Opinion: Community Choice Aggregation Sounds Too Good to Be True

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Sunrise power link in the desert east of San Diego. Photo courtesy SDG&E

By Chris Jennewein

As a young reporter just out of college, one of my first assignments was to cover a big city utility — the Memphis Light, Gas & Water Division.

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MLGW, as residents called it, was and is the largest three-service municipal utility in the United States, now with over 400,000 customers.

For a reporter, it was a dream assignment because the utility was always convulsed in politics. I covered rate increases, power outages, service changes, the questionable purchase of a natural gas field and, finally, the chief executive’s resignation under pressure. The utility seemed to be operating efficiently for Memphis residents, but it sure was rife with politics.

Then I moved to London for a year-long master’s degree program. As a uninformed and optimistic American, I tried to get telephone service in my apartment. At the time, government-run British Telecom had a one-year backlog. At least I had electricity and heat, though the latter was supplied via a coin-operated gas meter.

All this makes me skeptical of the supposed benefits of Community Choice Aggregation.

The concept sounds great, of course. Proponents like Lean Energy US promise lower rates and more sustainable energy. But thinking back to Memphis and London, it seems just as likely that we’d have thorny politics and abysmal service.

The basic idea behind Community Choice Aggregation, or CCA, is that cities and counties in California could organize a large group of their residents to buy energy from competing providers instead of the local private utility. Individual customers could stay with the utility, or pay an “exit fee” to join the CCA. The local utility would still deliver the power, read meters and handle billing, but a local government would have to staff up to administer the CCA.

Proponents say a CCA can deliver lower costs and greener energy, but as the City of Solana Beach — the administrator of what could be San Diego County’s first CCA — admits on its website: “The biggest risk is that CCA rates may be higher than utility rates.”

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Recalling my experience as a young reporter in Memphis and a student in Britain, I can think of five reasons to be skeptical of the viability of a CCA.

1. Business is usually more efficient than government. If a private utility makes a mistake, its stock gets hammered and it loses money. If a government makes a mistake, excuses are made and promises offered. There’s real pressure on business to perform, but not so much on government.

2. Any savings could be offset by the costs of a new bureaucracy. As a local taxpayer, I don’t want to pay to staff up a municipal utility when San Diego Gas & Electric is already fully staffed.

3. We still need some old-fashioned reliable power sources. Sustainable energy is the right way to go, but the technology is still evolving. For some period of time, we’ll need big natural-gas powered generating plants, especially at night. Utility experts call this “base load” power. I want to be able to charge my electric car overnight, and solar or wind energy from a distant supplier might not be sufficiently reliable.

4. If it’s not broken, don’t fix it. SDG&E already leads all major California utilities in renewable energy. It currently reports 43 percent and the proportion is continuing to grow. It is also pioneering large battery storage to handle fluctuating power from renewable sources. Switching to other, likely smaller and less reliable power suppliers, could slow conversion to sustainable power for the entire San Diego region.

5. Profit isn’t bad if we get good service. A fundamental assumption behind the CCA movement is that savings will come from removing the profit. But letting a utility make a decent profit isn’t a bad thing if we get good service in return. And that profit is already regulated by the Public Utilities Commission.

Solana Beach is moving forward with its CCA. As the idea wends its way through cities in San Diego County, let’s be sure to study this carefully and weigh both the upside and downside equally. Let’s not remake San Diego as Memphis.


Chris Jennewein is editor and publisher of Times of San Diego.

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