Long Beach Energy Resources
2400 East Spring Street, Long Beach, CA 90806
(562) 570-2000
March 22, 2022
HONORABLE MAYOR AND CITY COUNCIL
City of Long Beach
California
RECOMMENDATION:
Authorize the City Manager, or designee, to execute a new Schedule I, Transaction- Based Natural Gas Storage Service Agreement, as part of the long -term Master Services Contract , with the Southern California Gas Company , for natural gas storage capacity rights, from April 1, 2022 to March 31, 2023. (Citywide)
DISCUSSION
The City of Long Beach (City), through its Energy Resources Department (E nergy Resources), maintains an agreement with the Southern California Gas Company (SoCalGas) to retain natural gas storage capacity rights in SoCalGas’ regional underground natural gas storage fields. Because the City does not have above or below ground natural gas storage capacity, E nergy Resources maintains a reserve of natural gas in SoCalGas’ storage fields for added natural gas supply reliability during periods of sharp increases in natural gas demand and natural gas supply shortages caused by unexpected events. Natural gas s torage inventories represe nt approximatel y seven percent of annual Energy Resources natural gas sales.
On January 8, 2000, the City Council authorized a long-term Master Services Contract (No. 26729) with SoCalGas. The current Schedule I , Transaction -Based Natural Gas Storage Service Agreement (Agreement) , as part of the Master Services Cont ract, will expire on March 31, 202 2. A 2008 settlement agreement approved by the California Public Utilities Commission (CPUC), and subsequently upheld, set the natural gas storage reservation rates charged to Energy Resources to be equal to those paid by core customers of SoCalGas and San Diego Gas and Electric.
The new A greement sets a maximum natural gas inventory capacity, injection and withdrawal levels, and a provision for variable in -kind charges on actual natural gas monthly injection volumes through SoCalGas’ G -TBS Tariff. Any charge s and rates are subject to change during the term of Agreement with approval of the CPUC.
This matter was reviewed by Deputy City Attorney R ichard F. Anthony on February 14, 2022 and by Revenue Management Officer Geraldine Alejo on February 22, 2022.
C-6
HONORABLE MAYOR AND CITY COUNCIL
March 22, 2022
APPROVED:
THOMAS B. MODICA
CITY MANAGER
TIMING CONSIDERATIONS
City Council action is requested on March 22, 2022, to ensure uninterrupted natural gas storage rights on the SoCalGas system, a new Agreement is in place before the expiration of the current Agreement on March 31, 2022.
FISCAL IMPACT
Natural gas storage service costs are estimated at $1,139,613 for the contract term and are included as part of the natur al gas commodity charged to Energy Resources customers. The amount is budgeted in the Gas Fund Group in the Energy Resources Department. This recommendation has no staffing impact beyond the normal budgeted scope of duties and is consistent with existing City Council priorities. There is no local job impact associated with this recommendation.
SUGGESTED ACTION:
Approve recommendation.
Respectfully submitted,
ROBERT M. DOWELL
DIRECTOR OF ENERGY RESOURCES