The Long Beach Utilities Commission approved a relief fund that will distribute millions in bill credits to all residential customers after natural gas prices saw historic increases last month. But the logistics of how a smaller pool of money, which will be allocated to residents self-certifying they have economic needs, has not been decided.
The commission voted Thursday morning during an emergency meeting to authorize using about $7 million to pay back residents in response to the recent high prices. The money will cover a $45 credit for all residential accounts, as well as additional assistance for low-income households, seniors and those with disabilities.
However, another $575,000 that was allocated to a third group that the proposed program seeks to help—those who don’t qualify for the department’s low-income assistance programs but may still need help paying their bills—will have to wait to be disbursed. The proposal to aid that group called for a self-certification process that some commissioners said could be an “invitation for deception.”
“We’re inviting people to make the phone call,” said Commission Bob Shannon. “It would be a little stupid not to get free money.”
Shannon and Commissioner Frank Martinez said the department should apply some sort of filtering questions to people who might call in seeking the $100 credits that were proposed for those who have an economic need but are not considered low-income. Shannon pushed for “economic need” to be better defined, and Martinez said there should be a list of questions that the call center operators should ask customers before approving the credits.
“People are going to try and game the system,” Martinez said.
The vote Thursday postponed the roughly $575,000 pot of money the department recommended be set aside for these households from being allocated to customers. The commission is expected to decide how it wants to distribute those funds and how it will require people to self-certify at its next regular meeting on Feb. 16.
Spikes in the price in the cost of natural gas, which increased by nearly five-fold from November to January and led to some customers seeing hundreds of dollars in charges being tacked on their bills, has dropped by 66% this month. However, due to the department’s multiple billing cycles, some households are continuing to receive bills that have the “full impact” of the January prices, Utilities Department General Manager Chris Garner said.
Garner said the department opted for the self-attestation route because verifying the number of people who might seek the bill credits could take months and sap resources from a department that is already inundated with calls from angry customers.
“This is money that came from the customers, and we’re trying to give it back to the customers as fast as possible,” Garner said.
A portion of the funds is coming from revenue the city receives through the utility users’ tax, which increases as the cost of things like gas, water and electricity increase. The City Council pledged $1.5 million in that tax money, as it exceeded initial budget projections, when it asked the commission to create a relief fund during a special meeting last week.
The other $6 million that makes up the relief fund comes from a separate charge included on customers’ bills because of Assembly Bill 32, a state greenhouse gas reduction law. The funds are supposed to be used for green projects in the city, but the city manager authorized its one-time use for the relief fund, according to the department.
The department projects that it will be able to help thousands of low-income seniors and disabled households (2,000) and non-senior low-income households (3,000), who would be eligible for $200 and $150 credits respectively.
The department defines “low-income” as a household with an annual income of $36,620 or less for one to two people and allows an additional $9,440 per additional person in the household.
Households that qualify as low-income but have not signed up for the department’s discount programs would have to register by March 31 to receive the credit.
Those who are already signed up should receive the credit automatically on their next bill, according to a department spokesperson. All residential accounts should also receive their $45 credit on their next bill without having to register.
Hedging against future increases
In an attempt to insulate its customers from future market volatility, the Utilities Commission also voted Thursday to allow Garner to begin negotiations on possible price hedging that could lock in a set price in winters to come, potentially bringing big savings to customers.
Garner said that the department is currently looking at a “price-swap” option that would allow the department to pay the negotiated price for natural gas rather than the market rate, which is the price the department currently pays and uses to determine how much to charge customers.
The price-swap option could potentially see customers pay more for natural gas if the market price is low, but it could shield customers from a major rise in cost like the one seen in January.
Last month, the cost of a decatherm of gas, the unit the department purchases the commodity in, was about $40, and Garner said early talks indicated that a “swap price” right now would be closer to $7. But he noted that the commission’s vote doesn’t guarantee the department will strike a deal.
“Some of the best deals we do are the ones we don’t do,” Garner said.
If the department does move forward with a deal, Garner said it likely would only be applied to the portion of the year where cold temperatures drive up consumption, generally in the range of November to February, with customers likely paying market rates for the rest of the year. If the department does establish a price-swap or strikes some other deal, the commission will be updated at a future meeting, Garner said.