TITLE
Recommendation to receive and file report relative to anticipated higher natural gas bills for winter 2005/06. (Citywide)
DISCUSSION
Largely due to the impact of Hurricane Katrina, the U.S. Department of Energy (DOE) is anticipating natural gas .price increases across the United States this upcoming winter. DOE is projecting that prices will be approximately 50 percent higher than last winter. The current forecast for Long Beach Energy's (LBE) residential customers is slightly more optimistic. ' Using recent futures market prices as a gauge, the current projection for LBE residential customers is an anticipated average gas bill increase of 34 percent this winter as compared to last winter's bills. Last winter, the average residential customer paid $63 for their monthly gas bill. This winter, the forecasted average monthly residential bill will be $84. This forecast will continue to fluctuate as the longer-term market impacts of Hurricane Katrina evolve. Currently, as has been the case for the past few years, LBEs customers receive, on average, the lowest monthly natural gas bills in comparison to other Southern California gas utilities. Despite the increase in market prices, LBE fully expects to remain highly competitive with these other utilities, and most likely, will continue to be the leader. Although the natural gas market may reach much higher price levels this winter, LBE is confident that customers will not experience gas bills anywhere near the levels experienced during the energy crisis of 2000/01. The City Council, upon the recommendation of the City Manager, approved long-term gas supply contracts that provide significant price protections. As protection against possible upswings in natural gas market prices, LBE's two major gas supply contracts include price ceilings of $1.00 per therm during the winter months of November through March. For comparison, the highest cost of gas charged to LBE customers during the 2000/01 energy crisis was $1.6...
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