Consumer Watchdog Asks California AG to Investigate Rising Energy Prices | McGuire Woods LLP

On January 18, 2023, a consumer advocacy group issued a letter urging the California Attorney General’s Office to launch an investigation into rising natural gas prices in the state. If the group’s campaign gains traction, California could join New York as another major market investigating whether recent increases in energy prices could lead to price hikes or other consumer protection-related liabilities for companies through throughout the supply chain.

This pressure on the California Attorney General’s Office comes on the heels of California Governor Gavin Newsom’s December 2022 proposal that the state impose an unprecedented “price gouging penalty” on Big Oil, targeting what he characterizes as “excess profits”. That first-of-its-kind proposal remains pending in the California legislature.

For their part, energy companies have been managing inflationary pressures and supply shortages since Russia’s invasion of Ukraine, while also working to meet record demand. The resulting increases in the prices of various staples have sparked frustration and scrutiny from consumers, prompting at least one state to investigate sales of various fuel staples for possible price increases not just at the pump, but further back in the supply chain.

It’s been nearly a year since the New York State Attorney General’s Office launched an extensive investigation into price gouging in the oil and gas industry. California’s initiation of a comparable investigation would be a significant advance, given the size and complexity of its market for natural gas and other commodities. While current consumer advocacy focuses primarily on the natural gas distribution utility that directly interacts with consumers, any investigation would likely extend to dozens of companies involved in everything from generation to transmission to wholesale activities. between the well and the utility company.

Investigations like these appear to be another danger in an increasingly challenging “new normal” for energy companies. McGuireWoods has an experienced team, including former senior officials from key Attorney General’s offices across the country, who advise clients through price gouging investigations in the energy space and other industries. The team also helps clients preemptively avoid state regulatory actions.