline for about a year and a half after an explosion in the town of Coolidge, Ariz., in August 2021 killed two people. The 770-mile segment that sends natural gas from Texas to Southern California came back into service in February.

In addition, other lines serving the West that had been down for maintenance this winter are now back up and running. About 90 percent of California’s natural gas comes from outside the state.

April’s commodity price of 43 cents per therm represents a return to a more normal price range.

Prices in the natural gas market can swing for various reasons, but the April 2022 wholesale price was 58 cents per therm and in April 2021 it was 31 cents, according to monthly filings by Southern California Gas. SDG&E and SoCalGas are subsidiaries of parent company Sempra, and SoCalGas purchases natural gas for SDG&E.

Natural gas use in Southern California usually escalates during the winter months when homes and businesses with natural gas meters rely on gas for heating.

A typical SDG&E residential gas customer uses an average of 44 therms of gas in January — usually the coldest month of the year — and the figure drops as the weather warms up. A typical residential customer uses an average of 39 therms in February, 35 in March and 26 in April.

The price spike this winter resulted in soaring monthly bills for many utility customers.

On the heels of the natural gas spike, SDG&E in early March filed paperwork with the CPUC in its upcoming General Rate Case that requests a boost in revenues of $3.6 billion from 2024 through 2027.

If approved by the commission, the proposal would result in a 5.3 percent increase per month in the electricity bill of a typical residential customer and a 17.5 percent increase for natural gas rates, compared with 2023.

The SDG&E proposal includes additional funding for wildfire prevention, enhancements to help meet California’s decarbonization goals and other investments in utility infrastructure.

The CPUC is expected to make a decision on SDG&E’s General Rate Case by the first half of next year.