On March 5, 2026, the California Public Utilities Commission issued a long-awaited decision following its investigation into the unprecedented spike in wholesale natural gas prices during the winter of 2022–2023.
For public agencies across California, the findings—and what the decision does not address—carry important implications for energy planning, budgeting, and risk management.
A Look Back: The 2022–2023 Price Spike
During the winter of 2022–2023, wholesale natural gas prices in California reached historic highs. January 2023 supply peaked at $49.52 per MMBtu—more than 12 times the average monthly index price over the prior decade, and nearly double the previous high earlier this century (January 2001 supply), adjusted for inflation.
In response, the CPUC opened a formal investigation in early 2023 to determine the root causes of the 2022/23 natural gas price spike.
What the CPUC Found
After nearly three years of expert witness testimony, hearings, and analysis, the CPUC concluded that the price surge was driven by a combination of market and infrastructure factors (Decision 26-02-058), including:
- Below-normal winter temperatures
- Constraints on interstate pipeline capacity
- Reduced natural gas import capability
- Low storage inventory levels
- Volatility during “Bidweek” pricing events
Importantly, the CPUC found no evidence that California’s investor-Owned Utilities (IOUs)—including Pacific Gas and Electric Company, Southern California Gas Company, and San Diego Gas & Electric—caused the price spike.
The Decision also did not evaluate potential market manipulation, noting that such oversight falls under the jurisdiction of the Federal Energy Regulatory Commission.
What Decision 26-02-058 Leaves Unanswered
While the Decision provides clarity on immediate causes, it does not address several structural and policy-related questions that may influence long-term price volatility, including:
- Does the state’s statutory hostility to fossil fuels deter capital investment in natural gas infrastructure, exacerbating system constraints?
- Does regulatory policy favoring >85% core commodity service market share by IOUs increase commodity price risk?
- Does the fact that IOUs have won core procurement “incentive mechanism” awards virtually every year indicate a flaw in the incentive structure?
These open questions highlight the complexity of California’s evolving energy landscape and the need for continued evaluation as policies and markets shift.
As for remedies, among other things, the Decision directs the IOUs to alert customers of future price spikes and to impose a “temporary cap” on their core procurement commodity prices in the event of price spikes, with any costs above the cap to be charged later to customers.
Key Takeaways for Public Agencies
For public agency facilities and business leaders, the decision reinforces several important considerations:
1. Price volatility remains a real risk
Even in well-regulated markets, external constraints and weather-driven demand can drive significant cost swings.
2. Infrastructure constraints matter
Limitations in pipeline capacity, storage, and imports can have direct downstream impacts on end users.
3. Policy and market design continue to evolve
Regulatory frameworks and procurement structures will continue to shape future energy costs.
4. Risk management is critical
Budgeting, procurement strategies, and energy planning should account for potential volatility—not just average conditions.
How SPURR Can Help
As a trusted partner to public agencies, SPURR helps members navigate complex energy markets with confidence.
From market insights and procurement strategy to risk mitigation and long-term planning, our team works alongside agencies to:
- Understand market developments and regulatory changes
- Evaluate procurement options and cost drivers
- Develop strategies to manage volatility and protect budgets
If you have questions about this CPUC Decision or would like to discuss your agency’s energy strategy, we’re here to help. Please feel free to call (925) 743-1292 or email us at info@spurr.org.