Gas prices in southern california

Despite constant headlines about California's energy shortage, Southern California Gas Company is confident that customers will have the natural gas they need in the coming year with no interruption of service. However, customers can expect to continue paying higher gas costs than they have in the past.

"There will be enough gas," says Lee Stewart president of The Gas Company's Energy Transportation Services. "But with a doubling in supply cost and skyrocketing interstate transport rates, business customers should plan for continued high prices, even through The Gas Company's rates for delivery have declined in recent years.

Customers' gas bills reflect costs from three areas: the price of the gas itself (90% of which is imported from other states), the rates paid to transport the gas through interstate pipelines and the cost to deliver the gas to the customer once inside California. The Gas Company's only business is gas delivery to the customer.

The demand for natural gas has soared recently in part due to the shortage of electricity generating alternatives, Stewart says. Locally generators are using more natural gas to produce electricity, which has caused an increase in demand for gas to compensate for reductions in electricity that normally is available from other sources. For example, hydroelectric generators in the Pacific Northwest have been struggling with a 1 in 75-year drought that has diminished their capacity.

Even more significantly Stewart says, interstate transport rates have seen dramatic increases in the past year. Historically, rates paid for transporting gas through interstate pipelines were capped by the Federal Energy Regulatory Commission (FERC). Last year, price caps were lifted as a two-year experiment, and rates have risen 20-fold, causing sharp increases in customers' bills.

"We have been asking FERC to temporarily re-impose these price caps," says Stewart. "Business customers and consumers can help us to reduce their bills by asking their congressional representatives to communicate their support for price caps to the FERC."

Businesses can also learn more about what they can do to reduce their gas bills by logging on to The Gas Company's Web site at www.socalgas.com for energy saving tips.