(May 2, 2001) -- After a one-month respite in which City Hall used renegotiated commodity savings to subsidize LB natural gas bills to a below-market April rate of $ .1914 per therm, the LB Gas and Electric Dept. (now called "LB Energy") has raised LB's May natural gas commodity rate to $ .931 per therm.
This is 50% higher than the May rate charged by So. Cal Gas of $ .62049 per therm. paid by residents of neighboring Lakewood and surrounding areas
Prior to LB's April below-market rate, LB's March commodity rate was $ .69 per therm, beating So Cal Gas' March rate of $ .74043.
However for the three preceding months, LB City Hall allowed (i.e. the City Council took no action to defray or subsidize) consumers' LB's natural gas commodity rate which hit disproporitonate levels compared to So. Cal. Gas: LB's rates comodity were:
February, 2001: $ 1.4332 per therm
January, 2001: $ 1.6244 per therm.
December, 2000: $1.4465
By comparison, So Cal. Gas rates were:
February, 2001: $ 0.66215
January, 2001: $ 0.65206
December, 2000: $ 0.65307
May's 50% difference between LB's City Hall run natural gas utility and So Cal Gas could escalate calls by LB Citizens for Utility Reform (LBCUR) for City Hall to rebate the difference (until now, mainly Dec. 2000-Feb. 2001) to LB residents and businesses.
LBCUR has also questioned whether City Hall's disproportionate charges comply with Section 1502 of LB's voter approved City Charter. Section 1502 requires that rates charged by City Hall utilities "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."
In April, City Attorney Robert Shannon told LBReport.com his office had opined the rates charged by City Hall were allowed under section 1502. However, Mr. Shannon noted that nothing prevented the City Council from discussing the issue of rebates (adding he was not taking a position either way on rebates which is a Council decision.)
Meanwhile, as previously reported by LBReport.com, LB fiscal reformer and Prop J (Nov. 2000 grassroots utility tax cut) author Norm Ryan told LBCUR's inaugural meeting he is considering a ballot measure to end totally the utility tax now imposed by City Hall on utilities it operates.
City Hall currently uses the LB Gas Dept's operating "profit" (which doesn't stem from the commodity charge but from LB providing transmision and other services at less cost than So. Cal Gas) to feed City Hall's General Fund, which the City Council spends on items ranging from police and fire to travel and perks. Mr. Ryan argues that charging utility tax on top of a City Hall operation whose "profit" amounts to a de facto tax on ratepayers is unfair and double-dipping.
LBCUR has publicly asked the City Council to agendize the issue of Charter section 1502 and rebates without success thus far.
Meanwhile, in a separate and unrelated April 23 e-mail to LBReport.com, LB Energy Director Chris Garner addressed suggestions that Palo Alto (which has a City-owned gas utility and used reserves to subsidize rates down for its ratepayers) showed greater foresight anticipating this winter's rise in natural gas rates and used its revenue to benefit ratepayers, not general spending.
Mr. Garner said Palo Alto's City Hall-run "gas utility does transfer $2.5 million a year to the General Fund on about only $20 million in sales." He noted that Palo Alto's municipal gas utility "is proposing a 67% rate increase, its fourth increase this year...[and is] doing so because it did not foresee the gas price increase any where near the extent that occurred."