Long Beach Residential Natural Gas Customers Have Lowest Bills in State

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Residential customers of Long Beach’s gas utility have the lowest natural gas bills in the State of California, thanks mainly to conservation efforts that have seen the average household natural gas usage decrease by more than 70 percent since the early 1970s.

“I’m proud that we are able to provide the lowest gas bills in the State, and I’m proud that Long Beach residents have been leaders in energy conservation,” said Mayor Robert Garcia. “Not only does that reduce greenhouse gas emissions and help improve air quality, it means lower utility bills for our customers.”

A recent survey of the five other utilities that provide natural gas in California confirmed that Long Beach utility customers had the lowest average gas bills last year. Other contributing factors include improved energy efficiency standards for buildings and appliances; and gas supply contracts that have taken advantage of low commodity prices.

In 2014, the average monthly residential gas bill from Long Beach’s gas utility was $29.59, which is 15 percent lower than what the average gas bill with similar gas usage would have been from the following utilities: Southwest Gas, $41.99; City of Palo Alto, $35.37; San Diego Gas & Electric, $33.95; Pacific Gas and Electric $31.57; and Southern California Gas Company, $30.43. Furthermore, due to the lower trend of current commodity prices, the average Long Beach residential gas bill in 2015 is projected to be only $26.08, a 42 percent decrease from 2000, when the average Long Beach residential gas bill was $44.66.

“Our customers have done their part by making the effort to conserve energy and are saving real dollars every month by doing so,” said Chris Garner, Director of Long Beach Gas and Oil. “It is our job to continue to work hard to provide our customers with natural gas in a safe and reliable manner at the lowest possible price. We have been providing natural gas to Long Beach and Signal Hill for over 90 years now and our goal is to continue to be the very best utility in California.”

Almost 90 percent of today’s residential customers’ usage of natural gas is for space heating and heating water (shower, clothes washer, dishwasher), with the remaining used for cooking, clothes dryers, and pools/spas. Water conservation efforts in Long Beach have reduced the natural gas required for heating water, and the mild winters of the past few years have tempered the use of natural gas for space heating.

LBGO’s rates for gas service to its customers are set by the Long Beach City Council, which allows for direct responsiveness to the needs of our community, whereas rates for private gas utilities are set by politically appointed Commissioners at the California Public Utilities Commission in San Francisco.

The City Charter requires that LBGO’s gas rates be market-based rather than cost-based. This is a significant provision as LBGO’s gas utility is not allowed to simply pass through increasing operational costs to its customers as LBGO’s rates are effectively “capped” by the rates being charged by the surrounding private gas utilities. This incentivizes LBGO to minimize its costs in providing service so as to remain competitive.

The fixed, minimum charge for LBGO’s residential gas service has remained unchanged for over 20 years now and is, in fact, lower than it was nearly 30 years ago. In addition, LBGO long ago implemented tiered rates so that efficient users who conserve the use of natural gas are financially “rewarded” through lower applicable gas rates.

Fifteen years ago, natural gas supplies were declining, commodity prices were rising, and it was expensive to transport the gas commodity hundreds of miles over pipelines from other states and Canada (California must import about 85 percent of its needed supplies from other regions).

Up until about 2006, the nation’s production of natural gas was declining to the extent the United States was actively pursuing the expensive import of natural gas from other countries overseas. Gas commodity prices rose due to the shrinkage in supply. Since that time, natural gas production has increased substantially due to technological improvements in exploration and drilling techniques. The growth in supply of domestic natural gas has significantly lowered the commodity prices since 2006.

LBGO procures its natural gas supplies for its customers on the open, competitive national market. Fortunately, LBGO has negotiated supply contracts that provide both long-term supply reliability along with very favorable price terms. These supply contracts take full advantage of low commodity prices currently available. Long Beach and Signal Hill residents realize the full financial benefits of these lower prices as LBGO passes through the monthly commodity price directly to its customers.

However, unforeseen circumstances can quickly disrupt the market and result in higher prices. In a proactive manner, LBGO has also entered into financial price hedge agreements that provide its customers protection against the chance of unexpected high prices.

To further assist customers in their attempts to conserve energy and control their utility charges, LBGO will soon be initiating the first phase of installing a state-of-the-art Advanced Metering Infrastructure (AMI) program of “smart meters” for LBGO’s entire system of 150,000 natural gas meters.

Once fully implemented, customers will be able to access their individual gas patterns of usage on a near real-time basis from their home computers or smart phones. This will allow all of LBGO’s gas customers to better understand when and how they are consuming natural gas so that they can further adjust their usage as needed.

Long Beach and Signal Hill residents should proudly recognize the financial and environmental benefits that they have achieved through their ongoing natural gas conservation efforts. Likewise, LBGO is proud of its role in helping to facilitate these efforts on behalf of its customers and looks forward to continuing to safely provide essential natural gas services at the lowest reasonable prices possible.

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