Gas Co. Cuts Deliveries to More Big Users

December’s persistent cold weather and the prospect of a frosty January prompted Southern California Gas Co. on Thursday to announce that it will halt delivering gas, effective Monday noon, to 800 industrial and commercial customers that have other energy sources.

At the same time, utility executives warned residential customers to expect hefty increases in their monthly fuel bills.

Residential rates rise rapidly once customers start using more gas than the “normal seasonal” amount. If usage doubles, bills will more than double.

The shock to consumers of higher bills for December and January is likely to be exacerbated in coming months for yet another reason. High consumption during the long-running cold weather in the West and the nation’s northern half has led to short supplies of gas and is driving up gas prices. Southern California Gas already said it expects to pay 20% more this month to buy natural gas on the spot market. California allows such higher costs to be passed on to customers.

Supplies Seem Secure

Despite the prospect of higher monthly bills, supplies seem secure for residential and smaller commercial customers.

“No one can predict the weather very well, and I’m reluctant to rule out anything all together,” said Bob Loch, senior vice president for fuel, “but the prospects of that (being unable to serve residential customers) are extremely remote.”

The company said that Monday’s planned curtailments to 800 of its 4.2 million customers will trim daily gas consumption by about 12%. Supplies were cut off on Dec. 18 to Southern California Edison, the Los Angeles Department of Water and Power, San Diego Gas & Electric, and the cities of Burbank, Glendale and Pasadena, saving 16% a day, Loch said. The new program will add to that cutoff list some major universities, hospitals, hotels and refineries, among others, that have alternate energy sources.

Taken together, these actions are expected to slash daily gas consumption by nearly 40% at current rates of demand. They are the first such cutoffs imposed since 1979.

Meanwhile, Southern California Gas began receiving about 10% of its daily supplies Monday from Pacific Gas & Electric under a 10-year-old mutual assistance program. (San Francisco-based PG&E; trimmed its consumption by shifting its generating plants to burning fuel oil, said spokesman Harry Arnott.)

For those users forced to switch on their own alternative systems, it is, theoretically, a simple matter “of opening a few valves and turning some dials,” said one power plant engineer. On the other hand, these systems have not, in most cases, been fired up for years.

“We’re having some boiler trouble,” said Roger MacDonald, lead power plant mechanic for the Los Angeles Times, but MacDonald expected the problem to be remedied by Monday noon. He said fuel oil is used only as a last resort because it is currently more costly than gas--and always dirtier.

The curtailment order proved an opportunity for the Hyatt Regency in downtown Los Angeles, said chief engineer Tim Giddens. “We’ll be buying gas direct and cutting out the gas company at a savings of 3 cents a therm,” he said.

Gas customers that have alternative heating systems qualify for lower rates, said gas company spokesman Rick Terrell. If one of these customers is unable to switch over when a crunch comes--because of boiler trouble or for some other reasons--they can continue to burn gas but must pay a premium for it, he said.

Meanwhile, the gas company urged residential users, who make up the vast majority of its customers, to turn down thermostats and turn up their collars. But the greatest discomfort will likely come with the next gas bill, Terrell said.

Average winter gas consumption for a single-family home runs about 82 therms a month; at current rates, that costs about $37. Increasing consumption by less than half, to 120 therms, would double the bill to $74 because of a rate structure designed to restrain energy use.

Residential customers who suffer rate shock do have an option that may ease the pain, however: They can ask their gas company representative to convert their accounts to “flat-rate” payments, Terrell said. This plan divides the year’s anticipated bills into 12 equal monthly installments.

The last time Southern California Gas Co.’s major industrial and commercial customers were forced to go off gas came during the winter of 1978-79, Loch recalled. But that curtailment was caused by a shortage of natural gas itself, prompted by a federal law that held prices at the source so low that little new gas was produced.

“Our pipelines then were only able to get 50% or 75% of capacity,” Loch said.

This time, the pipelines are running full, but local demand is outstripping the system’s ability to meet it, he said. “We expect to draw down our stored gas in winter and make it up in the summer,” Loch said, “but we don’t expect a December that is so unrelentingly cold as this one has been.”

If the present cold weather continues for long and gas supplies continue to fall, he added, the curtailed customers will be kept off gas until supplies can be restored to normal.

While the current shortage is driven by weather, the natural gas market also has been shaken by federal regulations affecting the way gas is bought and sold that take effect today, said Norm Blumenthal, a San Diego attorney who represents some natural gas producers. The regulations were created to solve a longstanding dispute involving contracts worth billions of dollars that were signed by pipeline companies and gas producers during the late 1970s and early ‘80s.

Uncertainty over how the new rules will work has reportedly led some utilities to increase stockpiles, further tightening supplies, said Gary Simon, director of California affairs for El Paso Natural Gas, one of Southern California Gas Co.’s major suppliers.

Moreover, some producers may respond by refusing to sell their gas to pipeline operators, Blumenthal predicted. He said most of his clients will be “sitting on” their gas stocks.

Times staff writer Greg Johnson in San Diego contributed to this article.