Susanville City Council
August 19, 2026

1 City of Susanville
Annual Natural Gas Report
For City Council Meeting
August 19, 2026
Dan Bergmann, P.E.

IGService
[email protected]
Gas Purchase Policy
 Susanville’s “Long-Term Natural Gas Purchase Policy”
was approved in Resolution No. 23-6164, dated
August 2, 2023
 A formal policy is important for natural gas
purchasing and operation of the enterprise because:
 The natural gas market has been highly volatile
 Wholesale gas costs directly impact residents
 Policy will carry forward in time
2 Key Aspects of Policy
 Formalizes gas purchase strategy
 Winter focused: November through March
 Requires gas to be purchased prior to Nov 1
 Authorizes City Manager to execute agreements
 Requires annual reporting to City Council by end of
August
3 Annual Natural Gas Review

1. Gas supply and demand status

2. Changes needed for natural gas policy

3. Financial condition of gas enterprise

4. Needed capital improvement projects

5. Need for rate adjustments
4 5
6 7
8 9
10 11
By Nov-24 By Nov-25 By Nov-26 By Nov-26 By Nov-27 Total Goal Total Demand Criteria
10/2/23
$5.93
8/5/25
$4.93
9/19/25
$4.39
11/1/2025 300 360 660 853 1,067 80%
12/1/2025 400 250 360 1,010 955 1,194 80%
1/1/2026 400 250 360 1,010 955 1,194 80%
2/1/2026 400 250 360 1,010 1,029 1,286 80%
3/1/2026 300 250 360 910 800 1,000 80%
4/23/26
$3.79
6/9/26
$3.98 80% 4,600 4,592 5,739
11/1/2026 350 350 700 720 900 Five-Yr Low
12/1/2026 425 425 850 877 1,097 80%
1/1/2027 475 475 950 929 1,161 80%
2/1/2027 475 475 950 943 1,179 80%
3/1/2027 275 275 550 645 806 Five-Yr Low
78% 4,000 4,114 5,143
11/1/2027 700 700 720 900 Five-Yr Low
12/1/2027 850 850 877 1,097 80%
1/1/2028 27/28 Offer as of 8/17/26: $4.55 950 950 929 1,161 80% 2/1/2028 950 950 943 1,179 80%
3/1/2028 550 550 645 806 Five-Yr Low
78% 4,000 4,114 5,143
Winter 27/28
Winter (DTh/day) Winter 25/26 Winter 26/27
Purchase Policy
Recommendations (Resolution)

1. Natural Gas Purchase Policy becomes “Natural Gas
Enterprise Policy”

2. Purchases by November 1st, not necessarily over three years

3. November and March to be based on five-year low
volume
12 13
FY22/23 FY23/24 FY24/25 FY25/26 FY26/27
Audited Audited Unaudited Unaudited2 Forecast
Purchased MMBtu 269,400 233,600 230,000 196,800 220,000 Operating Revenues
Revenue from rates $5,012,559 $4,388,583 $4,446,632 $3,981,000 $4,263,000 Transportation-only revenue 81,977 77,284 73,106 64,000 75,000 Other Revenue 8,681 7,461 7,454 7,500 7,500
Rate Stabilization - - - - -
Total Operating Revenue 5,103,217 4,473,328 4,527,192 4,052,500 4,345,500 Operating Expenses Inflation
Salaries and Benefits1 483,343 494,083 459,411 569,400 598,000 5% Internal Services (Admin/PW/Eng) 815,616 802,186 905,889 997,800 1,048,000 5% Natural Gas Purchases, including Tuscarora 1,569,971 1,033,932 864,925 881,000 802,000 Professional and Technical Services - - - 154,000 159,000 3% Other Operating Expenses 234,266 306,307 83,435 170,600 176,000 3% Building Rental 47,232 47,232 47,232 47,232 47,232
Insurance - - 134,580 147,048 151,000 3%
Other Department Charges (Fire and Streets) 119,496 109,488 109,488 109,488 109,488 Total Operating Expenses 3,269,924 2,793,228 2,604,960 3,076,568 3,090,720 Net Operating Income 1,833,293 1,680,100 1,922,232 975,932 1,254,780 Non-Operating Income (Expense):

Interest Income from Fund Balance 123,036 304,330 350,018 306,358 315,865 Interest Income from CalPERS Loan (2.04%) 43,685 45,049 38,086 34,278 30,469 POB Loan Allocation (P&I) (78,358) (72,326) (72,326) (72,326) (72,326) Transfers In (Out) - - - - -
Total Non-Operating 88,363 277,053 315,778 268,310 274,008 Net Income Available for Debt Service 1,921,656 1,957,153 2,238,010 1,244,242 1,528,788 Debt Service 1,277,350 1,276,000 1,274,200 1,276,950 1,274,100 Debt Service Coverage Ratio 1.50 1.53 1.76 0.97 1.20
Net Revenue after Debt Service 644,306 681,153 963,810 (32,708) 254,688 CalPERS Loan Principal (Resolution 20-5785) 167,952 171,420 175,055 178,626 182,270 Cash Balance (Calculated) 5,966,572 6,611,831 7,750,696 7,896,614 8,333,572 Cash Balance Adjustment (207,314) (70,922) (91,738) - - Cash and Investments 5,759,258 6,540,909 7,658,958 7,896,614 8,333,572 Susanville Gas Enterprise Revenues, Expenses, Debt Service, and Cash Balances Financial Condition
 Existing revenue is not adequate to cover debt service ratio for 25/26 due to warm winter, but very close to
breakeven.
 Return to typical winter will solve for 26/27
 Fund balance constant from last year at approximately $7.8M
14 Capital Improvement
 Ongoing compliance with federal safety
requirements, specifically the high-pressure
transmission line bringing gas to town
 Gas fund has generous cash reserve to cover projects
15 Greenhouse Gas Cap & Invest
 Next agenda item…
 Does not impact annual gas report, but for next year will be incorporated in the annual report
 Being kept separate to meet the requirement of the gas report and then allow focus on Cap & Invest specifically 16 Summary
 In compliance with policy for this winter (with
approval of amended policy)
 Gas market continues stable with winter prices
dropping each year
 Gas enterprise healthy except for issue of warm
25/26
 No rate increase recommended at this time
 Recommend approval of amended Gas Enterprise
Policy
17 Discussion
18 19
City of Susanville
Greenhouse Gas Cap-and-Invest Program
For City Council Meeting
August 19, 2026
Dan Bergmann, P.E.

IGService
[email protected]
Background
 California’s “Global Warming Solutions Act of 2006” (Assembly Bill 32)
 Goal: Reduce greenhouse gas emissions 40% below 1990 level by 2030
 Mandatory greenhouse gas reporting
 Authorized market-based trading of greenhouse gas allowances for emitters greater than 25,000 Metric equivalent tons CO2, or about 471,000 MMBtu
20 Greenhouse Gas “Allowance”
 1 Greenhouse Gas Allowance = Authorization to emit up to one metric ton of CO2 equivalent during a year
 1 Allowance purchases “authorization” to burn 19 MMBtu of natural gas (190 Therms)
 Typical single-family customer in Susanville needs about 2 Allowances each year
21 22
California and Quebec Carbon
Allowance Prices
23 Source: ARB Website 8/18/26
Application to Susanville
Natural Gas Utility
 Notification from Air Resources Board in February 2026 that Susanville must participate in Cap-and-Invest retroactively for 2024, 2025, and 2026, and then forward
 The means City must purchase Allowances for itself and for Plumas Sierra Cogeneration and for High Desert State Prison  Initial purchases of Allowances by the City must happen prior to November 2, 2026
24 Many Steps Already Taken
 Engaged Yorke Consulting which has specific expertise in Capand-Invest transactions  Dan Bergmann of IGS facilitating overall implementation  Virtual meetings with ARB personnel to assure understanding of requirements
 Registration with ARB by City personnel
 Engaged and completed third-party verification of volumes  Preparation of Greenhouse gas monitoring plan
 In-person meetings with Plumas Sierra and prison personnel 25 Estimated Three-Year Cost
2024 2025 2026
City Distribution System $346,000 $330,000 $329,000 $1,005,000 29% High Desert State Prison $271,000 $289,000 $286,000 $846,000 25% Plumas Sierra Cogeneration $538,000 $500,000 $526,000 $1,564,000 46% Totals $1,155,000 $1,119,000 $1,141,000 $3,415,000 100% 3-Year Total
Allocated Cap-and-Invest Cost by Entity
(Based on $35 cost of Allowances)
26 Cap-and-Invest “Protection of
Ratepayers”
 Allowances given by Cap-and-Invest Program that must be sold through ARB auction, then the value used for the benefit of ratepayers consistent with the goals of AB 32.
 The amount “given” is roughly 64 percent of the value of that purchased. (This is good!)
 This value can begin coming back to customers mid-2027  Rebate program to reduce gas consumption
 Non-volumetric payment return to ratepayers
27 Customer Impact
28  City distribution customer recommended to be handled differently than Prison and Plumas because distribution customers have contributed to the fund balance and the Prison and Plumas have not.
 Current Single-Family Rate is $1.85 per Therm
 Prison rate is $0.01 per Therm (185 times lower)
 Plumas rate is $0.015 per Therm
 Conclusion
 Use fund balance to cover distribution customers
 Collect from the Prison and Plumas for past three years Customer Impact (cont.)
29 $/Therm
Single-Family Rate $1.85
Greenhouse Gas Surcharge $0.16 9%
$2.01
 Based on Allowances purchased at $35 each, the allocated cost per Therm sold (or transported) would be $1.60 per MMBtu or $0.16 per Therm
 For a single-family customer paying $1.85 per Therm, the increase is 9 percent
 … But over half that value will come back from Allowances given and sold under “Protection of Ratepayers”
Today’s Resolution
 Authorizes City Manager to designate two employees to register with Cap-and-Invest Program to purchase and sale Allowances  Authorizes use of the existing cash balance in the gas enterprise to purchase allowances up to $3.5 million by November 2027  Specifies a cash asset fund within the gas enterprise to track revenue and spending for Cap-and-Invest
 Directs staff to pursue High Desert State Prison and Plumas Sierra to collect their share of cost
 Requires recommendation by April 2027 for use of Holding Account Allowances for the benefit of ratepayers
30 Next Steps
 Discussion / Approval of Resolution
 Continued dialogue with Prison/Plumas
 Planning and subsequent proposed resolution implementing customer surcharge and procedure to allocated costs to Prison and Plumas (Implement by Jan 1)
 Begin purchasing Allowances
31