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Soaring Natural Gas Prices Lead To Higher Utility Bills

Release Date: 2023-01-04


Jan. 4, 2023

:  Lauren Gold Howland
Public Information Officer
Phone:    (562) 355-1201
Email:     lauren.howland@lbwater.org


LONG BEACH, CALIF. (JAN. 4, 2023) — Residents and businesses in Long Beach, Signal Hill and throughout Southern California will see a drastic increase in their natural gas bills this month as global market prices hit a 20-year high.

This follows already higher-than-average bills in December, when the price of gas doubled from November. The price tripled from December to January.

The average single-family residential customer is likely to see an increase of $200 or more. While winter bills are always higher than in the warmer months, this year’s extreme spike is attributable to historically high market rates for natural gas combined with colder-than-usual temperatures across the nation.

Facing the highest natural gas prices in Long Beach’s history, Long Beach Utilities took swift action to mitigate the impact on customers as much as possible. These actions will save customers $10 million and bring the average bill in at about 4 percent less than those of SoCal Gas, which serves the majority of Southern California.

Long Beach Utilities is looking at additional strategies to provide future protection from monthly bill spikes, while also offering conservation tips to help customers lower their bill.

Resources are available to help customers manage higher bills, including payment plan options and reduced rates for seniors, those with disabilities and other income-qualified customers. For more information, click here.

“Our customers are understandably shocked by these high market prices suddenly experienced throughout Southern California,” Long Beach Utilities General Manager Chris Garner said. “While there are legitimate market forces that have resulted in the cost increase, that does not ease the financial impact to our residents, who rely on natural gas to heat their homes, cook their food and warm their showers.”

Natural gas bills include two components:

  1. The charges that cover both the pipeline transmission of gas to customers and the provision of customer services
  2. The cost for the gas commodity itself applied against the volume the customer uses that billing period

For the gas commodity, Long Beach and other regional gas utilities purchase natural gas from wholesale suppliers in West Texas, the Rocky Mountains and the Four Corners area.

We strategically manage our gas supply purchases with discounted long-term contracts, calculated use of local storage, and the purchase of locally produced natural gas. But prices are largely determined by the competitive market and can fluctuate, more than doubling since this time last year.

Customers pay exactly what we pay, we don’t earn a profit on these rates.

We’re seeing high prices due to several factors:

  • High natural gas consumption due to below-normal temperatures
  • A 14 percent increase in natural gas used for the generation of electricity
  • Constraints on the interstate pipelines serving California, as imported gas makes up 90 percent of the state’s supply
  • Lower than normal amounts of gas in California’s storage fields due to maintenance and infrastructure failures
  • A marked increase in U.S. exports of liquefied natural gas to Europe

For the transmission part of the bill, Long Beach and Signal Hill residents and businesses benefit from lower cost by having a locally-owned gas utility — that rate has remained stable, with only one increase in the past six years.

“We recognize that these high market prices for natural gas are a significant burden on our customers, especially amid inflationary price impacts in their daily lives,” said Gloria Cordero, President of the Board of Utilities Commissioners. “We’re here to support in any way we can, including working diligently as a newly-consolidated department to implement strategies for mitigating customer impacts.”

As of January 2023, natural gas services in Long Beach and Signal Hill are provided through Long Beach Utilities, previously under the Department of Energy Resources. Voters approved consolidating water, gas and sewer services under one department in November 2022.

The spike in wholesale natural gas costs is not a result of the utility consolidation.

However, with new leadership and more efficient operations from the consolidation, management is immediately reviewing existing natural gas buying strategies and policies to determine additional steps that can be implemented to provide better price security and stability for our customers moving forward.

In the coming days, weeks and months, Long Beach Utilities will continue to monitor the wholesale gas market and provide updates to customers.

In the meantime, customers can take some simple steps to reduce their usage and save money:

  • Dial down the thermostat to 68 degrees or lower
  • Warm your home with natural sunlight during the day
  • Wash clothes in cold water
  • Take shorter hot showers
  • Bundle up with warm blankets, socks and sweaters

For more information on natural gas prices and helpful tools to estimate your bill, visit longbeach.gov/energyresources. For questions or concerns, call (562) 570-5700.