LCC waits for better natural gas rate from city
Dr. Homer Cissell, LCC’s president, told the board he’d had meetings with the city and with the city’s natural gas consultant, but Eric Rulofsen, LCC’s facilities director was better prepared to report to the board.
Rulofsen said the city and the college had been talking, but the city needed to come up with a better rate before the college would agree to continue to purchase natural gas from the city.
The city has scheduled a natural gas hearing for 6 p.m. on Wednesday, Jan. 24 at the City Council Chambers located on North Lassen Street.
He said the discussions were, “what we agreed to as far as the concept, but some of the numbers aren’t adding up right. We’ve been in contact with them and we told them where we need to be. They said, ‘We hear you, and when we go into the rate hearing we’ll see what we can do.’ We are hopeful we’ll come out of the rate hearing with an acceptable rate.”
Under the old contract, which expires next week, LCC enjoyed the cheapest natural gas rate in the city — paying $1.02 per therm. The city and the college agreed on that rate in January 2005, when natural gas prices were at the lowest level they have been since the contract was signed. But Rulofsen said those days are over as the city is offering a variable rate tied to the cost of other energy sources.
“We’re not going to have a contract with them anymore,” Rulofsen said. “They’re going to come up with a multi-tiered commercial rate that’s going to be for everybody who uses 100,000 therms or more per year. Conceptually what we talked about before is still what we’re talking about, however, some of their numbers are a little higher. For instance, the county just made some long-term agreements for No. 2 fuel oil and propane, and the city’s numbers are a little higher than that. We said, ‘take a look at that,’ because we would expect to get such an arrangement as well.”
Rulofsen said the new rate structure contains other new provisions as well.
“Also there’s a new term you may not have heard last time,” Rulofsen said. “It’s called price floor. That’s an absolute minimum price for natural gas that the city may have to implement if fuel oil goes so low it drops below the actual price they pay for natural gas.”
The facilities manager said the board should have a proposal to look at during the board’s next meeting.
Cissell said one of the major changes between the new contract and the old contract is the college would be bound to the city for two years.
“It’s going to be very important we get this locked in as best we can,” Cissell said. “I do believe being tied to some flexible price that keeps us in line with what our petroleum would be, because that’s the lowest. We have been very, very fortunate the past couple of years because of the contract that was negotiated. I realize there are some in the community who are not pleased with the rate we were able to obtain, but it has helped this college through some tough financial times.”
Cissell estimated the college’s heating costs would increase by as much $150,000 per year. He said that should give trustees an idea of how much the college has saved over the past two years.
The college’s natural gas usage is about the same usage as 500 households. One trustee suggested the college represented 38 percent of the city’s natural gas usage.
Rulofsen said the college had a number of options even despite the contract with the city.
“We’re going from a fixed rate to a variable rate,” Rulofsen told the trustees, “but there is no obligation for us to use any city gas. If they come up with a rate that’s unacceptable, we will fill our tanks with No. 2 fuel oil, start burning it and reduce the amount of natural gas we use. Whatever we use we’ll have to pay for at the new rate, but it doesn’t exclude us from putting up propane tanks on campus and converting over to something else.”
Rulofsen said the college could change over to another fuel source in less than a day.
“On our main boilers all we have to do is prime the pumps and hit a switch,” Rulofsen said in response to a question from the board. “Of course, we’ve got to buy the fuel because the tanks are empty right now. So we’re talking a day, easily, we’re on No. 2.”
Trustee Doc Blevins wondered if the college could lock in a good price on No. 2 fuel oil as the price is below $2 per gallon and falling.
Rulofsen said nobody is going to lock in a long-term price, but will quote “a rack price” plus a percentage for transportation and tax, essentially the same format the city is using to come up with its commercial rate.
“But their plus is too much plus,” Rulofsen said of the city’s projected rate. “They need to work on that, and I’m confident they will. We are a huge part of their system, and if we leave, their prices have to go up. So it’s in all of our best interests if we can work something out.”
Trustee Jay Dow continued to argue for an even better price.
“That’s all well and good then, and I brought this up at the last meeting,” Dow said. “I don’t think it’s good enough that they’re just going to match the competition. I want them to beat the competition. What they’re doing now is essentially matching the competition. I want them to know that. If this is going to be truly competitive, all they’re saying is we’ll match the competition, but we’re not going to do anything else. That’s not good enough. If we’re that critical a player in their natural gas endeavor, they need to beat the competition.”
Dow also complained the city wasn’t giving the college enough time to consider it’s options, and suggested the college should have 30 or 60 days to review its energy purchases.
“This is baloney for them to approve a rate scale and have our contract expire essentially that day or the next day. I’d bring that point up to them, too. That’s very poor business. They should have had this done two months ago.”
Rulofsen said he would convey Dow’s comments to the city.
Cougars face tough teams to prepare for a victorious season
TJ McCauley attempts to keep the ball away from a Fresno City College player during the championship basketball game of the El Camino Tournament on Sunday, Nov. 24. The Lassen Community College Cougars have been competing in pre-season tournaments and have earned several wins. Photo by Scott Nordstrom Dec....Read More...
Susanville native to play in college bowl with Boise State
Darren Lee, a Lassen High School graduate and former Lassen High football player, now plays football for Boise State and will be going with the team to a college bowl game in late December. Photo by Boise State Media Relations Dec. 6 — A Susanville native is making strides in his football career...Read More...
Lady Grizzlies celebrate a championship season
Miranda Langenhorst, back left, Mikailia Bustamante, Melica Woodhead, Dana Lovelace, Makenna Busse, Klari Scheff, bottom left, Hailey Hannah, Stevie Woodbury, Myeisha Shepard, Emilee Downing, Gabi Geoia and Jayde Hartzell pose together with the awards they were presented with at the Lassen High School...Read More...