San Francisco, CA – Consumer Watchdog President Jamie Court offered the following testimony to the Public Utilities Commission on the spike in natural gas prices in Southern California:
Something is clearly wrong with the natural gas market in the West, and in particular the Southwest. During its peak in December and January, the spot price paid for natural gas in Southern California was two to ten times higher than it was in the East and significantly greater than the price PG&E paid for natural gas in the North.
Consumer Watchdog made a short video demonstrating how So Cal Gas and its parent company SEMPRA may have wrongfully profited on the gas price spikes based on Energy Information Administration inventory data and charts: https://www.youtube.com/watch?v=8SUxoP7LrpQ
These areas of investigation should be explored:
1) Why did So Cal Gas fail to hedge its contracts and have long term contracts necessary to deliver gas at cheaper rates rather than having to buy at the height of the spot market price in winter?
2) Why did So Cal Gas deplete its significant inventories in November and early December when the spot market price was low, only to have to buy natural gas on the spot market at its peak prices, presumably from its parent company SEMPRA’s trading arm? (This, despite its historical pattern of holding inventory until winter, then depleting storage in winter when spot prices were high).
3) How much did So Cal Gas’s parent company SEMPRA’s trading company make from the spot market transactions in winter with So Cal Gas?
4) What caused the spot market price in the Southwest to climb so high, particularly when maintenance issues on the Permian basin pipe had been known for a while and could have been hedged against?
