Noticed a high utility bill recently? Natural gas prices are rising in California.

Shock, confusion and frustration: These may be just some of the reactions from millions of Californians after opening their natural gas bills this winter.

California’s Public Utility Commission, CPUC, says natural gas prices in the state and across the West have risen to alarming levels for consumers.

PG&E has 4.5 million natural gas customers in Northern California and Central California. The utility company said customers can expect a 32% increase in their bills through March. PG&E and other utility companies throughout the state are pointing at high demand, low supplies and cold weather for the steep rise in energy bills.

Gov. Gavin Newsom has called for a federal investigation into price increases. Regardless of politics, the price hike is hitting residents at a time when inflation is affecting everyday purchases.

So what’s causing this sudden increase? CapRadio’s Insight Host Vicki Gonzalez spoke with UC Berkeley Haas School of Business professor and Faculty Director of its Ene3rgy Institute, Severin Borenstein.

This interview has been edited for clarity and length.

On when natural gas prices started to spike

The price of natural gas starting in late November just skyrocketed on the West Coast, not in the rest of the country. That indicates that there wasn’t enough pipeline capacity to get the gas we needed from the rest of the country, and we knew there were going to be some problems. There’s been a pipeline that carries a lot of gas from Texas to California that’s been out of commission or now at low pressure since 2021.

… California also has less gas in storage than we used to, partially because of the pretty well-known problem that Aliso Canyon, the storage facility in Southern California that had that [had a] massive leak in 2015.

Then we had cold weather, and cold weather drives up the price of natural gas, not just [because] we’re burning more in our houses to stay warm, but also because it means we’re using more electricity … [that is] produced [by] burning natural gas.

… So the prices shot up, and it took a while to show up in our bills because the gas companies average [prices] over time. For the first couple of weeks, we were still seeing an average with some lower prices, but by late December, bills were just showing astronomical prices for natural gas.

On what was most surprising about the price spike

We have seen these spikes [before in California]. So just to give you an idea, typically, the price of natural gas is about $5 per million B[ritish] T[hermal] U[nits]. It got up [to] as high as $40 or $50 [for] a few days.

That does happen occasionally when you get into a crunch, but it usually lasts a day or two, and then it settles back down. This lasted well into January. [Prices] have gone back down now, and we’re starting to see some relief, because [gas companies] are averaging [their pricing]. It’s going to take a little while for [everything] to get back down to normal levels.

What happened is we saw a spike that didn’t last a day or three days, but lasted almost two months … and that was just a killer.

On whether the spike in gasoline prices are tied to the spike in natural gas

I think it’s primarily a coincidence, the problem in natural gas right now is really very much an isolated West Coast problem. The problem [with] gasoline earlier in the year was a world crude oil problem, and then later in the year, it was a California problem with our own refineries … this sort of volatility really hurts people.

And what you didn’t mention is electricity prices are going up too, partially because they are tied to natural gas. But the bigger piece is that we are paying for all sorts of other costs — including climate change adaptation — through our electricity bills.

And so those prices aren’t as volatile, but they are steadily marching upward. We’re paying for wildfires. We’re paying for wildfire mitigation and for compensating people who are hurt by the wildfire.

All of that is in our electricity price, and that’s probably becoming the most unaffordable when you look at it over the whole year.