State regulators said they’re investigating San Diego Gas & Electric’s efforts to influence the local adoption of government-run electricity programs, saying the company doesn’t have permission to do so yet.
Officials with SDG&E and its parent company, Sempra Energy, said they’ve done no wrong. They said the California Public Utilities Commission cleared their specially designated marketing division to lobby on community choice aggregation, or CCA, a program that would give residents and businesses a government-run alternative to SDG&E.
Until Wednesday night, the commission didn’t say it had undertaken a probe of the utility. The agency and Sempra also have spent this week giving fuller explanations for their opposing positions.
At stake are the statewide standards for how investor-owned utilities can weigh in on the program, which a growing number of cities and counties across California have embraced — or are considering — as a way to replace fossil fuels with more renewable power in the fight against climate change.
After publicly lobbying on CCA last week before the county Board of Supervisors, officials with the SDG&E marketing arm, Sempra Services Corporation, said they’ve been meeting with lawmakers countywide on this issue since September. Those include San Diego Mayor Kevin Faulconer and several council members.
This lobbying caught the attention of the commission’s regulators, who said this week that SDG&E’s marketing division has never received approval to lobby on CCA. They also said they’re looking into the lobbying and that violations could be subject to fines as high as $50,000 for each offense.
“SDG&E is not in compliance …,” said Terrie Prosper, speaking on behalf of the commission and its president, Michael Picker. “The CPUC is investigating the facts surrounding SDG&E’s CCA-related communications.”
Officials for the utility and Sempra disagree with that position. They said in August, the commissioners approved a resolution allowing the marketing division to begin operations using only shareholder funds. This arrangement, the first of its kind in the state, was needed after the Legislature banned utilities from tapping ratepayer money to influence the adoption of CCAs.
A key sticking point is whether the resolution is contingent on SDG&E securing final clearance from the commission for its compliance plan, which spells out how the utility would satisfy a state-mandated firewall between it and the marketing division. The state’s goal is to ensure that information, employees and contractors are not shared between an investor-owned utility and the independent marketing arm.
SDG&E officials have repeatedly said lobbying is allowed while details of the compliance plan are hammered out. The commission has twice rejected the company’s blueprint, and a third version is expected to be considered by the agency in the next several days.
“Under the rules, whenever SDG&E proposes any changes to the (compliance) plan, it must seek staff approval for the change. That is precisely what we’re doing now, seeking approval for specific language changes,” said Amber Albrecht, senior communications manager for the utility.
A portion of the Aug. 18 resolution said the utility’s application for an independent marketing division and a related compliance plan are approved. But the document also called for some parts of that compliance plan to be revised and resubmitted to the commission.
Officials with the marketing division declined to say whether lobbying will continue ahead of the plan’s final approval. They did offer a summary of their previous lobbying efforts.
“Since the California Public Utilities Commission approved SDG&E’s filing in August 2016, Sempra Services has been meeting with elected officials and others in the community to introduce ourselves, gather community input and begin engaging in the ongoing dialogue about how our region can implement climate action plans to reduce (greenhouse-gas) emissions, maximizing potential environmental and economic benefits while minimizing cost and risk to local taxpayers,” said Frank Urtasun, regional vice president for Sempra Services.
After a bitter fight between Marin County and Pacific Gas & Electric over establishing the state’s first CCA, the Legislature in 2011 barred utilities from using ratepayer dollars to lobby on such programs.
As more CCAs come online, the specifics of how SDG&E and Sempra are allowed to operate could set a significant precedent for other utilities, said Andrew Campbell, executive director of UC Berkeley’s Energy Institute at Haas.
“This situation is going to clarify the rules, potentially set new rules,” Campbell said. “How this is resolved between Sempra and the CPUC and the (local) governments in their territory is what’s going to apply for other potential CCAs …”
California’s five existing CCA programs — Marin Clean Energy, Sonoma Clean Power, Lancaster Choice Energy, CleanPowerSF in San Francisco and Peninsula Clean Energy serving San Mateo County — have routinely offered customers more renewable power than competing utilities at the same or lower prices.
The number of such programs in the state is expected to double this year, and more than two dozen more municipalities are exploring the option. That includes the cities of San Diego and Solana Beach.
San Diego expects to release the findings of a rate study for CCA this fall. The program is being considered as part of the city’s nationally recognized Climate Action Plan, which calls for San Diego to run on 100 percent renewable energy by 2035.
According to the city’s lobbying database, Sempra first disclosed its intention to do CCA lobbying with San Diego in January.
On Thursday, the mayor’s office said Sempra and the contractor Responsible Solutions, a lobbying firm, met with Faulconer and city staff to discuss CCA once in November and another time in December.
Also, Councilman Chris Cate’s office said he met with Urtasun from the SDG&E marketing division to talk about the electricity program once in November.
Sempra and Responsible Solutions haven’t responded to requests asking whether they disclosed their lobbying before January.
Regulators Investigating SDG&E for Potential Lobbying Violations, by Joshua Emerson Smith, The San Diego Union-Tribune, February 23, 2017.