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SoCalGas Is Price-Gouging Low-Income Communities in LA. It’s Time to Transition Away From Gas.

Policy makers need to protect vulnerable households by investing in renewable energy and provide utility debt relief.

Oil Pumps in California (Wikimedia Commons)

SoCalGas customers are rightfully outraged about high gas bills this winter, as evidenced by online comments and calls to state legislators. The utility ominously warned customers to brace themselves for “shockingly high” bills — more than double what they paid in 2021 — with some reaching over $900. Paying more for utility bills is not an option for some; between Los Angeles’ housing affordability crisis and the growing cost of necessities, low-income communities are already living on the brink. 

While gas price volatility is expected in the winter, the current price spike seen on SoCalGas bills is cited by some as the worst in 30 years — causing customers to blame SoCalGas for price gouging, given that they saw the highest price spikes in California and other Western states. Between January 2022 and 2023, the average PG&E customer saw their bills increase $44 while the average SoCalGas customer saw their bills increase $176.

Customers aren’t alone in their mistrust of SoCalGas and high gas prices. Consumer Watchdog petitioned State Attorney General Rob Bonta and LA City Attorney Hydee Feldstein Soto to investigate price gouging by SoCalGas, a call echoed by LA advocates in a similar letter to the city attorney. Consumer Watchdog said the utility mismanaged their gas storage supplies, leading to unnecessary buying on the spot market, where wholesale gas is bought and sold for immediate delivery, which drove the price to historic highs. They also question whether trading subsidiaries of SoCalGas’ parent company, Sempra Energy, profited from this artificial inflation of the spot price.

Following pressure from elected leaders including the LA County Board of Supervisors and California State Senate Republicans, the California Public Utilities Commission — the agency responsible for regulating utilities — hosted a special hearing to discuss gas price spikes. During the meeting, SoCalGas attributed the soaring price of wholesale methane gas to an atypically colder winter, increased demand, and storage issues.

But Gov. Gavin Newsom didn’t buy these excuses and alluded to SoCalGas being unable to account for “the extent and longevity of the price spike.” In a letter to the Federal Energy Regulatory Commission (FERC) — a federal agency tasked with regulating the transmission and sale of gas and electricity between states — Newsom urged FERC to investigate California’s energy market to determine whether “manipulation, anticompetitive behavior, or other anomalous activities are driving these ongoing elevated prices in the western gas markets.” 

In the meantime, CPUC and SoCalGas have committed to provide relief by offering credits or cash on current bills amid mounting prices. However, these efforts are a temporary remedy to the ongoing volatility of fossil fuels.  Policymakers, city leaders and utilities must do more to insulate communities from fossil fuel price spikes. This means investing funds in additional utility debt to provide relief to meet the scale of need for affected households and ending utility shut offs for vulnerable customers like LADWP did for low-income communities last November.  

Research shows that a quarter of low-income households in Los Angeles are severely energy burdened, spending 10% of their income on energy needs. Energy burdens disproportionately impact households in communities of color who are also located in the most polluted areas of the city. We need energy policies that correct past harms inflicted on our communities due to the legacy of environmental racism and fossil fuel pollution. Investing in long-term solutions centering energy justice and paving the way for affordability is key.

Reducing the city’s dependence on gas is an essential step toward a transformative vision for affordable, clean, and accessible energy for all residents. It’s crucial to center frontline communities with practical and equitable solutions that will reduce these communities’ exposure to the health, safety, and climate impacts of gas infrastructure. Fossil fuels are subject to an unpredictable market, whereas renewable energy from the sun and wind will always be abundant and free for Los Angeles to harness. 

Last year, the LA City Council approved additional motions to bolster the city’s effort to reach 100% renewable energy by 2035. Renewable energy isn’t just cheaper than fossil fuels, it also has the benefit of price stability. An E3 study showed that equitably transitioning buildings off of gas could save households living in low-rise apartment buildings an average of $50 a month. Low-rise apartments currently account for over 80% of Los Angeles’s multifamily housing units. Savings are needed more than ever as SoCalGas is applying for another rate increase that would raise bills by an average of 13.2%.

Los Angeles needs to invest in all-electric home upgrades with efficient appliances like heat pumps, starting in communities most burdened by high energy bills and fossil fuel pollution. Last year, California committed to bold investments our communities need, by allocating over $1.3 billion in multiyear funding for programs equipping low-income households with heat pumps and other upgrades that would cut energy use. A managed and planned transition away from gas could help shield consumers from the rising cost of gas and the risk of stranded assets.

The gas bills arriving in the mail this winter are hurting low-income families — there’s no getting around it. These bills should serve as a wakeup call to move forward with utility debt relief that meets the scale of need. Renewable energy investments and all-electric home upgrades are a feasible solution that would transition households from fossil fuels that are the root cause of this affordability crisis. 

Agustin Cabrera is the policy director at Strategic Concepts in Organizing and Policy Education: SCOPE, a grassroots base-building organization in South Los Angeles.