- California Sen. Dianne Feinstein and Gov. Gavin Newsom, both Democrats, asked the Federal Energy Regulatory Commission to investigate a recent spike in natural gas prices in the West that has led to a jump in electricity prices, according to letters released Tuesday.
- FERC should immediately investigate whether “market manipulation, anticompetitive behavior, or other anomalous activities” contributed to the rise in gas prices, Newsom said in a letter to FERC Monday.
- Wholesale electricity prices in California jumped fivefold in December to $250/MWh on average compared to the year-ago period, according to the California Independent System Operator. The jump in gas prices in December and January was caused by several factors, including cold weather, low gas storage inventories and maintenance on the El Paso gas pipeline, the grid operator said in a report Monday.
FERC must investigate the “unusual conditions” in the gas markets in the Western U.S. that have resulted in skyrocketing home heating and electricity costs for California residents, Feinstein told the agency Monday in a letter.
Prices in all CAISO electric markets trend higher during periods of high gas prices, the grid operator said.
Gas prices after Thanksgiving rose quickly until reaching up to $50/MMBtu, according to CAISO. Prices remained unusually high in December at the two main California gas hubs and at many other Western hubs, the grid operator said.
There were no major gas pipeline outages affecting gas system reliability in the West from November through January, according to CAISO.
Driven by the December price spike, wholesale power costs in the fourth quarter last year in CAISO totaled about $7.4 billion, twice and three times as high as the previous two fourth quarters, according to the grid operator.
Gas prices in the West, and in California in particular, remain high compared to prices in the East, such as at the Henry Hub in Louisiana, CAISO said.
Gas prices at California’s gas hubs on Jan. 31 were 215% higher than at the Henry Hub, according to a presentation by the California Energy Commission at a meeting Tuesday held by the California Public Utilities Commission.
Natural gas has been more expensive on the U.S. West Coast and in New England than in Ukraine, according to Tyson Slocum, director of Public Citizen’s energy program.
“This is what happens when natural gas spot markets are almost completely free from regulatory oversight, and you force Americans to compete with Berlin and Beijing on price due to our record [liquefied natural gas] exports,” Slocum said Wednesday in an email.
FERC has the statutory authority to force transparency into gas spot markets, and the Department of Energy has the obligation to only authorize LNG exports that are “consistent with the public interest,” Slocum said. “Neither of these things are happening, so California officials are right to demand answers from FERC.”
The high gas prices haven’t affected grid reliability, according to CAISO.
“The higher gas prices have not affected the reliable operation of the electric system and the CAISO continues to monitor its market to address any unusual market results that may be caused [by] gas conditions,” the grid operator said.