Long Beach Struggling Through Power Crisis

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Sunday, June 10, 2001

Long Beach Struggling Through Power Crisis

Energy: Poor residents forsake stoves, washers and even showers since municipal utility rates soared. City and charity services can't fill need.

By LOUIS SAHAGUN, Times Staff Writer

After reeling from the loss of 50,000 Navy and aerospace industry jobs in the mid-'90s, the city of Long Beach was hoping for a period of municipal peace and prosperity.

Then the energy crisis hit the state's fifth-biggest city in the gut six months ago, and nothing has been the same since. Long Beach is battling energy producers in court for money needed to keep from having to cut back on police and fire services. Activists are suing City Hall over hikes in their bills from the municipal gas company. Unable to pay those sky-high bills, some impoverished residents are forsaking gas stoves and washing machines, even daily showers. The city of 471,000 people is "getting hit on all sides," said beleaguered City Manager Henry Taboada. "We're doing all we can for our residents within the limits of our resources."

Long Beach has been on the front lines of the energy wars since last December, when Southern California Edison Co. stopped paying for power from a city-run electricity generator on Terminal Island that is fueled by trash. A lawsuit filed against Edison recently resulted in a $9-million lien being attached to the utility's assets. Natural gas rates, meanwhile, have climbed as much as 600%, focusing negative attention on the city's 75-year-old gas agency. In March, Long Beach filed a class-action lawsuit--later joined by Los Angeles--against natural gas suppliers it claimed were responsible for the shockingly high costs being passed on by the city's gas utility to its 150,000 ratepayers.

The city's lawsuit against Southern California Gas Co. and El Paso Natural Gas Co. is being "aggressively pursued" in federal court, said Long Beach City Atty. Robert Shannon. "If successful, the ratepayers will be directly reimbursed," he said. But public confidence in City Hall has eroded with every whopping utility bill. A week ago, a group called Citizens for Utility Reform filed a $38-million class-action lawsuit against the city. It alleges the city violated its own charter rules designed to protect residents against excessive gas costs. Nancy Ahlswede, executive director of the Apartment Assn., Southern California Cities, a nonprofit organization providing services for property owners, said, "What's going on in Long Beach is merely a microcosm of what the entire state of California can look forward to over the next few months." "The only difference is that while residents can still make a difference at the community level," she said, "they'll have a harder time penetrating the statewide problem." So far, the city has not had to make any cuts in services. But that may not be the case if the situation worsens, or if the $38-million suit against City Hall prevails. "Thirty-eight million dollars is about 15% of the city's general fund," Taboada said. "Losing that much would be catastrophic in terms of our ability to provide basic services." But as soaring utility costs chew away at the state's once flush general fund surplus, Long Beach is carrying more than $6 million in unpaid gas bills of businesses, and residents on fixed or low incomes. On a war footing, Long Beach has instituted an array of easy payment and discount plans for hardship cases, and organized a 30-member energy task force to suggest ways of dealing with the energy crisis. It also has been cranking out conservation tips: Insulate your attic. Weatherstrip around doors. Open draperies to let in more sunlight. Bundle up. Still, the city's poorest ratepayers keep falling further behind on their utility payments. Of the 114,000 gas bills sent out in May, 24,000 were to customers delinquent in their payments, 18,000 included shut-off warnings, and 7,000 were computed under partial- and delayed-payment plans now offered for households unable to pay the full amounts. By comparison, in May of last year, of the 119,000 natural gas accounts billed, there were 23,000 delinquent bills, 15,000 shut-off notices, and no special arrangements for hardship cases. Shut-off warnings are dispatched to ratepayers who fail to pay two consecutive monthly bills. During the current energy crisis, however, the city has been reluctant to actually cut off gas without first directing consumers to the financial assistance plans, including a temporary 25% discount for disabled people. "We're not shutting off service to anyone who has made a reasonable effort to pay--we're trying to help make them current on their bills," said Pam Wilson-Horgan, manager of commercial services. "But at some point, we will have to resume our normal shut-off policy." In an interview in his 13th-floor office overlooking the bustling Port of Long Beach, Taboada conceded, "There's anger, frustration and confusion on the part of ratepayers." Personally, he added, being on the political hot seat "is interesting. It keeps me energized--no pun intended." In one impoverished neighborhood on the northeast side of town, however, Eva Rodriguez's gas bills are so large that she and her family now shower only twice a week. Sund Kim may have to start closing the doors of his fast-food stand at sundown. Amelia Nieto, who runs the Centro Shalom social service agency, is lending out microwave ovens as long as cooking with such electrical appliances is cheaper than using gas stoves.

"People are going through financial hell," Nieto said. "City Hall has got to do something fast. Just raising utility prices is not a viable solution for people who are already paying more than they can afford."

It's not just the poor who are hurting. John Morris, owner of Mum's, a popular downtown Long Beach restaurant, has watched his utility bills grow from about $1,200 a month to $5,000. Apartment manager Phil Dauk said the gas bill on a water heater that feeds his 34-unit complex jumped from $275 a month to $985.

"City Hall clobbered its own people and did it with impunity," Dauk said. The turmoil started in late November, when Edison's financial problems became so severe that it suspended payments on electricity produced by Long Beach's generator. Long Beach sells the power to the utility, which uses it in its general grid.

As it stands, Long Beach is owed $14 million for November through March, and those funds are needed to pay bonds that support the trash-burning power plant, Shannon said. In April, Shannon sought and received permission from the City Council to sue the utility. So far, nearly 30 power generators around the state have sued Edison in hopes of attaching assets or to get out of their contracts so they can sell their electricity on the open market. Only Long Beach, however, has managed to put a lien on the utility. Edison, which plans to appeal the lien, resumed payments in April, city officials said.

Solving the natural gas problem may be even more difficult. Long Beach buys two-thirds of its gas on the spot market. When gas prices doubled and tripled last winter, the city gas utility passed the explosive rates on to its customers, triggering a public outcry.

"There was no warning. I brought my own gas bill to the City Council chambers because it had suddenly doubled," said Long Beach City Councilman Ray Grabinski. "We can blame the suppliers for the high price of gas. But there is no good excuse for the city's poor response to them." Plaintiffs in the Citizens for Utility Reform lawsuit contend that the Long Beach City Charter requires that city gas prices be kept in line with those in other cities. Charter section 1502 states that the rates "shall be based upon the prevailing rates for similar services and commodities supplied or sold by other utilities, whether public or private, operating in the Southern California area."

Until this year, local gas prices had matched those of Southern California Gas, which serves cities surrounding Long Beach. But that company evaded explosive price rises last winter by having long-term contracts for space on the pipeline supplying the gas. As a result, Southern California Gas customers were paying 65 cents per therm from December through February. The average household burns about 75 therms per month during the winter.

City officials insist there has been no violation of the City Charter, which they say is open to interpretation. Besides, they say, the city has been a victim of the spot gas market. In the meantime, the city has begun considering alternative energy procurement strategies. At a recent City Council budget workshop, officials unveiled a proposal for buying out-of-state gas on a long-term basis.

In an interview, Chris Garner, the city's energy director, said he has recently met with at least a dozen of the largest energy producers in the Western United States. "What we are proposing is a long-term contract still tied to market prices, but also in line with Southern California Gas prices," he said. "If approved by the City Council, it could mean dramatically lower costs for consumers."

Long Beach also may launch an advertising campaign extolling the benefits of a locally owned gas utility that had operated almost 75 years without major controversy. "Now we're getting attention, all right," Garner said. "But it's not the kind we had in mind."


-- Martin Thompson (mthom1927@aol.com), June 10, 2001


It sounds like Long Beach's story might be a precursor for similar stories effecting a lot of local communities around the Western U.S.

-- Nancy7 (nancy7@hotmail.com), June 10, 2001.

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