Today’s Southern California Gas Company (SoCalGas) evolved through a series of mergers and acquisitions that have spanned its more than 140-year history.
SoCalGas’ roots trace back to 1867 when the Los Angeles Gas Co., the forerunner of SoCalGas, installed 43 new manufactured gas lamps in downtown Los Angeles. At that time, natural gas was still unknown and the company sold manufactured gas made initially from asphaltum, a tar-like substance, and later, from oil. The gas lighting business was enjoying modest success until Thomas Edison introduced his new electric light in 1879. To offset declining lighting revenues, the company began aggressively promoting stoves and heaters.
Meanwhile, Pacific Lighting, a predecessor of SoCalGas' parent company, Sempra Energy, was interested in expanding its gas business. Founded in San Francisco in 1886, Pacific Lighting bought several small gas manufacturing and distribution companies in 1889, including the Los Angeles Gas Co. and two other Los Angeles-based gas and electric firms.
By the early 20th century, natural gas - a colorless, odorless gas found in association with oil underground - was starting to gain attention. A huge field of natural gas was discovered near Taft, Calif., in 1909. Since natural gas had twice the heating value of manufactured gas, Pacific Lighting took the bold step to convert its system to natural gas and build pipelines throughout the state.
As natural gas became more widely available in California, Pacific Lighting acquired control of the gas distribution systems of Southern Counties in 1925, Santa Maria Gas Company in 1928 and Southern California Gas in 1929. Fueled by Los Angeles' rapid growth and new uses for gas, such as space and water heating, these companies - which would become Southern California Gas - made Pacific Lighting's system the largest in the country.
Growth through the years
Natural gas was soon found throughout the U.S. and demand for the fuel was rapidly growing. To meet customer needs, SoCalGas began storing gas in large holding tanks in the 1920s. In 1941, the company introduced a new system to the Southwest - underground storage of natural gas in depleted oil and gas fields. Over the next 30 years, the company would establish five underground storage facilities.
Demand for natural gas continued to grow before and after World War II. In the 1940s, Pacific Lighting pushed for the creation of a 30-inch diameter pipeline to carry natural gas to the southland from Texas. Built in 1948 by El Paso Natural Co., the 1,200-mile pipeline was the largest of its kind at the time, capable of delivering 175 million cubic feet of gas to Southern California each day. Soon, other interstate pipelines would be built and eventually, over 90 percent of all gas sold in the region came from outside the state's borders.
By the end of the 1950s, 90 percent of all cooking ranges and 98 percent of water heaters and home heating systems in Southern California were fueled by natural gas. SoCalGas offered industrial customers low rates in exchange for using other energy sources when usage peaked on cold winter days.
The years between 1950 and 1965 saw the gas business in Southern California grow more than it had in the prior 83 years. SoCalGas sales representatives aggressively promoted natural gas with architects, builders, homeowners and restaurant operators. The company also offered incentives to real estate developers to install gas mains when new subdivisions were built.
Changes in supply and regulations
By the 1970s, faced with diminishing natural gas supplies in the U.S., the company vigorously promoted gas-efficient appliances and provided incentives to consumers to install solar energy systems and insulation.
To locate new sources of natural gas, SoCalGas and other utilities proposed transporting liquefied natural gas in oceangoing tankers and then reconstituting it into gaseous form where supplies were needed. The company pursued a permit for an LNG plant 40 miles west of Santa Barbara, but the location was a major concern at the time. The issue became moot in the early 1980s due to the easing natural gas shortage.
Deregulation of the natural gas industry in the 1980s brought about dramatic changes in SoCalGas' operations. With its market open to new competitors, including interstate pipeline companies, brokers and producers, the company had to shed its old monopolistic ways in favor of a more market-oriented approach to distributing natural gas. The company focused its activities on services customers valued at the lowest possible cost.
In the 1990s, the company restructured contracts with suppliers and transporters of high-cost gas contracts to lower utility rates and obtain new customers. Like other utilities, SoCalGas moved away from historic "cost-of service" rates to "performance-based" rates, which provided incentives for increased efficiencies.
With growing air quality concerns, SoCalGas worked with the Gas Research Institute, the U.S. Department of Energy and others to develop new markets and technologies to take advantage of natural gas' clean-burning properties. This work included natural gas vehicles, fuel cells and low-emission burners.
Parent company activities
Pacific Lighting moved its corporate headquarters from San Francisco to Los Angeles in 1967 and began diversifying beyond energy-related operations. In 1970, the company merged its two remaining principal utilities, Southern California Gas and Southern Counties Gas companies, to form the nation's largest natural gas utility.
Constrained by the Public Utility Holding Company Act of 1935, which regulated holding companies and interstate commerce in gas and electricity, Pacific Lighting began its diversification strategy and acquired several non-related businesses in the 1980s. These included an oil and gas exploration and production company, a home builder, and a chain of drug and sporting goods stores.
To reflect its increasing diversity, Pacific Lighting changed its name to Pacific Enterprises in 1988. A few years later, the company shed its oil and gas and retail operations to focus on its core business, SoCalGas, and related businesses.
In 1998 - as part of the rapid consolidation in the electric and natural gas industries to lower costs and achieve economies of scale sparked by deregulation - Pacific Enterprises merged with Enova Corporation, parent of San Diego Gas & Co.
The entity that resulted from the combined operations of both companies was named Sempra Energy, with "Sempra" derived from the Latin word for "always."
At its inception, Sempra Energy had the largest regulated gas and electric utility customer base in the United States, serving 21 million customers.
Today, SoCalGas is the nation’s largest natural gas distribution utility providing clean, safe and reliable natural gas to its customers for more than 140 years. It is the nation’s largest natural gas distribution utility, providing service to 20.9 million consumers connected through nearly 5.8 million meters in more than 500 communities. The company’s service territory encompasses approximately 20,000 square miles throughout central and Southern California, from Visalia to the Mexican border.
Headquartered in Los Angeles, the company is a regulated subsidiary of Sempra Energy (NYSE: SRE), a San Diego-based, Fortune 500 energy services holding company. Like other investor-owned utilities in the state, SoCalGas' operations are regulated by the California Public Utilities Commission.