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LB's Natural Gas Commodity Rate For June Is Over 50% Higher Than So. Cal Gas (in neighboring Lakewood)

LB's June rate is .7947 per therm (down from .9310 in May); So Cal Gas rate is $ .52120 per therm (down from .62049 in May)

(June 1, 2001) -- LB's City Hall-run utility, Long Beach Energy, has advised that its June natural gas commodity rate will be .7947 per therm.

This is roughly 52% higher than the June rate for So. Cal Gas of .52120 per therm which will be paid by residents of neighboring Lakewood and surrounding areas.

LB Energy's May natural gas commodity rate of .9310 per therm was also roughly 50% higher than So. Cal Gas (which was .62049 in May).

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

Price per therm

LB EnergySo. Cal Gas
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."

Citing Section 1502 and other sections of the LB City Charter and Municipal Code, on May 31, 2001 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 paid by residents of neighboring cities.

Our coverage lets readers view the actual court complaint and read City Hall's response on learning the suit had been filed. Click on: Class Action Suit Filed re LB Natural Gas Bills.

LB's high 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 for City Hall (by charging ratepayers more than the Gas Dept.'s other costs) and 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 any 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.

LBCUR's class action suit alleges City Hall's high rates violate Section 1502's duty to provide prevailing area rates, and City Hall failed under Section 1501 to put aside sufficient reserves that could have been used to help stabilize and lower rates for LB consumers.

The suit seeks refunds of the difference between LB's rates and prevailing area rates for the class of persons who were customers of LB Gas since December 1, 2000. The suit estimates the sum is $38 million, and growing.

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