California Utility Left in the Cold

Pacific Gas and Electric Co. is literally running out of gas. The current economic squeeze caused by the electricity crisis in California has prompted 15-20 natural gas suppliers to decline to sell the utility gas beyond their current commitments--they’re not confident Pacific Gas & Electric Co. will be able to pay the bill.

Pacific Gas and Electric Co. has been able to purchase enough gas for its 3.8 million customers' projected use in January, unless temperatures drop, causing the demand for natural gas to rise.

The average residential gas bill will rise to $125 in January, 60 percent higher than a December bill of $77. A year ago, the average gas bill was $50. Market prices for gas are expected to reach record levels this month, following increases over the past months due to cold weather and record demand by natural-gas fueled power plants.

So far, Pacific Gas and Electric Co. has been able to keep prices low by planning ahead. The utility has taken a number of steps to lock in low gas prices, including storing gas in the summer, signing long-term contracts and arranging for price caps--keeping January residential bills from reaching $162.