Natural Gas Prices Explained
How is My Natural Gas Bill Calculated?
Our rates are regulated by the California Public Utilities Commission, or CPUC, based on three components:
- Commodity Costs – The cost of the natural gas itself
- Transportation Costs – The cost of natural gas delivery
- Public Purpose Surcharge – The cost to fund natural gas-related programs
Overall, about 92% of your bill goes toward products and services provided to you essentially at cost, with the remaining eight percent going toward a return on SoCalGas’ investment in the gas system.
More information about how these charges are reflected on your bill can be found here.
How are Rates Calculated?
The costs associated with delivering natural gas are ultimately approved by the CPUC, with input from SoCalGas and public advocates. This process is repeated every three to four years.
1. Propose
- SoCalGas analyzes the future needs of the natural gas system and estimates the funding needed for the next three years to upgrade utility infrastructure, operate systems safely, invest in new technology and provide responsive customer service.
2. Review
- The CPUC takes about two to three years to hold public hearings, open comment periods and formal sessions before an administrative law judge. They also need that time to analyze the input gathered.
- Public advocates comment on both the plans for the natural gas system and their proposed costs and raise issues they believe to be in the public’s interests.
- After its analysis, the CPUC determines SoCalGas’ budget for the next three years.
3. Implement
- As a final step, the CPUC decides how to divide the increased need for funding into different rate increases to be paid by the different categories of natural gas customers.
- Commercial and industrial users usually fund a larger part of the rate increases because of their heavier demands on the system.
- Residential rates are split into “tiers,” and customers who use more natural gas pay a greater percentage of the funding needed to operate and maintain the natural gas system.
Upcoming Rate Changes
Periodically, SoCalGas customers can expect key rate changes. All requests for rate changes must be submitted by SoCalGas to, and approved by, the California Public Utilities Commission (CPUC) pursuant to a four-year General Rate Case (GRC) application process, as well as other proceedings. At a minimum, there is a rate change at the beginning of each year.
These rate changes allow for investment in, and improvement of, the SoCalGas natural gas infrastructure that delivers fuel to cook food, dry clothes, provides heating and hot water, and power electric generation plants in Southern California. It is important to note that these rate changes are not related to the Aliso Canyon natural gas leak, which was repaired in 2016.
Besides these rate changes, the price you pay for natural gas (known as the Gas Commodity rate), varies monthly depending on the market prices. The current rates can be found here.
Rate Change
New gas transportation rates, approved by the CPUC, went into effect on January 1, 2023. Residential average transportation rates increased by about 8% and small business transportation rate increased by about 5% on average. These transportation rate changes will allow us to continue upgrading our infrastructure, retain responsible, well-trained employees, and support the growth of diverse energy options.
Commodity Price
Effective July 1, 2024, the procurement component of the core sales rate will increase 3.624 ¢/therm to 27.537 ¢/therm. This increase resulted from an overall 7.833 ¢/therm increase in commodity price and a decrease of 4.209 ¢/therm in account adjustments. Compared to a year ago, the procurement rate is about 41.4% lower (47.001 ¢/therm) than what it was effective July 2023.
Transportation Price
This year’s rate changes, approved by the CPUC, will allow us to continue to modernize and upgrade our natural gas pipelines and other infrastructure to enhance long-term reliability and safety. In addition, it will support the growth of more renewable, diverse energy options for our customers now and into the future. Natural gas transportation rates are increasing by $0.088 per therm and $0.034 per therm for residential and small commercial customers, respectively.
Rate Setting Process
Every four years, SoCalGas files a request called the General Rate Case for the cost recovery of serving gas customers with the California Public Utilities Commission (CPUC). The CPUC reviews the request and sets the new rates. At the beginning of every year, gas rates change to recover such costs and any other costs approved by the CPUC.