Advocacy groups are calling on Los Angeles City Attorney Hydee Feldstein Soto to investigate potential price gouging and market manipulation by Southern California Gas Co. (SoCalGas). The request was made in response to the company’s proposed $4.9-billion rate hike, which followed an outcry over sky-high bills this winter.
The advocacy groups wrote the following in a letter to the City Attorney’s Office:
While wholesale gas prices typically rise in the winter under cold conditions and constrained supply, this gas price spike was an unusual and significant event. Additionally, there was a massive disparity within California’s regional markets. The average PG&E customer saw their bills increase $44 from Jan. 2022 to Jan. 2023 compared to the average SoCalGas and SDG&E customers who saw their bills increase $176 and $153 respectively during the same period.
Consumer Watchdog has also called for an investigation into SoCalGas and said the utility mismanaged their gas storage supplies, leading to unnecessary buying on the spot market that drove the price to historic highs. They question whether SoCalGas’s parent company Sempra Energy’s trading subsidiaries profited from this artificial inflation of the spot price.
Furthermore, a report from the state’s grid operator, CAISO estimated that energy markets saw additional costs of $3 billion in December and nearly $1 billion in January due to the impact of higher gas prices. These costs were then passed along to customers through their gas and electricity bills.
Feldstein-Soto’s Office says it is reviewing the letter. In the meantime, Gov. Gavin Newsom has asked the Federal Energy Regulatory Commission to look into the elevated gas prices and any potential wrongdoing on the part of utilities.