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LB Gas Bills Rise and Could Double or Triple Over Last Year's Level; LB Consumers Pay As City Hall Reaps Utility Tax Windfall But Net City Hall Costs Unclear

Mayor O'Neill and Councilman Grabinski Agendize Utility Bill Issue for Jan 2 Council Meeting But Don't Propose Utility Tax Adjustment

(December 31, 2000) -- LB's publicly owned gas utility says its bills could double or triple compared to last year. The increaase will carry a double-punch: the higher gas price itself plus a larger utility tax bite on the higher bill.

The Long Beach Gas and Electric Company, a City Hall operated entity, does not produce natural gas but buys it on the open market and delivers it. In recent months, the wholesale price of gas has risen dramatically.

The City Charter (which would require a vote of the people to change) requires the municipal utility's rates be no lower than prevailing rates charged by like utilities, but the City Council has the power on its own to lower LB's utility tax charged on consumers' skyrocketing utility bills.

LB's gas bill increases come as the CA Public Utilities Commission considers an SCE request to raise electricity rates by double digit amounts. A PUC vote could come as soon as Thursday January 4.

As previously reported on, an SCE rate hike will also increase the amount of utility tax collected by LB City Hall and could offset part of Prop J's utility tax relief.

The rise in both utilities rates may produce a utility tax windfall for City Hall but the net fiscal impact is unclear in this still developing story. City government entities consume, and thus pay to receive, gas and electricity service but likely not on the same terms as most ordinary consumers.

Prop J, spearheaded by LB fiscal reformer Norm Ryan and enacted by LB voters in November, lowered LB's 10% the utility tax rate to 9%, with additional 1% decreases each October until the rate reaches 5%.

Had LB voters not enacted Prop J, consumers' net out of pocket cost for electricity and gas bills would be even higher.

The LB Gas and Electric Co.'s web site in late December included the following notice:

"BE PREPARED FOR HIGHER GAS BILLS...Similar to other energy prices, the commodity cost of natural gas has significantly increased. The Gas and Electric Department does not produce natural gas; we buy natural gas on the open competitive market. We will continue to purchase natural gas at the most competitive price. However, as a direct result of increased natural gas costs, your gas bill may double or triple compared to last year." [emphasis in original]

Mayor Beverly O'Neill and Councilman Ray Grabinski have agendized separate items for the January 2, 2001 Council meeting dealing with utility bill increases. Neither item proposes taking any action to adjust the utility tax rate downward on the soaring utility bills.

The Mayor's agenda item (#15) recommends asking the City Manager to report back to the Council on January 9th "explaining the natural gas situation and sharing ways in which the City can assist long Beach residents in dealing with the high cost of the commodity." It also recommends that the City work "cooperatively with the Governor, the State of Califonia and the League of California Cities" in helping to address the problem of rising energy prices.

Councilman Grabinski's agenda item (#16) requests a report on recent increases in resident utility bills.

Every incumbent Councilmember opposed Prop J, which LB voters passed by a nearly 70% margin. The Council voted instead to put a counter-measure on the ballot to defeat Ryan's Prop J that proposed half of Prop J's taxpayer relief. The Council measure lost, drawing fewer votes than Prop J in every LB Council district, roughly 60% citywide.

Prop J author Norm Ryan has consistently said his measure should not require cuts and shows the public's desire for spending reform and change. However, a week after Prop J's victory, the incumbent Council (motion by Grabinski) responded by voting to seek ways to increase (i.e. maintain) City Hall revenue.

During the December 16 Council proceedings that changed city zoning to permit a Carnival Cruise Terminal on the east side of Pier J, several Councilmembers publicly justified their votes in part by contending more city revenue was needed to offset Prop J's reductions.

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