California regulator probes high winter natural gas prices
March 16 (Reuters) - The California Public Utilities Commission (CPUC) on Thursday said it began an investigation into why natural gas prices spiked on wholesale markets in December 2022, driving up utility bills for customers.
Daily spot prices of natural gas in December at key western trading hubs exceeded every other U.S. market, including the benchmark, due to cold weather, high demand and supply issues.
The daily natural gas spot price at Pacific Gas & Electric (PG&E) Citygate jumped 125% to $56.429 per million British thermal units (MMBtu) on Dec. 21, 2022. Prices were trading around $6.939 per MMBtu on Thursday.
The CPUC, which does not regulate gas prices or producers, said it will look into causes and impacts of the price spikes, the potential for recurrence in summer this year, and actions to mitigate such volatility.
"High natural gas prices can have an immediate impact to customers, and also a delayed impact when electric rates increase because the natural gas-related costs of running electric power plants are higher than earlier forecasts," it said.
At a Feb. 7 public hearing by the CPUC, data from the California Energy Commission showed that natural gas prices for delivery on Dec. 22 last year were nearly seven times higher compared to the same day in 2021.
"I am particularly eager to see what this investigation reveals about market actors who contributed to this situation and have eluded scrutiny for too long," said CPUC commissioner John Reynolds.
Earlier this month, California Governor Gavin Newsom requested the Federal Energy Regulatory Commission (FERC) to investigate any "market manipulation, anticompetitive behavior, or other anomalous activities" behind the elevated prices.
"In response, FERC stated that it is conducting surveillance to determine whether any market participants engaged in behavior that contributed to, or took advantage of, the high gas prices," the CPUC said. (Reporting by Deep Vakil and Brijesh Patel in Bengaluru; Editing by David Gregorio)