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.

Upcoming Rate Changes

Periodically, SoCalGas customers can expect key rate changes. Rate changes are approved by the California Public Utilities Commission (CPUC) through a three-year General Rate Case (GRC) application process and other proceedings. At a minimum, there is a rate change at the beginning of each year.
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. It is important to note that these rate changes are not related to the Aliso Canyon natural gas leak that was fixed in 2016. 
Besides these rate changes, the price you pay for natural gas (known as the Gas Commodity rate), varies monthly depending on the market prices. The current rates can be found here.
Rate Change Effective Date
Gas transportation rates increased by $0.023 per therm and $0.026 per therm
for residential and small commercial customers, respectively, to allow for the
cost recovery of continuous improvement to our infrastructure to deliver natural
gas to your home.
Gas Residential transportation rates increased slightly by 0.7% due to the
Aliso Canyon Turbine Replacement Project becoming operational.
Gas residential transportation rates increased by 1% due to recovery of  costs in the
Natural Gas Leak Abatement Program Balancing Account for 2018, Pursuant to
Resolution G-3538.
Gas residential transportation rates are estimated to increase by $0.088 per therm
and $0.079 per therm for residential and small commercial customers, respectively,
mainly due to recovery of the 2019 Greenhouse Gas revenue requirement and for
an under collection in the balancing account due to mild weather.

Effective September 1, 2020, the procurement component of the core sales rate will decrease 0.741 ¢/therm to 25.498 ¢/therm. This decrease resulted from an overall 4.965 ¢/therm increase in commodity price and a decrease of 5.706 ¢/therm in account adjustments. Compared to a year ago, the procurement rate is about 2.5% lower (26.162 ¢/therm) than what it was effective September 2019.  

Combined with the transportation rate, core residential and C&I sales customers will see about a 0.9% rate decrease from last month.