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RCED-84-178 1 (1984-07-31)

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  REPORT BY THE U, S.


RELEASED


General Accounting Office


Natural Gas Price Increases

In Los Angeles




Natural gas price increases in recent years captured
congressional and public attention. To determine
Which factors contributed to an average price increase
of 61 percent in the Los Angeles, California, area
between April 1981 and April 1983, GAO obtained
and analyzed information from the distribution com-
,pany which sells gas to retail customers in Los
Angeles, the state agency which regulates it, and the
!distribution company's four principal pipeline com-
pany suppliers.

GAO found that about three quarters of the price
increase was due to (1) the depletion of old and less
,expensive gas reserves and the addition of new and
* higher cost reserves, (2) price increases permitted by
Ifederal regulation, (3) increased imports of relatively
expensive Canadian natural gas, (4) contract clauses
affecting purchases by the distribution company and
its pipeline suppliers, and (5) a decline in gas con-
sumption which made purchasing patterns and com-
pany operations less efficient. The remaining in-
creases stemmed from operating costs.


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GAO/RCED-84-178
   JULY 31, 1984


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