After a historic spike in natural gas prices sent many households’ monthly heating bills soaring into the hundreds of dollars last winter, Long Beach’s utilities department is trying to insulate its customers from similar spikes in the future.
Tony Foster, Long Beach Utilities’ senior director of gas business services, said Thursday that the department had secured a fixed rate for natural gas for the next three winters that will keep the average price of natural gas at about 63 cents per therm.
The cost of a therm of gas peaked in January at $3.81 but was at least 77 cents per therm between July 2022 and March 2023. The average household uses about 65 therms of gas per month, according to the department, and the fixed prices should result in an average monthly bill closer to $108 in January 2024 compared to about $313 in January 2023.
“This holds true for any winter months over the next three years through 2026,” Foster said of the locked-in rates.
Negotiating a lower price has been coupled with a change in how gas is delivered to the city. Long Beach had been using the SoCalGas network at a cost of about $2 million annually, but Foster said a change to using the state’s Backbone Transmission System will save the department roughly $500,000 per year over the next three years.
Foster gave the update Thursday to the Utilities Commission, which authorized its director, Chris Garner, earlier this year to seek out price protections for customers in future winters. The new rates are expected to be effective between November and March through 2026.
The reduced rates were a priority for the board after the historic spike in gas pricing last winter that forced the department and City Hall to scramble to put together a relief fund that offered bill credits to customers to help soften the blow of unexpectedly high bills.
While department officials said the new price points are the greatest protections secured by any utility provider in the state, there is the possibility that Long Beach customers could end up paying more than others if the commodity price dips below 63 center per therm.
Both Garner and Foster said Tuesday that they don’t believe that will be the case as gas prices typically go up during the winter months.
In 10 out of the last 16 months, the price paid for natural gas by the department’s customers was more than the new winter rates. However, all but one of those months (August) were outside of the “winter” block of months, according to city data.
The cost of one therm of gas in August was just over 69 cents.
Garner said Tuesday that the department decided to limit its price cap to the winter months to minimize cost exposure for both the department and its customers. The vote Thursday was to receive and file the update on the new winter pricing, but Garner said he plans to take the issue to the City Council to help publicize it.
“We are doing things to protect our customers,” Garner said Tuesday.