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Council Previews Limited Moves On Soaring Natural Gas Bills:

  • Webb Says There've Been Private Discussions, Memoranda re Soaring Gas Bills
  • Grabinski, Webb Suggest Support For Partial Utility Tax Rebate
  • Colonna Suggests "Deferred Payment" and Possible Other Measures
  • No Councilmembers Suggest Rebate of Commodity Cost
  • Manager promises financial analysis arguing City Hall isn't getting revenue windfall

    Our coverage below includes transcript excerpts

    (February 2, 2001) With constituent protests mounting over LB Gas Dept. bills that are among the highest in CA, 8th district Councilman Robb Webb disclosed during the January 30 City Council meeting that discussions have taken place and memoranda have circulated over stronger Council actions that can be taken in response.

    This triggered a flurry of public responses from various Councilmembers and the City Manager, foreshadowing future action. has prepared and posted excerpted transcripts of salient comments (not every speaker and statement are reproduced).

    The Council discussion grew out of colloquy on an otherwise mundane item agendized by Councilman Dennis Carroll. During its discussion, Mr. Carroll made a number of comments generally defending City Hall's actions to date.

  • Summary

    Councilmembers Webb and Grabinski separately suggested partial rebates of LB's utility tax. Grabinski suggested the rebate be limited to the natural gas portion of LB utility bills. (The utility tax represents the smaller portion of consumers' out of pocket cost from City Hall's soaring natural gas bills.)

    Councilman Colonna suggested "deferred payment," then referred to a previous request he'd made to consider a general discount. (Several weeks ago, Mr. Colonna requested a report from the City Manager on whether a 5% discount was posible.)

    No Councilmember publicly suggested rebating the differential between LB City Hall's natural gas bills and those in neighboring cities (like Lakewood). As previously reported in, LB City Hall's rates are more than double So. Cal Gas rates in surrounding cities.

    City Manager Taboada promised to return at the February 6 Council meeting with a financial analysis and options.

    Councilman Carroll's agenda item & praise for City Hall's conduct

    Councilman Carroll had agendized an item requesting a report on the status of a rehearing before the CA Public Utilities Commission over a proposal (previously rejected by the P.U.C.) to permit So. Cal Gas to sell gas to LB's City Hall run Gas Dept. Carroll's agenda item also suggested creating a so-called "Energy Task Force."

    Councilman Carroll said:

    "This is a report I requested from the City Manager...One [portion of the agenda item] is designed to address what I would hope is a potential solution to our gas crisis" and "would allow us the opportunity to negotiate with them to purchase natural gas at their rates or close to them, which are currently being made available to their 11 million ratepayers. In my view, that is the closest thing that we are able to come to as a solution rather than nibbling at the edges of this problem."

    After praising a recent Press-Telegram series on the natural gas issue, Councilman Carroll commended City Manager Taboada:

    "We have not suffered any gas shortages. The lights have not gone out in Long Beach...The gas has not gone out, but we are paying exhorbitant rates which we hope to turn around. We have been able to maintain an uninterrupted supply and I think that is to their credit."

    Councilman Carroll also commented:

    "...on what I think may be a perception out there ...that the city is being enriched at the expense of our residents and our businesses because of the increasing gas prices...We are net losers to the tune of a minimum of $2 million a month. That's Edison alone for simply not paying their bills for the 30 megawatts of electricity [from LB's "SERRF" plant] that we give them. We're down $6 million to Edison alone. The net figure is on the order of $5 million a month and I think it's important the citizens know we're not getting rich. We are losing money every month. We're trying to do everything we can to return to a state of normalcy that will families and the businesses to move on with their lives in an orderly way."

    [ comment: Edison not paying its bills is a collection matter and, we believe, a clumsy diversion. LB City Hall is collecting additional utility tax revenue on its soaring natural gas bills, notwithstanding "losses" introduced now to camouflage this.]

    At the City Manager's request, two other agenda items (21 and 22) were then combined for discussion along with Mr. Carroll's item: a staff-proposed voluntary "level pay plan" (that doesn't reduce gas rates but spreads them evenly over the year) and a state legislative initiative on natural gas.

    The City Manager's view

    City Manager Taboada began by thanking Councilman Carroll "for an excellent staff report" and added, "If ever he decides not to be on the Council, we could certainly use someone who is that articulate in framing an issue."

    Mr. Taboada said the energy situation was in a "state of flux" and "daily there are new developments that surface that change our course and direction and it's almost a minute by minute kind of event."

    He said that although Edison has not made a roughly $1.8 million monthly payment for the past three months for electricity produced by LB's SERRF plan, Edison has assured it will continue making payments on its separate $6 million franchise fee (allowing it to sell electricity in LB); a December payment was timely made and City Hall will watch carefully to see that a March, 2001 payment is made, Mr. Taboada said.

    With regard to natural gas, Mr. Taboada said:

    "[T]here are issues of pipeline capacity, those are being examined by the City Attorney. As Councilmember Carroll indicated, we're dealing with Southern California Gas in an attempt to piggy-back onto their contract for long-term contracts for gas prices...The P.U.C. received a request from Southern California Gas to fold in Long Beach as part of its rate structure and the P.U.C. denied that in December of last year, and that is being refiled by So. Cal Gas and we should know within the near future whether or not there is an opportunity there for us to have the same rate structure that's enjoyed by the neighbors around the City of Long Beach."

    Mr.Taboada said City Hall had also petitioned the State Lands Commission to adjust the prices LB pays for gas produced in the Wilmington field; City Hall currently pays market price plus a fee to the state, which means LB now pays CA the same price it would have to pay on the spot market. LB is negotiating the State Lands Commission "to attempt to get the same price that we would have gotten had prices not gone up and this windfall would not have accrued to the state," he said.

    With regard to longer term contracts for the LB Gas Dept, the City Manager said:

    "All I can say is it has served us well over the last ten years and it has provided for our citizens a rate structure that was better than they would have gotten had we been on the Southern California Gas Company system.

    "There's been some discussion about long term contracts, and Palo Alto is a beneficiary of a long-term contract, and why doesn't Long Beach have one, let me just say the City of Palo Alto did in fact get a long term contract but it's not as lucrative as one might imagine. Speaking with the folks up there, we've been told that they have raised their utility prices over 60% in the last six months and will continue to do so as they deplete their reserves as a means of offsetting the cost of energy."

    [For details on Palo Alto City Hall's gas utility, including its significantly lower rates and how it maintains them, see's in depth article at: Other CA municipal gas utilities charge significantly lower rates than LB.]

    Mr. Taboada also indicated City Hall and Port of LB staff had met to begin examining the "feasibility of a power plant that would produce at least enough electricity to meet the needs of the City of LB in the 500 megawatt range and the first indications are that they are willing to enter those discusions in a positive manner." (A suggestion offered some years ago to build a plant on Port land was recently revived by Councilman Jerry Shultz.)

    The Manager said he had no objection to an "Energy Task Force" suggested by Councilman Carroll because:

    "I have currently a citizens advisory committee that advises me on downtown and Queensway Bay matters, and that has worked well, and I see no reason why we can't duplicate that with the kinds of members that Councilmember Carroll has suggested, and we'll be bringing back to you a form and outline of how we might do that and how we might structure such an advisory group and see if that meets with your needs."

    Councilman Webb

    After staff presented its "level pay plan," 8th district Councilman Robb Webb was first to speak:

    Councilman Webb: "For many years on the City Council, and for the half year I've been on the Council and many years prior, I've heard this Council many times declare that an emergency exists. And based I think, all of us can agree, the responses that we've seen in our offices form constituents and from our own families as we open our gas bill, that indeed an emergency does exist in this city that pales in comparison to what the ratepayers are affected with from Southern California Edison...It's the City Council's obligation to respond to this emergency and we need to immediately work to heal this patient and stop the bleeding...We must immediately be able to respond to our businesses, and I would like perhaps, Mr. Torrez [Dir., Financial Management] you can respond to how we could immediately respond to the needs of the business, and I'll put this in perspective.

    In my house, I have four kids. Our gas bill this month was $475. Cafe Bixby in my district usually has a gas bill under $1,000, it [now] was a $4000 gas bill. I'll use that analogy, every laundromat, every small business in this city is going through the same thing.

    ...We have a responsibility on the City Council to do whatever we can to stop the bleeding of this patient and then, of course, move forward with the challenge and responsibility that we have of healing this patient. Our City Council is being criticized because as we set policy for 10 or 15 years, it was a good policy to buy our gas on the spot market, and right now it's...a severe crisis, and I know all of us on the Ciyt Concil are looking for more answers as to how we could have predicted that and how we move forward in the future to deal, that we don't put ourselves in this position."

    Councilman Grabinski

    7th district Councilman Grabinski began by asking staff when it could announce increased qualifying levels for low income residents who could receive discounts and to what date this would be retroactive. (Grabinski and the other Council incumbents voted in early January for a temporary 25% gas reduction available only to low income seniors and low income disabled.) Staff said the new qualifying levels might be ready in a couple of weeks but the matter was complex.

    Grabinski suggested that City Hall ask the LB Area Chamber of Commerce what would best serve businesses. [ note: The leadership of the LB Area Chamber of Commerce did not support the utility tax cutting Prop J, but backed City Hall's counter-measure Prop I which offered half the taxpayer relief; had Prop I passed instead of Prop J, LB businesses (and residents) would be paying higher out of pocket utility bill costs than now.]

    Grabinski said the Council should "think about" the utility users tax "just on gas" because "that's the commodity that has gone through the roof." He said, "That would be one way at least the public would know that we're walkin' the walk and talkin' the talk, that on that particular item we find a way to rebate back some of that."

    He blamed LB's natural gas rates on "being held up at the border," calling it "economic terrorism."

    Grabinski said City Hall needed more people answering the phones and could benefit from a business Ombudsman to relate to business and government who could "help us out of some of these knotty problems." He suggested retired business people might work with City Hall as a "connector" between the business community and City Hall "so our staff isn't overwhelmed."

    City Manager Taboada said the Chamber is working with City Hall "on what their issues are." Taboada also responded favorably to the idea a "business Ombudsman."

    Grabinski said that in the past (earthquake retrofits downtown, east side condo problems) "we found ways to make people whole without necesarily spending all the taxpayers' dollars doing it. What we ended up doing was helping come up with the loans..."

    Councilman Colonna

    "There are financing instruments that a lot of people are accustomed to right now such as deferred payment plans on variable interest rate loans and so on in my industry [real estate], and I would like to think that if we are workiung to try to soften the blow and bring in some rationale to help deal with this, then perhaps your interaction with the Gas Dept., where people can perhaps work off of a deferred balance.

    "In other words, right now there are people who are having anywhere from a few hundred dollars to thousands of dollars in billed structures that are facing them and are really a little bit uncertain as to how to reconcile, other than what we are unfolding tonight. What I hope is that we can get the message out...but I'm just wondering if there's an opportunity where people, if we can in the next perhaps billing, we can have people put out some kind of a simple method by which they can fill out a form and submit it along with payment...

    "...I can't emphasize how important it is I think that we get this quickly back to the commercial user as possible, because I am overwhelmed in my Council office with the costs as high as they've gotten...I'm just hoping that this plan can work, or some form of deferred payment...

    Councilman Webb, second time
    (after add'l Councilmembers speak)

    Councilman Webb: I just really wanted to ask our counsel [City Attorney] if we could have an update on what action we can take we can find out what we can take immediate on today."

    Robert Shannon, City Attorney: Well the Brown Act prohibits your taking on a substantive matter unless you'e agendized the items...

    Councilman Webb: There's been much discussion about a temporary rebate on the addition, staff you can refer to that better than I do, we would refer that to next week's agenda then, is that correct?

    Mayor O'Neill: Mr Taboada.

    City Manager Taboada: A temporary rebate on...

    Councilman Webb: Well, we've had a number of discussions and there have been a number of proposals and memos from the City Council as to how we can temporarily stop the bleeding with regards to, the level pay plan was one...

    City Manager Taboada: That's right.

    Councilman Webb: But it's been indicated, and I'd like to talk about it if we can, if not tell me and we'll agendize this for a future meeting, to talk about how we can perhaps rebate some of the increases that we've received, let's say, in the utility users tax."

    City Manager Taboada: Councilmember, there have been proposals that have been discussed, certainly not in this public arena, that have been talked about, and if you direct me to come back to you to come back with one or more proposals for how we might deal with this, then I'd certainly be happy to bring those back to you...

    Councilman Webb: Well I certainly would like to see that and I'll let my other colleagues respond.

    Councilman Colonna, second time

    Two weeks ago when we had a conversation regarding utility rates I had requested or made a suggestion that we review the opportunity of looking at some form of a rate reduction and I believe that the City Manager designated at that time that he would bring back some information to the Council.

    And I think that next week, Councilman Grabinski is going to be engaging in some agenda discussion. So perhaps you could bring that information or be prepared and then what we can do is have a conversation based on perhaps not only Ray's agenda item but any of those of us who care to bring another one forward.

    Mayor O'Neill: ...There have been Councilmembers that would like to have, Mr Taboada, to have something returned to the Council that would perhaps, options, that they have presented earlier

    City Manager Taboada: What we can do, and I think which would be the most appropriate for your review and consideration, would be to simply do a financial analysis of what he impacts have been of what has been perceived as a real windfall on the part of the utility tax when in fact we would argue that if you contrast it against the $6 million reduction [Edison not making payments for SERRF plant energy], in fact we still have a reduction in the overall, the utility tax secured by the city. But we can certainly give you a good analysis of what the options are with utility tax calculations and commodity prices and everything so that you could fashion if you desired some method of rebate plan based on some very specific figures that you could utilize for that purpose.

    Mayor O'Neill: I'd like to ask Councilmember Colonna and Councilmember Grabinski if that is what your requests were? [They indicate yes].

    Councilmember Richardson-Batts

    "...It's one thing to have the ideas but we have to analyze if in fact can we do all these wonderful ideas that we have. And further, I'm kind of getting frustrated with some of the ideas that we have if we don't say where the money is coming from...We really need to, I think, first look at where is the money coming from...and can we really afford to take the money from Peter to pay Paul."

    The Council voted unanimously to adopt a voluntary "level pay plan."

    Councilman Carroll's agendized proposal for an "Energy Task Force" ended with a bizarre vote in which Mr. Carroll joined the rest of the Council in voting to "receive and file" his own proposal (i.e. take no further action on it at that time). During the meeting, Councilman Carroll made no comments on suggestions for rebates of the gas commodity cost or utility tax.

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