After spiking nationally and at the California border in late February, natural gas prices have come down to more normal levels and the spikes were not caused by market manipulation, according to California energy officials who participated in a Sacramento press conference and conference call Wednesday. A California Public Utilities Commission staff official cautioned that the results are “preliminary” and the state will continue to look for the possibility of inappropriate behavior among market players.

Steve Maviglio, the California governor’s chief spokesperson, said the governor remained “skeptical” of the energy suppliers, so the state intends to continue to closely monitor wholesale and retail price developments, and if they find evidence of price manipulation or gouging “there will be hell to pay.”

Nationally, natural gas prices went from an average of $6.74/MMBtus to $18.85/MMBtus on Feb. 24-25, an increase of 180%, said Paul Clanon, the CPUC’s energy division director. In California the spike was only 68% — going from $5.68 to $9.54/MMBtus. Nevertheless, at the retail level the result was an added $325 million spent statewide from natural gas in March, compared to the same month in 2002, Clanon said.

“There is no evidence so far of market price manipulation,” said Clanon said. “The price spikes appear to be related to normal supply/demand processes.

Responding to winter price spikes in both natural gas and gasoline, California energy agencies conducted a hurried two-week analysis the end of last month at the request of Gov. Gray Davis. In both instances, so far, they emphasized that there appears to be no wrongdoing by energy suppliers and that wholesale prices have come back down. In the case of gasoline, a 42% spike in retail prices the first 10 weeks of this year will begin to drop considerably by the end of this week and later in the month when pump charges are expected to be below $2/gallon again for the lowest grades of unleaded fuel.

In terms of natural gas retail prices, Clanon said the CPUC study indicated that there was an average 22% increase from February to March in Southern California Gas Co. customer bills ($55 to $67) and 10% for Pacific Gas and Electric Co. ($62 to $69).

PG&E’s utility announced separately on Wednesday that it expects April retail natural gas prices on its system to fall 19% from an average bill of $69/month in March to an average bill of $56. The utility attributed the March price spikes to “cold weather in the eastern United States and concerns about the situation in Iraq.”

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