Newsom wants investigation into soaring natural gas costs in California

SACRAMENTO, Calif. - The cost of natural gas has dropped across the country, but not here in California. Prices here have soared compared to a year ago, with some customers seeing a more than 300 percent hike in their bills.

"Six hundred dollars! I was shocked," said Robert McMonigle, who only uses two wall units to heat his modest, single-family home in South San Francisco. 

His bill last month was $618. Last year at this time it was $260.

"It is such a huge amount. If you multiply that extra money times all the homes you see when you fly over the Bay Area - that's a lot of money they're bringing in. A lot of money," he said.

Now, state leaders, customers and advocacy groups want to know why.

The California Public Utilities Commission discussed this topic at a Tuesday hearing. 

Representatives from California's utilities, including PG&E, blamed unseasonably cold winter weather, spiking demand and problems with out-of-state pipeline operators as the main drivers of the cost increase, adding that "PG&E does not mark up the price of gas, we charge our customers the same price that we buy it."

Mark Toney, the executive director of the ratepayer advocacy group, Utility Reform Network or TURN, said questions need to be asked of all entities involved in the sale and purchase of Natural Gas in California.

"Was their profiteering? Price-gouging from pipelines out of state?" Toney said. "It is a fact that California paid more for gas than the rest of the country."

Gov. Gavin Newsom and U.S. Sen. Dianne Feinstein have asked federal regulators to step in and investigate. 

They sent a letter to the Federal Energy Regulatory Commission, or FERC, which is the federal agency in charge of regulating wholesale natural gas, to look into "...whether market manipulation, anticompetitive behavior or other anomalous activities are driving these ongoing elevated prices."

"There are many regulatory layers of oversight that should prevent that from happening... but that doesn't mean it always works," said Severin Borenstien, Haas School of Business Professor and CAL ISO board member.

Utilities can't blame inflation. 

The cost of wholesale natural gas across the country has dropped 50 percent in the past year, but here in California, it has gone up 63 percent during that same period.

"Really look at what were the causes of the price spike and what were some of the opportunities if there were any opportunities for either profiteering or market manipulation," said CPUC Public Advocates Office Director Matt Baker.

Newsom said the state will be issuing natural gas credits to customers, in the amount of anywhere from $90 to $120 dollars. 

The money comes from the state's cap-and-trade energy program. 

Ratepayers don't need to do anything to apply for it. It will simply show up as a credit on your bill.

More than 70 percent of California homes use natural gas as their primary source of heat.

Toney noted that natural gas prices are expected to decline in California over the next month. 

But even with the added expenses, PG&E is still asking the CPUC to authorize a separate, un-related rate hike on all customers over the next four years.

"While PG&E cannot be blamed for this temporary gas rate hike, they can be blamed for every other increase," Toney said. "PG&E can hide behind this one but they can't hide behind all the other rate increases they're asking for right now."

Toney urged ratepayers who are frustrated with their bills to contact their state representatives, Newsom's office and the CPUC to voice their concerns.