Energy Resources

History

1900 Domestic Manufactured Gas Service Introduced to Long Beach Residents

Domestic manufactured gas service was first introduced to the residents of Long Beach in 1900 by the United Electric Gas and Power Company, predecessor of the Southern California Edison Company of today. They delivered manufactured gas from a small 20,000 cubic foot per day gas works located in the present day vicinity of Ocean Boulevard and Pico Avenue. At that time the City's size was 18.14 square miles, with a population about 2,250. By the end of the first year of operation this company had 160 active consumers who paid $1.90 per 1,000 cubic feet of gas.

A second gas company, the Long Beach Gas Company, was organized in 1900 and by January of 1901 it too was delivering manufactured gas to the City. Its product was a gas generated from crude oils in a plant located in the vicinity of Alamitos Avenue and Broadway and its distribution system covered much the same territory as did that of the United Electric Gas and Power Company. In 1905, the population of Long Beach was only 15,000 and the available consumers were less than 4,000, yet a third gas company was chartered, the Inner Harbor Gas Electric Company.

Through the early years, only manufactured gas was sold, but in 1912 outside gas was purchased from the Southern California Gas Company of Los Angeles. The gas was a mixture of one-half manufactured gas and one-half natural gas. It wasn't until 1915 that straight natural gas was first introduced to the area.

All companies competed strenuously for the local business. But the growth of the City was not measuring up to real estate developers' expectations and projections and they soon realized it was not profitable for them to compete. Consequently, in 1910, the three companies merged and became the Long Beach Consolidated Gas Company which was sold to the Southern Counties Gas Company in 1916.

1921 Signal Hill Oil & Gas Field Discovered

The Signal Hill Oil & Gas Field, at one time the leading source of natural gas supply in California, was discovered in 1921. Soon, enormous quantities of natural gas and oil were produced here. Because of its proximity to Long Beach, considerable public attention was directed to this field. The City of Long Beach, owning several large tracts of land in the heart of this area, leased certain properties for oil and gas development. It also retained the right to gas produced over that required for field purposes should the City decide at any time to operate its own gas utility. Gas production from City leases reached 25 million cubic feet per day, thereby triggering a citizens' movement for a municipally-owned utility which would deliver gas to residents at a lower price than that charged by a private company.

1924 Long Beach Gas Department Created

In 1923 residents began to rally against what they considered unfair gas rates. The private company paid 8 cents per 1,000 cubic feet for the gas and delivered it to consumers for $1.00 per 1,000 cubic feet. This led to a special election in 1923 whereby Long Beach citizens voted to establish a municipal gas department and approved $3,000,000 in revenue bonds for purchase of the existing gas system. After many failed attempts to reach a fair price for the properties, the City constructed a new competing gas system which sold gas to consumers for 50 cents per 1,000 cubic feet. Soon the Southern Counties Gas Companies realized that they couldn't compete and in April 1924 agreed to a selling price of $2,170,000.

On May 24, 1924, the Southern Counties Gas Company properties within the City boundaries were purchased and officially became the Long Beach Gas Department. At that time the number of customers served was approximately 4,600.

The 1933 Earthquake

Thanks to the swift action of Gas Department employees immediately following the first shock, damage to the system was held to a minimum. As a direct result of this action in closing the outlet valves, together with the loss of gas from breaks in the high pressure mains, the gas pressure on the entire system was reduced in record time. Pressure gauges installed at various points in the system showed that the high pressure fell to zero almost immediately following the first shock in every instance. Broken gas services and devices caused seven of the 19 fires reported in Long Beach during the 1933 earthquake. Prompt closing of valves, together with a major break in a high pressure main, undoubtedly prevented fires in numerous locations in the business district.

Of a total of 119 major breaks found on the entire distribution system, all but 28 of these occurred on the large feeder mains. The 28 remaining breaks were directly traceable to the numerous aftershocks of March 10 and 11. The two gas holders and equipment at both compressor plants suffered practically no damage and at all times were ready for service.

1971-New Headquarters

In 1971, the Gas Department moved its entire operation into the its new headquarters at 2400 E. Spring St. With this move came the addition of a Home Services Center. It included demonstrations and meeting areas where the Gas Department home economists provided ideas on cooking, meal planning and preparation, kitchen remodeling advice and gas appliance demonstrations. Due to budget constraints, however, the Home Services Center was eliminated. 

January 1, 1986 - Oil Price Collapse

Collapse of the oil industry in January 1986 had a severe impact on the earnings of the Long Beach Gas Department. Our large industrial users, such as Southern California Edison Company, could now get oil at a price lower than the equivalent amount of natural gas.

The California Public Utilities Commission, in an emergency session, prevented abandonment of industrial customers by allowing natural gas prices for Utility Electric Generation (UEG) users to float with oil. This meant that these large industrial customers would stay as users of natural gas and pay their associated share of fixed costs. However, it did reduce the earnings of the Gas Department from $1.00 per decatherm to 10 cents per decatherm, or from $40,000 a day to $4,000 a day - a drop of 90%. Southern California Gas Company, which is guaranteed a rate of return, was also hit with a loss of revenue. It should be noted that the Gas Department is not guaranteed a rate of return, but it is subject to market conditions.

June 1986 - Increase in Electric Generation Allocation

In June 1986, the City was successful in obtaining an increase in its allocation of natural gas deliveries to Edison during negotiations with the Southern California Gas Company; our allocation went from 40 million cubic feet per day to 60 million cubic feet per day. At this time, the Gas Department entered into a vigorous and very successful "spot market" bidding program.

September 1986 - Major Increase In Demand Charges From Southern California Gas Company

In September 1986, the Gas Department was served with a 246% increase in its demand charge from $574,333 to $1,406,833 per month. The monthly demand charge was the vast majority of the amount we paid the Southern California Gas Company to utilize their transmission system. As a result of this substantial increase, the City Council adopted a new schedule of daily service charges for all Gas Department customer classes. This change became effective December 1, 1986. 

May 1988 - Deregulation of Natural Gas

On May 1, 1988, the California Public Utilities Commission unbundled natural gas service in California. They divided gas acquisitions into two major categories, i.e., core customers, residential customers and those that cannot fuel-switch, plus non-core customers, those customers who have the capability to fuel-switch. The Gas Department, as a wholesale customer of Southern California Gas Company, has both core and non-core requirements. However, in the new scenario, we have the right to acquire supplies directly from the Southern California Gas Company or from producers outside the State of California. We are currently providing service to you from sources both locally and outside the state.