Why Does Gas Bill Rise While Rate Stays Same?

“We did everything the gas company says you should,” a suburban Los Angeles housewife complains. “We have an air-return duct, keep our thermostat on low, wash only full loads of dishes and clothes. Still, when we got our gas bill in February, it was five times the month before!”

Suspicion is the increasingly common reaction. Last January, after an unusual cold spell, 72,000 customers called Southern California Gas Co. with bill complaints--almost twice the previous January’s calls. Some say their rates had gone up despite the company boast that it hasn’t raised rates in two years. Some insist that the company miscalculates their charges, counting on a certain customer inattention.

Gas bills aroused little interest until the oil crisis of the 1970s overturned utility tradition of rewarding higher usage with lower rates. Now, pricing virtually punishes usage, and surprised consumers find little comfort in the knowledge that regulators such as California’s Public Utilities Commission review rates and revenues. Nor are they receptive to reason, such as the gas company’s recent explanation that very cold weather keeps furnaces going continuously instead of “cycling on and off because when it’s warmer, it reaches the desired temperature more quickly,” says Al Russell, manager of the gas company’s customer services.

Few customers understand this, and unfortunately the most regular communication from a utility such as the gas company is hardly communicative. Take Southern California Gas Co.’s bill, similar to others in terms and calculations, and if anything, probably less inscrutable in its step-by-step calculations. It starts with name, address, account number and coded rate schedule (the common “R13” designates residential customers in the prevalent climate zone, with individually metered household usage), and ends with city taxes and a fee to support the state utility commission. In between is the calculation of usage and charges.

Mysterious Billing Factor

The first calculation gives starting and ending meter readings for the billing period (roughly a month), with the difference being a total number of unnamed somethings-- cubic feet of gas in hundreds, it turns out. Those cubic feet, a measure of gas volume passing through the pipe, are multipled by an unexplained “billing factor” to yield the billable therms, a measure of energy value.

That mysterious billing factor, one woman says, “goes up and down, God knows why.” Nothing nefarious, it adjusts for differences in altitude and the composition of the particular gas shipment; when gas contains less methane or is under less atmospheric pressure, it takes more to produce the desired energy. “The formula assures,” Russell says, “that all customers are charged equally for the same amount of heat value.”

Moving on, the unspecific “customer charge” is just a basic service rate applied to meter reading, billing and processing rather than cost of gas. Residential customers pay about 10 cents a day. Businesses pay from $10 a month (up from last year’s $5) to $500, depending on size.

Next come the charges for actual therms used. By legislative decree, residential customers get a certain number of “lifeline” (now called “baseline”)therms at a low rate (about 37.9 cents since May 1), paying more than double (about 85.4 cents) when they pass beyond them--an obvious encouragement to conserve.

Some consumers protest the idea of forced conservation when there’s reportedly a gas glut; some criticize the amount allotted--judged adequate for cooking, heating water and warming an average four-person household--as “just about enough to heat an outhouse,” in one man’s words. Until this month, most residences got 81 therms for a 31-day winter month and 26 therms in summer (more for longer billing periods, less for shorter)--enough apparently for most, because 61% of 1984’s gas bills didn’t exceed lifeline. Customers in colder climates get more in winter, as do people with certain medical problems.

Changes in Calculations

Another thing customers can’t understand without help is changes in the calculations. Between December and February, for example, the residential lifeline rate went from $0.46468 down to $0.45463, and the over-lifeline rate went up from $0.71794 to $0.74074. The bill explanation: “By California Public Utilities Commission Decision No. 84-12-066, the two ‘over-lifeline’ rates previously shown on your bill have been consolidated into a single rate.” But who knew there were two “over-lifeline” tiers--the one starting at 81 therms and another, at higher rates, above 181--because only 6% of bills ever showed a third tier last year.

Unfortunately, this inadequate explanation is not untypical. Many customers immediately noticed the changes, and some a concomitant increase in their bills, but the company was still boasting that “gas rates . . . have not been increased in 22 months.” “There’s a difference,” Russell explains, “between a rate increase and a change in rates”: One rate (over-lifeline) went up, the other (lifeline) down, and while it’s true some bills had a net increase, some came out less (which will happen again this month, when lifeline allotments change). Indeed, the overall effect was “revenue-neutral” for the company, so “the thing was basically a wash,” company spokesman Rich Puz says.

This is a distinction lost on ordinary people, particularly those whose overall charges increased . To them it didn’t seem a wash, and the gas company’s “good news” explanation--or lack of it--is disingenuous.

Small wonder customers complain about how the company does use its bill space: “Use a new gas dryer to treat your clothes with care and save time each wash day.” And “Important message . . . You’ll find a lot more than gas at the gas company.”