The San Diego City Council is expected to decide early next year whether the city should part ways with San Diego Gas & Electric. If so, the Council would create a new government agency to buy energy for its 1.4 million residents.
There’s lots of technical stuff to sort through, like deeply nuanced projections about the energy market. But the decision is also a gut check for San Diegans about which entity they trust more – or at least which they hate less: the government or the power company.
Do people trust city government to keep the lights on and rates down? The city nearly bankrupted itself not that long ago, couldn’t quickly answer 911 calls and once stupidly agreed to buy up tickets for professional football games that people didn’t want to attend.
Or, do people want a break from SDG&E? The company’s prices skyrocketed as part of the statewide energy crisis, still has some of the highest rates in the country and helped burn down part of the county a decade ago only to expect its customers to foot the bill.
In other words, expect a massive airing of civic grievances.
San Diego is among dozens of local governments across California that want more control over energy sold within their borders, largely in hopes of fighting climate change.
San Diego has an ambitious plan to reduce the amount of climate-changing gases its citizens send into the atmosphere. The city needs to replace the mostly natural gas-fired power sold by SDG&E with wind and solar power.
Though 43 percent of its power is already from wind and solar sources, SDG&E has suggested it’s impossible to stop burning natural gas anytime soon. A city-funded study agreed, in part, by concluding that the city cannot totally abandon natural gas within the next decade and still beat SDG&E’s prices. But the study also found that the city still could provide cheaper and greener power within the next decade.
So the city may enter the energy market, becoming a community choice aggregator, or CCA. SDG&E would still distribute the power through its power lines, and send out the bills.
People on both sides of the issue inevitably bring up trust, competence or motive. SDG&E is a profit-hungry monopoly and just wants to sell as much gas as possible, say the company’s critics. The city hasn’t been well-run and can’t be trusted with power, say SDG&E’s allies.
Buried in the background are age-old fights about whether utilities ought to be public or private. The Climate Action Campaign, an advocacy group that wants the city to begin competing with SDG&E in the energy market, said a government-run utility would “take the profit out of a fundamental public need.”
California has historically split the baby on this point. Most people get water from public agencies, but get energy from private companies. That’s changing as the community choice movement takes off. By one estimate, Pacific Gas & Electric, the state’s largest power company, will sell half as much power in 2030 as it does today because so many local governments in its service area are banding together to offer energy choice. So far, none of the existing CCAs has experienced any major problems, though the oldest is less than a decade old.
But then there’s the peculiar histories of two San Diego institutions: its government and its power company.
Neither, of course, is particularly spotless.
Haney Hong, the head of the San Diego County Taxpayers Association, has repeatedly pointed to the city’s pension crisis as evidence the city shouldn’t be trusted to get into the energy market.
“Past experience tells us our elected leaders have a hard time predicting long-term financial obligations and financial markets that leave their successors and taxpayers on the hook for decades,” Hong said in a statement. “This smells awfully similar, leaving one to wonder: Is it wise for local governments to enter into the energy business?”
Mayor Kevin Faulconer’s office, though, takes exception with people talking about San Diego as if its past was the present.
“This is not your father’s city government,” the mayor’s spokesman, Craig Gustafson, said in an email. “The city of San Diego has turned its once-troubled finances around and is now setting records for road repair, investing nearly half a billion annually in neighborhood infrastructure projects and leading the way for the rest of country with smart-city technologies and a landmark Climate Action Plan.”
Still, he said the decision to enter the energy market shouldn’t rest on the city or SDG&E’s reputation but on “what’s the best way to get us to 100 percent renewable energy while protecting ratepayers.”
Jim Waring, who was a cofounder of CleanTech San Diego, said everybody needs to temper their emotions and focus on policy nuances.
“There are people that just hate the utility, so if they think they are able to weaken or hurt the utility that’s, to some degree, a motivator in and of itself,” he said.
One of the more galling episodes for SDG&E’s customers has little to do with the debate about energy choice.
During the 2007 Witch Fire, nearly 200,000 acres of the county burned, two people died and hundreds of homes were destroyed. Sparks that caused the fire, investigators would later conclude, came from SDG&E’s power lines slapping in the wind.
When all was said and done, SDG&E and its insurance company paid over $2 billion to settle claims related to the fires, though it still argues many factors beyond its control played a major role in igniting and spreading the fires. Then SDG&E turned around and asked the California Public Utilities Commission to allow it to raise rates by $379 million, or about $1.70 a month for customers.
Regulators are still trying to decide what to do. But the case shows that despite all the talk about protecting city taxpayers from government screw-ups, even a private monopoly that supposedly shoulders risk can just pass the cost of follies along to captive customers.
The company, for its part, has tried to make sure something like the fires never happens again and sees that trust is not only hard to come by but will be an important part of the debate.
“As I am sure you would agree, in this day and age, earning and keeping the trust of customers is a challenge for any public agency or private business,” SDG&E spokeswoman Helen Gao said in an email. “We are keenly aware that it’s a privilege for us to serve the 3.6 million customers we have, and that to maintain their trust and their business, we must continue to first and foremost, deliver safe and reliable energy, as well as innovate and improve every aspect of our business.”
The question the City Council will face is whether it believes SDG&E or whether it believes it can do better.
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