2019 Rate Request FAQ
1. How does SoCalGas set rates?
SoCalGas does not set rates—they are determined by the California Public Utilities Commission (CPUC) through an open, public process. SoCalGas submits a rate request to the CPUC and participates in hearings to discuss the needs and concerns of all its customers. The CPUC determines both what customers pay from 2019-2022 and how SoCalGas can invest in its infrastructure to enhance long-term reliability and safety.
The rate request does not include the cost of the natural gas customers use. SoCalGas does not profit from customers’ consumption of natural gas. This creates an incentive for SoCalGas to achieve the best natural gas price possible for our customers, and to help customers conserve energy.
2. Do new rates cover costs related to the Aliso Canyon Storage Field leak?
No. In 2015, the CPUC ordered SoCalGas to exclude all costs related to the Aliso Canyon leak from this rate request. No such costs are included.
3. How often do utilities file general rate case applications, and how long does the process take?
SoCalGas and other large investor-owned utilities in California file general rate case applications every three to four years. The CPUC oversees the proceedings, which include numerous regulatory and public hearings with testimony from ratepayer advocates, environmental groups, and others. The approval process is scheduled to take at least 12-18 months.
4. What is the breakdown of the cost increase?
The main components of the 2019 rate request are broken down into three areas:
- About 59 percent of the increase is associated with modernizing and upgrading our infrastructure so that we can maintain and enhance long-term reliability and safety for our customers, and assess safety-related costs based on a new state-mandated risk assessment program that takes into account our top safety risks.
- Approximately 28 percent covers costs to retain and reward the most talented energy professionals, so they can continue delivering the safe, clean, and reliable energy and superior customer service our customers deserve. This also includes the nearly $43 million in cost reductions SoCalGas has achieved through organizational efficiency measures, such as renegotiating supplier contracts and improving the efficiency of employee training.
- Another 13 percent is to support the growth of more renewable energy options, as well as improvements to customer services and technology solutions that can help California meet its environmental goals, and provide customers with a diverse mix of energy options now and well into the future.
5. Why do we need to invest in natural gas infrastructure?
Natural gas is the foundation of California’s energy systems, providing safe, clean, affordable, and reliable source of energy for homes, businesses, transportation, electric generation, and industrial processes.
More than 90 percent of households in Southern California rely on natural gas for heating their homes and hot water, and prefer it by a ratio of 4 to 1 over electricity for those uses. About 60 percent of the electricity in California is generated using natural gas. Natural gas supports renewable sources of energy, like solar and wind, and serves as a critical safety net that supports the electric grid when the sun doesn’t shine and the wind doesn’t blow.
The investments included in SoCalGas’ 2019 rate request reflect the company’s commitment to delivering the clean, safe, reliable, and affordable natural gas that Southern Californians deserve, now and far into the future.
6. Why are you increasing employee pensions, medical, and compensation benefits?
Our highly trained, responsive team is the reason we’re able to deliver clean, safe, and reliable energy to every home and business in our service area. This rate request allows us to recruit and retain the most talented energy professionals, so they can continue delivering the safe, clean, and reliable energy and superior customer service you deserve.
Specifically, we’re asking to fund the company’s total compensation programs, which are structured to maintain market competitiveness and attract and retain high-performing employees that can competently operate SoCalGas’ large and complex natural gas system—the nation’s largest.