Customers’ Energy Costs Expected to Decrease in March with Drop in Natural Gas Market Prices
After three months of higher-than-normal natural gas market prices driving up energy bills, PG&E customers can expect to see, on average, a 75% decrease in their March natural gas bills.
This decrease is due in part to PG&E implementing the state’s annual April Climate Credit one month early. Even without the climate credit, March natural gas bills, on average, would decrease 40% because of a significant drop in the market prices PG&E pays for natural gas to serve its customers, and customers using less gas as colder temperatures moderate. The estimated decrease is based on customers using 38 therms (a unit of energy) in March compared to 50 therms in February.
Gas bills are expected to continue to decrease as customers traditionally use less gas during spring and summer months.
PG&E does not control the market prices for gas and electricity, and like other utilities, does not mark up the cost of gas and electricity that it purchases on behalf of its customers.
Higher natural gas prices were sustained on the West Coast from November 2022 through January 2023. The western natural gas markets had not experienced prolonged, elevated gas prices like this in their history. Prices were driven by market forces including increased natural gas demand due to colder than normal temperatures; increased demand for gas-fired electric generation due to less hydroelectric generation and fewer electric imports; lower Pacific gas storage inventory; and pipeline delivery constraints.
The average residential non-CARE customer bill for natural gas service in March is projected to be about $37.00, which includes the state’s gas Climate Credit of $52.78. In February, the average residential non-CARE customer gas bill was about $150.00.
Natural gas prices also affect electricity costs because many power plants use natural gas to generate electricity. The average residential non-CARE customer bill for electric service in March is projected to be about $91.00, which includes the state’s electric Climate Credit of $38.39. That’s compared to about $145.00 in February.
The prices that PG&E pays for the natural gas it delivers to its customers have been rising this winter, and PG&E wants its customers to know their energy bills are likely to rise as well.
Price increases have been driven by higher demand and tighter supplies on the West Coast, as customers use more natural gas for heating during cooler than normal temperatures, and as power plants use more natural gas to meet electricity demand.
PG&E customers have used more natural gas than the five-year historic average this winter, with November usage 20% higher, December 10% higher, and January 10% higher.
Like other utility companies, PG&E does not control the market prices it pays for gas and electricity nor does PG&E mark up the cost of the energy it purchases on behalf of its customers.
“PG&E recognizes our responsibility to serve our customers safely and reliably while keeping their energy bills as low as possible. We’re here to help all our customers save money by working with them to find the best rate plan for their household or business, sharing free and low-cost actions to help them reduce energy usage and better manage monthly bills, and offering assistance programs for income-eligible customers,” said Vincent Davis, PG&E Vice President, Customer Operations and Enablement.
CPUC moves up Climate Credit for bill relief
PG&E is actively engaging with federal and state regulators, policymakers and lawmakers on ways to provide bill relief to customers.
One example is the annual Climate Credit, which is part of the state’s efforts to fight climate change. The California Public Utilities Commission approved utilities distributing the annual April credit as soon as possible, a proposal that PG&E supported.
PG&E and other California utilities administer the Climate Credit to their customers. Customers who receive both gas and electric services from PG&E will receive a total bill credit of $91.17; gas-only customers will receive $52.78; electric-only customers will be credited $38.39.
Separately, more than 300,000 customers who experienced financial hardships during the pandemic will receive an automatic one-time bill credit under the California Arrearage Payment Program. Amounts vary.
How much higher could bills be?
As of January 25, PG&E projects that residential energy bills will be about 32% higher from November 2022 through March 2023 compared to the same months last winter. Bills for individual customers vary based on factors including how much energy they use.
On average, residential non-CARE customers who receive both their energy supply and delivery from PG&E may see a bill increase of about $79 per month from November through March. The majority of the bill increase is from the gas and electricity supply that PG&E purchases for its customers.
Breaking that down between gas and electric, residential non-CARE gas customers using an average of 56 therms (a unit that measures energy) may see a monthly bill increase of about $54; for residential non-CARE (non-Community Choice Aggregator or Direct Access) electricity customers using an average of 442-kilowatt hours, monthly bills may rise about $25.
However, if the colder weather and natural gas prices moderate, then bill impacts could be less severe.
Prices higher in the West than nationwide
Natural gas prices change daily and have been much higher on the West Coast (California, Oregon and Washington) than the rest of the country since November.
Between January 19 and 25, for example, California’s average daily prices were five times higher than the U.S. benchmark Henry Hub prices and those in New York and Chicago, according to the U.S. Energy Information Administration.
Colder temperatures in the West are causing customers to turn up the thermostat and use more energy.
“It has been colder than normal since the start of November. Temperatures during the period of November 1 through December 18 ran 2-5 degrees below normal, and have not been this cold during the same period since 2011. Temperatures statewide during November were the tenth coldest on record dating back to 1895,” said PG&E meteorologist Ted Schlaepfer.
Lower-than-normal natural gas storage levels maintained by market participants at facilities owned by independent third parties are also impacting natural gas prices. Although storage levels held by PG&E for its residential and small business customers are at normal levels, storage overall on the West Coast is currently about 31% lower than the five-year average.
Additionally, issues on the Kinder Morgan El Paso Natural Gas Pipeline system have limited natural gas supply.
Annual gas and electric rate change
Beyond the changes driven by natural gas supply costs, customer gas and electric rates changed on January 1, 2023, as part of an annual process called the “true-up,” which consolidates rate changes authorized by the California Public Utilities Commission.
These rate changes include charges for gas and electric delivery, electricity supply, and state-mandated assistance programs for income-qualified customers, energy efficiency and public-interest research and development.
As part of this year’s true-up, average residential non-CARE gas bills decreased by 4.6% (does not include natural gas supply costs). Average residential non-CARE electric (non-Community Choice Aggregator or Direct Access) bills increased by approximately 3.4%.
How PG&E is working to reduce costs
PG&E uses three key strategies to help limit the impact of dynamic natural gas pricing on its customers: accessing the lowest-priced gas from three gas production basins; withdrawing gas from underground gas storage when open-market demand and prices increase; and using financial hedging products to lock in lower prices. These strategies are helping to moderate the impacts of current high market prices on PG&E customers’ bills.
PG&E is also taking actions to stabilize customers’ bills overall in the long term, with a goal of keeping increases at or below assumed inflation.
PG&E is working to reduce or offset investment costs in its energy system for customers, including selling licensing agreements to wireless providers to attach equipment to transmission towers to generate more than $970 million; undergrounding powerlines to reduce recurring maintenance costs; and pursuing federal funding to offset some costs of making the energy system safer and more climate resilient.
Free and low-cost ways to manage winter bills and reduce energy usage
· Make sure you’re on the right rate plan. Get a personalize Rate Plan Comparison to find the best rate plan for how your household uses energy.
· Keep bills predictable. Level out monthly payments and offset high seasonal bills with Budget Billing, a free tool that averages your annual energy costs to help manage monthly bills.
· Flexible payment arrangements. Extend your bill due date or make a payment arrangement. Access your online account for details.
Ways customers can lower energy use to save money
· Dial down your thermostat. You can save about 2% of your heating bill for each degree you lower the thermostat, heath permitting (if the turndown lasts a good part of the day or night). Turning down from 70 to 65 degrees, for example, saves 10%.
· Keep areas around vents open. Furniture and carpet can block heating vents, which makes heating systems work harder and prevents rooms from heating quickly.
· Wash in cold water. Save on water heating costs and wash only full loads of laundry in cold water.
· Use your window coverings. Open curtain and blinds to warm and light your home during the day, and close them at night to help keep out the cold.
· Lower your water heater temperature. By setting your water heater temperature to 120 degrees Fahrenheit you can reduce the amount of energy it takes to produce and maintain hot water.
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