TITLE
Recommendation to adopt resolution authorizing the issuance of gas utility commercial paper in an amount not to exceed $35 million; and authorize City Manager to execute all necessary documents. (Citywide)
DISCUSSION
The Long Beach Energy Department (LBE) has thoroughly updated its Natural Gas Utility's
long-term infrastructure improvement plan. The natural gas infrastructure consists of over 1,800
miles of underground pipelines and nearly 150,000 meters. This pipeline system is, and must
continue to be, maintained in compliance with U.S. Department of Transportation (DOT)
guidelines and standards. The DOT standards require regular maintenance and replacement.
Industry practices suggest gas infrastructure replacement is required every 50 to 70 years to
maintain system integrity, ensure its safe operation and minimize capital costs. An increasingly
large segment of LBE's Gas Utility pipeline is approaching this replacement threshold as the
majority of the pipeline was installed during Long Beach's peak growth period during the 1940~~
50s and 60s.
Age alone is not the deciding factor relative to replacement. Pipeline replacement also takes
other factors into consideration such as the results of annual leakage and corrosion control
surveys. LBE coordinates planned pipeline upgrades with roadwork planned by other City
departments to the greatest extent possible.
Over the past 15 years, investments in the system have been sufficient to maintain a safe
system, including approximately $8.5 million from Gas Utility revenues on critical capital
improvements between 2002 and 2004. However, the investment strategy for the Gas Utility's
infrastructure needs must change to implement a long-term plan for upgrading the gas
infrastructure for the upcoming decade and beyond.
LBE expects to spend approximately $56 million on capital improvements to the Gas Utility
Enterprise between 2005 and 201 1. These improvements consist primarily of selective removal
of aging pip...
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