Reflecting the nose-dive in wholesale prices, Southern California Gas Co. in July whacked its retail prices to residential and small business customers by 48%, dropping from 52.1 cents/therm in June to 27 cents this month.
Industry observers, particularly merchant power generators building new natural gas-fired plants, indicate they think the wholesale prices will head back up in California along with higher temperatures, which kicked in last Monday as did the resumption of Stage One and Two power alerts by the transmission grid operator.
Most predictions, at this point, do not foresee going back to the extreme price spikes experienced during the period of December 2000 through January 2001.
Milder weather in June allowed SoCalGas to sock away greater supplies in underground storage. In fact, Sempra Energy CEO Steve Baum recently told a business conference at UCLA that his SoCalGas subsidiary has a five-year high of gas in storage at this point in the summer peak electricity demand season.
Some Wall Street analysts are already quoted in the business news media as predicting there won’t be gas price spikes this summer if the weather turns hot because of the extra volumes SoCalGas and other utilities in the West now have in storage.
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