The Long Beach (CA) municipal gas utility is close to signing a 30-year, $900 million natural gas pre-pay contract with Merrill Lynch Commodities Inc. that could satisfy up to 90% of its annual load, the general manager for the city’s utility department told NGI.
Chris Garner, general manager of the Long Beach Utility Department, received authorization from the city council Tuesday to proceed with the pre-pay deal. “We haven’t signed it yet,” Garner said. “We’re waiting to see if the market can get better, and we’re willing to wait up until two months.”
The port city of Long Beach, with more than 400,000 residents about 25 miles southeast of Los Angeles, has an annual natural gas load of 12 Bcf. Supplies in the pre-pay deal could come from wherever Merrill Lynch can get them and guarantee they can get into the Southern California Gas Co. transmission system, to which Long Beach’s distribution system is connected, Garner said.
In anticipation of the deal, Fitch Ratings on Friday issued an assessment saying it intended to rate the city’s expected $900 million municipal bond issue to finance the pre-pay at “AA-” with a “stable” outlook attached to the bonds. The city utility uses Long Beach Bond Finance, the joint powers authority used by all the Long Beach agencies, to finance major projects.
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