(Bloomberg) -- California Governor Gavin Newsom called for federal energy regulators to investigate a recent hike in natural gas prices that has resulted in sky-high utility bills.
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Newsom, a Democrat, asked the Federal Energy Regulatory Commission in a letter to look into whether market manipulation, anticompetitive behavior or other activities have driven up the cost of gas in the US West, according to a statement Monday.
The call for a probe comes after the wholesale price of natural gas in Southern California soared to more than nine times that of US natural gas benchmark futures in December, prompting California utilities to warn of shockingly high bills. Several factors have contributed to the soaring prices including colder-than-normal weather, reduced pipeline capacity due to maintenance and low gas storage levels in the US West.
PG&E and Sempra Energy's Southern California Gas Co., two of the state's biggest gas utilities, said they support Newsom's call for an investigation. The utilities said they don't set the price of gas and its cost is passed along to customers without a markup.
State energy regulators are scheduled to hold a hearing on Tuesday to examine the causes and impacts of the elevated gas rates. Last week, state regulators voted to speed up payouts of credits ranging from $90 to $120 to help offset high utility bills.
"Now is the time to identify the causes of the alarmingly high gas bills that are affecting millions of Californians," said Matt Baker, director of the Public Advocates Office, a division of the California Public Utilities Commission. "We need a better understanding of whether any profiteering or market manipulation has occurred."
(Updates with comment from utilities in fourth paragraph, consumer advocate in sixth)
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