Natural Gas Rates Explained

Learn about the factors that determine the price you pay for natural gas.


How is My Natural Gas Bill Calculated?

Our rates are regulated by the California Public Utilities Commission, or CPUC, based on three components:

  1. Procurement Costs – The cost of the natural gas itself
  2. Transportation Costs – The cost of natural gas delivery
  3. Public Purpose Surcharge – The cost to fund natural gas-related programs

Overall, about 92% of your bill goes toward products and services provided to you essentially at cost, with the remaining eight percent going toward a return on SoCalGas’ investment in the gas system.

More information about how these charges are reflected on your bill can be found here .

How are Rates Calculated?

The costs associated with delivering natural gas are ultimately approved by the CPUC, with input from SoCalGas and public advocates. This process is repeated every three to four years.

1. Propose

  • SoCalGas analyzes the future needs of the natural gas system and estimates the funding needed for the next three years to upgrade utility infrastructure, operate systems safely, invest in new technology and provide responsive customer service.
  • During the process, the CPUC also analyzes the rate increases required by Public Purpose Programs, such as those mandated to assure natural gas service remains accessible to customers with low incomes.

2. Review

  • The CPUC takes about two to three years to hold public hearings, open comment periods and formal sessions before an administrative law judge. They also need that time to analyze the input gathered.
  • Public advocates comment on both the plans for the natural gas system and their proposed costs and raise issues they believe to be in the public’s interests. 
  • After its analysis, the CPUC determines SoCalGas’ budget for the next three years.

3. Implement

  • As a final step, the CPUC decides how to divide the increased need for funding into different rate increases to be paid by the different categories of natural gas customers. 
  • Commercial and industrial users usually fund a larger part of the rate increases because of their heavier demands on the system.
  • Residential rates are split into “tiers,” and customers who use more natural gas pay a greater percentage of the funding needed to operate and maintain the natural gas system.

What Rate Changes are Planned?

Periodically, SoCalGas customers can expect key rate changes. Listed below are the planned and recent rate changes approved by the California Public Utilities Commission. These rate changes allow for investment and improvement in the natural gas infrastructure to deliver the fuel to cook your food, dry your clothes, heat your water and to power the electric generation plants in Southern California. And it's important to note that these rate changes are not related to the Aliso Canyon natural gas leak. 
Besides these rate changes, the price you pay for natural gas (know as the Gas Commodity rate), varies monthly depending on the market prices.
  • August 2016
    • An increase in costs to fund major investments and improvements to SoCalGas’ system through the three year General Rate Case (GRC) application process. 
    • A small decrease due to the Transmission Integrity Management Program cost adjustment.
  • September 2016
    • Pipeline Safety Enhancement Program (PSEP) and TCAP Phase I implementation in September, 2016: A small increase to address the allocation of updated storage-related costs to customer classes costs for storage operations.
  • January 2017
    • A decrease in the residential baseline rate by $0.098 per therm from the 9/1/2016 rate and a decrease in the residential non-baseline rate.

How Will These Rate Changes Affect My Bill?

Ultimately, in 2016 residential customers, with an average usage of 37 therms per month, may see an overall average increase of about 3% or $1.27 per month.
Low income customers, with an average usage of 30 therms per month may see an overall average increase of about 2% or $0.82 per month. 
Small-to-medium business customers, with usage of 300 therms per month, may see an overall average increase of about 3% or $8.32 per month. 
Large commercial/industrial customers, with usage of 6,250 therms per month may see an overall increase of about 2% or $72 per month. 

Gas Price Outlook

Effective January 1, 2018, the procurement component of the core sales rate will decrease 5.020 ¢/therm to 30.187 ¢/therm. This decrease resulted from an overall 7.942 ¢/therm decrease in commodity price and an increase of 2.922 ¢/therm in account adjustments. Compared to a year ago, the procurement rate is about 27.6% lower (41.687 ¢/therm) than what it was effective January 2017.
Combined with the transportation rate, core residential and C&I sales customers will see about a 3.5% rate decrease from last month.