PUC Approves New Policy for Natural Gas Pricing

The California Public Utilities Commission gave final approval Wednesday to a new regulatory policy for natural gas that will raise residential rates, cut rates for small commercial customers and let big companies buy the cheapest gas on the market.

The action confirms an interim decision by the commission last March. But details, including the new rates to be charged customers, won’t be set until next year.

Officials at Southern California Gas said they don’t expect sharp increases in rates for residential customers but declined to estimate what the increases might be. Utilities have said they will be better able to compete with oil and other energy forms under the new policy.

The new policy treats major industrial customers differently from other natural gas customers, giving them the option of buying gas from outside suppliers or from the utility. In either case, the utility’s pipelines would deliver the gas.

For residential customers, the PUC said the new approach will end the subsidization by commercial users that has kept residential rates lower. Instead, rates will reflect the cost of providing natural gas to each category of customer, the PUC said.

The action, in effect a partial deregulation of natural gas utilities in the state, is an outgrowth of natural gas deregulatory actions at the federal level. California is the first state to begin to implement such actions.