San Diegans pay the highest electric rates in the country — rates that have nearly doubled since 2016. San Diego Gas & Electric projects that its rates will continue to rise at 10% per year. San Diego ratepayers are shouldering the burden of record profits for SDG&E shareholders.
Continued ownership and control of our local electric grid by a private monopoly utility company that is relentlessly driving higher rates is detrimental to the people of San Diego.
SDG&E took in more than $1 billion in profits last year. The CEO made $10 million in 2020. A quarter of SDG&E’s customers are more than $600 behind on their bills. Meanwhile, SDG&E undercuts rooftop solar in the city with onerous fixed charges and unfair tariffs, while promoting high-profit, multibillion-dollar transmission lines to far-off desert solar farms — when we could be making our solar power here, and cheaper.
It is time for fundamental change. A citizens ballot initiative has been proposed that would create a not-for-profit electric distribution utility in the city, to be known as “Power San Diego,” to replace SDG&E’s electric service. The city has a fundamental right to take over the provision of electric power when it opts to do so. It already provides water and wastewater service to city residents through the Public Utilities Department.
The PUD’s core mission is water reliability. It is lauded throughout the Southwest for its achievements in that area.
Not-for-profit electric utilities are well-established in California (there are 44 of them). Their distinguishing characteristics are local control, low rates and high reliability. New not-for-profit electric utilities continue to form around the country. Over 30 public electric utilities have been established in the U.S. in the last 30 years. One of these utilities, the Long Island Power Authority, has far more electric customers than the City of San Diego.
Multiple public power studies have been done in San Diego over the last several years. These studies indicate generally that switching to a not-for-profit electric utility would save customers money.
However, and even more important, control of the utility would be local. Investment decisions would no longer be driven by Wall Street investors seeking maximum profit from a private monopoly corporation. Decision-making would be far more responsible to the needs of San Diegans.
Where would the money come from to buy SDG&E’s assets in the city? Revenue bonds.
Power San Diego would impose no new taxes or financial burden on city residents. The not-for-profit utility would be a self-financed department of the city funded by customer revenue with no exposure to the city’s General Fund. This is the same financing tool that has funded the city’s water and wastewater utility for more than 100 years.
Would the cost of the purchase of SDG&E’s assets impose a cost burden on customers? No.
As the city’s public power consultant indicated in 2020: “The purchase price assumption does not have significant effect on the cost customers would pay for service. . . . Annual debt (repayment is) a small portion of the total cost of service.”
A buy-out of these assets with a lower interest rate municipal revenue bond is analogous to refinancing a home loan with lower interest rate financing. It reduces costs.
The mission of Power San Diego would be to provide electric service at just, reasonable and affordable rates while maximizing economic benefit to the people of San Diego. Power San Diego would lower electric rates, advance local climate action, and spur local economic development and employment.
San Diegans across all income levels and customer categories would be encouraged and supported to maximize deployment of solar and battery storage through favorable tariffs and programs. Local solar power would lower costs by avoiding high and rising transmission charges imposed by SDG&E on all power sales. Discounted rate structures would be made available to lower-income customers.
Power San Diego would be directed by a five-member Electric Board with oversight by a Citizens Oversight Committee.
The not-for-profit utility would need experienced workers and expects to fill many positions with former SDG&E staff. Power San Diego would welcome union labor and pay its union employees compensation and benefits that meet or exceed the terms of their current collective bargaining agreements.
If you don’t like how a locally controlled utility is being run, you can vote the people in charge out. With investor-owned utilities, you are just stuck. Power San Diego would be focused on serving the needs of San Diegans, and not those of Wall Street investors.
Bill Powers is a registered professional mechanical engineer in California and Missouri with over 40 years of experience in energy and environmental engineering. Powers is the author of the 2020 strategic energy plan for San Diego — Roadmap to 100 Percent Local Solar by 2030. He is the campaign chair for the Power San Diego ballot initiative.