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LB Energy Cuts July Natural Gas Commodity Rate Nearly 64%, Nearly Identical to So. Cal Gas

LB July Rate: $ .2872 per therm, So Cal Gas July Rate: $ .27004

(July 2, 2001) -- Long Beach Energy, has cut its July natural gas commodity rate to $ .2872 per therm -- a reduction of nearly 64% from its June rate -- and only slightly higher than the $ .27004 per therm rate charged by So. Cal Gas in neighboring Lakewood and surrounding areas.

In June, LB Energy's natural gas commodity rate was .7947, roughly 50% higher than So. Cal Gas' June rate of .52120.

LB City Hall is facing a class action lawsuit seeking over $38 million for LB consumers for disproportionate natural gas rates allegedly collected in violation of a City Charter charter section requiring LB natural gas rates based on those prevailing among like So. California utilities.

LB Energy told its July commodity price today (July 2) in response to our midafternoon telephone inquiry. So. Cal Gas announced its reduced rate in time to be reported on July 1 by the Los Angeles Times.

The drop in both LB Energy and So. Cal Gas natural gas commodity rates is likely due in significant part to a drop in the price of gas at the CA border, reported July 1 by the Times.

Rates for LB's City all run natural gas utility and So. Cal. Gas are compared below.

Price per therm

LB EnergySo. Cal Gas
July 01.2872.27004
June 01.7947.52120
May 01.9310.62049
Apr 01.1914.69401
Mar 01.6900.74043
Feb 011.4332.66215
Jan 011.6244.65206
Dec. 001.4465.65307

LB City Charter section 1502 provides, "The rates to be charged users for any services or commodities supplied by any public utility owned and operated by the City shall be based upon the prevailing rates for similar services and commodities supplied or sold by other like utilities whether public or private, operating in the Southern California area."

On May 31, citing Section 1502 and other sections of the LB City Charter and Municipal Code, LB Citizens for Utility Reform and a group of LB residents filed a class action lawsuit against the City of LB, the LB City Council and City Manager Taboada (in his official capacity), challenging the propriety of LB's City Hall-run gas utility charging LB consumers significantly higher rates than those charged by So. Cal Gas paid by residents of neighboring cities.

LB's natural gas commodity rates do not produce a profit for City Hall since they are "passed through" from suppliers. However, LB's Gas Department does produce a "profit" (i.e. revenue) for City Hall by charging ratepayers more than the Gas Dept.'s other costs. Much of that profit has annually been sent to the General Fund where it has been spent by the City Council.

When commodity prices soared in December 2000, the City Council let City Management continue passing the full commodity cost through to LB consumers without providing offsetting rebates (which would likely have required significant spending changes; qualifying poor and disabled got limited relief which didn't require major budget adjustments). City Hall blames suppliers for the high commodity costs.

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