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LB Gas Dept. Slashes March Natural Gas Commodity Charge In Half; City Hall Will Effectively Subsidize Consumers' March Rate With Savings From New Deal For Tidelands Gas

(March 2, 2001) -- LB natural gas bills will drop significantly for gas used in March as LB's City Hall-run Gas Dept. has slashed consumers' commodity rate for March usage to 0.69 per therm. This is a major drop from the $1.43 per therm charged for Feb usage and $1.62 per therm for January usage.

LB's March commodity rate will actually be lower than So. Cal Gas' March commodity rate of just over .70 per therm.

Chris Garner, Director of the LB Gas & Electric Dept., explained for how this is being done, noting March's lower rate results from two factors.

One factor is a lower price recently re-negotiated by City Hall with the CA State Lands Commission for gas pumped from the tidelands and sold back to LB by the state. City Hall is using the savings from the lower rate to effectively subsidize and lower the net commodity rate for ratepayers in March.

In addition, the LB Gas Dept. has purchased March gas from seven different suppliers at a lower average market rate of $1.24 per therm, compared to February's average rate of $1.44 per therm.

The LB Gas Dept's lower rate for March will appear on bills reflecting March usage which (depending on your billing cycle) may arrive in later March or April.

Caveat: Since individual bills cycle at different times of the month, the commodity rate on your bill may look different. That's because it may reflect part of the current month and part of the previous month.

For example, if your bill dates from the 15th of the month, it will reflect 15 days of the current month plus 14-15 days of the previous month, in effect blending or prorating the two months' rates.

Some bills covering early March usage with late February usage would blend the lower 0.69 March rate with the higher $1.44 February rate, so the effective daily rate for that month's bill would be somewhere in between. However, March usage will effectively be charged the lower 0.69 March rate, and billings covering March usage will factor in the lower rate.

The commodity charge is shown on the bottom third of the bill where it says, "The gas usage rates include a commodity charge of $XXXXX."

Compare: There's a different, higher per therm rate in the middle third of the bill. That's the total of the commodity charge (above) plus a baseline rate (charge on use under 50 therms) and non-baseline rate (charged on use over 50 therms).

Meanwhile, a City Hall issued press release stated that LB natural gas bills would "be reduced by an average of fifty percent."

The press release text said "Mayor O'Neill announced that due to a combination of State Lands Commission savings, a rebate on the Utility Users Tax approved by the City Coucil on February 13 and reduce market rates, Long Beach natural gas consumers could see an average reduction of 50% on their April natural gas bills."

(Caveat: "Average" reductions mean the reduction on some bills will be higher or lower depending on individual usage.)

The release indicates that the State Lands Commission agreed to reduce prices for tidelands gas (to equal So. Cal Gas) for the months of January and February, following presentations by the Mayor and city staff to the Commission in Sacramento on February 5.

The release quotes the Mayor as indicating continued negotiations with the Commission's staff have been concluded and, if approved by the Commission, will produce an additional savings (about $3 million) retroactive for November and December.

"Those savings will be reflected on customers' utility bills," the Mayor said. This is consistent with a status report given by City Manager Henry Taboada (previously reported on at the February 27 City Council meeting

The new rate for tidelands natural gas would continue through the end of 2002. Tidelands gas represents about 1/3 of LB's natural gas usage in winter.

As also reported on, the City Council previously approved a rebate equal to 4.5% of the utility users tax charged on natural gas usage for the period of December 1, 2000 through March 31, 2001.

This sum will begin appearing on March bills with the amount noted under a line labelled "gas rebate," the press release indicated.

Despite these reductions, City Hall's actions to date leave unrebated the lion's share of disproportionate commodity charges (over double the rates charged in Lakewood) spanning roughly 90 days (in December, January and February.) Those sums could amount to hundreds dollars per household and considerably more for many LB businesses.

As previously reported on, the City Council could use General Fund revenues to provide LB consumers with such rebates but to date has not. Such a step would almost certainly require the City Council to make budget adjustments and spending changes, a step no incumbent Councilmember has publicly advocated.

LB City Hall's reductions thus far have been accomplished with nearly no (or minimal) budget adjustments, using windfalls from the utility tax collected on higher gas bills, other over budget revenue and (now) re-negotiated cost savings to basically maintain City Hall spending despite the citywide crisis.

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