Points to Evidence Utility Colluded with Parent Company Sempra To Drive Up Price On Customers
Consumer Watchdog wrote Attorney General Rob Bonta and Los Angeles City Attorney Hydee Feldstein Soto to investigate the Southern California Gas Company for the doubling of its customers' natural gas bills.
“Southern California Gas’s curious failure to plan for winter left its customers with huge bills and its parent company SEMPA and its gas trading subsidiaries with huge profits,” said Jamie Court, President of Consumer Watchdog. “The company owes the public answers and it is up to our public prosecutors to ask the key questions on their behalf.”
Read the letter here.
The consumer group wrote the doubling of natural gas prices is unique to California and that So Cal Gas “has purchased gas at unreasonably high prices, with higher profits for So Cal Gas’s parent company SEMPRA, that sells natural gas to So Cal Gas through its other subsidiaries. We believe So Cal Gas’s conduct in implementing natural gas rate hikes may constitute an unfair business practice and we are calling upon you to investigate.”
"Southern California Gas doubled consumers’ natural gas bills with virtually no notice, leaving its customers with large, unexpected bills," the letter continued. "They are now forced to choose between paying their utility bills and their rent, food costs, and other monthly obligations with no warning."
Consumer Watchdog pointed to “red flags” that warranted an investigation, including the fact that So Cal Gas has “deceived its customers about the fact that it is profiting from the increase in natural gas costs...In fact, SEMPRA, the parent company of both utilities, and its other subsidiaries, profits greatly from the increase in natural gas prices and that benefits So Cal Gas’s management financially as well – which is rewarded for feeding the cash cow that is SEMPRA. Put another way, would it be an unfair business practice if a plumber charged a consumer double for piping, claiming he has no financial interest in the added costs of the pipe and is just passing those costs along, and neglects to mention his father owns the piping company."
The letter asks the prosecutors to investigate the follow issues:
- Did So Cal Gas fail to notify its customers in a timely way in order to drive up natural gas sales for SEMPRA’s subsidiaries? Without adequate notice, customers would use more gas and SEMPRA subsidiaries would make more money.
- Does So Cal Gas have a duty to acknowledge its financial relationship with SEMPRA and its other subsidiaries as sellers of natural gas to the utility? How much did SEMPRA profit from selling gas to So Cal Gas at increased costs?
- What role did SEMPRA and its subsidiaries play in the doubling of natural gas prices on the West Coast. Natural gas prices in the East are significantly less than West Coast prices. Did SEMPRA deplete inventories to drive up the price on the West Coast, knowing it had a guaranteed market for higher price gas from its subsidiary utilities?
- What role did SoCal gas play in the scarcity of natural gas for its customers? Evidence shows that So Cal gas did not adequately purchase gas for the 2022 – 2023 season. Ordinarily the utility would purchase, transport and store ahead of the season to plan for winter surges. This failure of planning created conditions where it had to buy from its parent company SEMPRA’s subsidiaries on the spot market at twice the normal price, passing the costs on to its customers.