California natural gas customers to receive smaller climate credits this spring
As debate over the future of California’s Cap-and-Invest reforms grows, residential households with natural gas service through investor-owned utilities are set to receive bill credits of about $40 this month as part of the program’s annual return of greenhouse gas auction revenue to residents.
But while Gov. Gavin Newsom took a moment to jab at the Trump administration over increases in gas prices and grocery costs, the state’s natural gas credit distribution decreased for all four covered utilities.
“At a time when Donald Trump is making life more expensive for every American — at the pump, in their home, at the grocery store, and virtually everywhere — California is fighting back,” Newsom said in news release on Wednesday.
“Thanks to the Legislature’s partnership, the Golden State is delivering on its promise to put money back in Californians’ pockets, and we’re making it work smarter and harder for households across the state.”
The relief comes from the Climate Credit under Cap-and-Invest, the state’s flagship climate program that redirects revenue the state earns from selling greenhouse gas pollution permits to businesses back to ratepayers — distributing electric credits twice a year and natural gas credits once a year.
The announcement came as the state prepares for the California Public Utilities Commission’s vote that would change the schedule of electric climate credits from their original timing in April and October to August and September, when rates are typically higher.
PG&E natural gas service customers are set to receive $46.26 per household, $32.58 for SDG&E, $45.57 for Southwest Gas, and $36.06 for SoCalGas, according to the utilities commission — down from $67, $54, $74 and $87, respectively, in 2025, representing drops of about 31%, 40%, 38%, and 58%.
A total of $1.4 billion in residential credits are set to be distributed with Wednesday’s relief for natural gas customers marking $520 million of the total fund. Electric credits total $894 million, though distribution has been paused in March by the CPUC and is being rescheduled for later in the year. The credits will be reflected automatically on residential energy bills.
The announcement came as air regulators have proposed major changes to the Cap-and-Invest program, one of which aims to boost Climate Credit for electricity customers through 2030 from $8 billion to $10 billion.
Air regulators have been caught in a tug of war between environmental groups and the oil and gas industry, both of which have drawn competing roadmaps for how the state should meet its growing energy demands — all while facing pressure from policymakers who want faster government action to shift support toward electric utilities over natural gas as a way to deliver lower power bills to ratepayers.
During an informational hearing in February, the California Air Resources Board faced a heated discussion with lawmakers who argued against the board’s planned timeline for a gradual transition of emission allowances from natural gas suppliers to electric utilities spanning from 2029 to 2037.
“Natural gas is a fossil fuel. And if we are talking about another 14 to 15 years, I think we’re really missing the urgency of the problem,” said Assemblymember Jacqui Irwin, D-Thousand Oaks, during the hearing.
