Madam Mayor, Councilmembers, ladies and gentlemen. When this agenda was prepared, of course, there had been no lawsuit filed, and I have to tell you candidly that the lawsuit which essentially challenges the interpretation of section 1502 of the Charter essentially involves a legal issue, that is, how to you interpret 1502, and therefore, I am greatly restricted in my ability to comment on 1502.

Now that said, I think a few brief comments are in order.

Section 1502 was passed in 1980, and I think you have to put it in context, because any lawyer, whether it be me or anybody else, has to interpret a legal section both with regard to the language that's used and the intent of the section when the language was formulated.

Now as I say, it was passed in 1980. It was passed at a time when we were in a regulated environment insofar as the energy industry is concerned. It was intended, I believe, that the cost of the commodity to the city, that is the cost that the city pays for the gas that it receives and passes on to the ratepayer, that that cost wouldn't vary in any substantial form, whether it be Long Beach, Southern California Edison, or some other gas company in southern California.

That is, that the actual cost of gas could be passed on to the ratepayer. And in fact, in 1997, certain utilities petitioned the Public Utility Commission and received permission specifically to pass through their cost of commodity to their ratepayers. Southern California Edison, San Diego Gas and Electric and Southern California Gas.

That, I submit, indicates that the PUC recognizes that no gas company should operate at a loss.

Now, in December of last year, December of 2000, the cost of gas rose dramatically. It rose dramatically in Long Beach and it rose slightly everywhere else but it rose very, very dramatically in Long Beach, disproportionate to the rest of southern California, I'm not including San Diego.

We soon learned, that is our office learned, that this rise was not due to a healthy functioning market economy where the law of supply and demand rules, but rather, in our opinion, due to unlawful activity.

Now the damages sustained by Long Beach ratepayers probably exceed $28 million just in the three month period beginning in December and ending in March. We filed our lawsuit, as many of you know. We've alleged anti-trust violations which, if we recover, will entitle us to three times the total damages, so if you assume that the damages are somewhere in the range of $28 million you would multiply that by three.

We sought and approved the permission [assume means: received the approval] of the District Attorney, Steve Cooley, to file a further cause of action against certain energy companies for unlawful practices which if we prevail on will prevent any future illegal conduct and will also entitle us to further damages.

Now I want to emphasize that this lawsuit, unlike virtually all of the other lawsuits we file on behalf of the entity "City of Long Beach," this lawsuit was filed on behalf of the ratepayers of Long Beach, the corporate ratepayers and the individuals. Mr. Lamont [sic: Robert Lamond] is smiling. Mr. Lamont is a party to that lawsuit [name typo in suit too]. He represents a class of people, ratepayers, who were damaged, greatly damaged, by the rise in prices and if and when we prevail, the damages will be passed directly on to people like Mr. Lamont.

Just as a sidelight, I want to indicate to you that we are actively pursuing this lawsuit. There was a motion heard in Washington D.C. just last Friday in which the defendants, listen to this, the defendants requested that the action be transferred from California to Texas because nobody in California could be unbiased in dealing with this situation. The motion failed. [applause]

In essence, what I'm saying is, it was never contemplated that the [City Hall] Gas Company would operate at a loss, particularly of this magnitude. Nor was it contemplated that unlawful activity would cause a reduction in supply which in turn would spike up the price of gas.

In summary, this is a legal issue on which I guess reasonable people can differ. We feel very strongly, however, that section 1502 does not prohibit the pass-through of the cost of the commodity. It does not require a complete pass-through of the cost of the commodity, but it does not prohibit it.

Thank you, Mayor

...Long Beach Citizens for Utility Reform is not about lawsuits and lawyers. It's about people and their government. It's about ratepayers and their utility and you are the trustees of our utility.

We had to take the action we had, we did, to protect the interests of the citizens of this city. We would like to resolve this not in the courtroom but in the Council chamber.

It begins with a discussion of the real problems in this community, the kind of pressure that we are seeing on our small business community and the renters in this city. I wish Mr. Grabinski was here, because he and I have talked on many occasions about what is happening to the poor, those who live on a low income.

Almost 1/3 of our city is now either delinquent, received shut off notices, or has imposed a self-shut off on themselves in terms of gas use.

And next month, they are going to get pounded even harder by electric rates.

We are facing a crisis in this city and it's one that you can do something about.

I also wish Councilman Webb was here because I would like to thank him personally for his efforts with us, to talk with us, to bring this to the Council, to agendize it, to put this discussion moving forward so we can address this problem.

We look forward to meeting with you, to talking with you, to resolving the issue, but it begins very simply by following the law.

[Following Mr. Donaldson, LB resident Karl Tiedemann came to the podium and announced he would read from "The Bible." He then read portions of the City Charter governing City Hall run utilities, including section 1502. Mr. Tiedemann was followed by Ron Noe.]

I would like to address two topics tonight: liberty and common sense. Since December of last year, the ratepayers of Long Beach have suffered a loss of liberty in the form of illegally higher utility bills. Ratepayers representing all socio-economic walks of life have paid the price.

...Higher income ratepayers have undoubtedly been forced to make some sacrifices while lower income ratepayers have not only been forced to make sacrifices, but these sacrifices have also included foregoing purchases for medicine, food and other items, not to mention having to live without heat and or living with the threat of having their gas and water shut off.

Many small businesses have been hanging on by a thread or they have been forced to pass along higher costs to customers, or they have been forced to reduce income.

The loss of liberty is real for people across the board yet their seems to be no sense or urgency emanating from our city government, which leads me to my second topic.

The ratepayers of Long Beach have been paying substantially higher rates for natural gas since December of last year. At about the same time last year, it was known by everybody in this room that we are all going to pay substantially higher rates for electricity. All the while, the city has been reaping windfall profits from the utility tax on the sale of natural gas, which they will also do with electricity once the higher electricity rates kick in.

Where has the Council been? Six whole months has passed and there has been no public discussion about [Charter sections] 1501, 1502 or any potential remedies. I find this to be appalling and completely lacking in common sense.

What have you been waiting for? I ask the Council to not only follow the law as it pertains to the succinctly and adequately worded sections 1501 and 1502. I also urge the Council to start exercising common sense and to start showing some respect for the liberty of Long Beach ratepayers.

And I would also like to make notice to Mr. Webb, I appreciate his openness and his willingness to discuss the issues with me.