The state released Wednesday a long-anticipated blueprint for ensuring ratepayers aren’t unfairly burdened with rising electricity bills as the popularity soars of a government-run alternative to investor-owned utilities.
Lobbyists for San Diego Gas & Electric’s parent company, Sempra Energy, have repeatedly argued that adoption of the public-energy program, known as community choice aggregation, could pose significant financial risks to cities, as well as residents and businesses.
Supporters of community choice said that those concerns were no longer valid given the proposal by the California Public Utilities Commission, which will be up for adoption next month.
“It’s a huge win because now we can feel confident that we can bring the benefits of choice to San Diego families,” said Nicole Capretz, executive director of the San Diego-based Climate Action Campaign. “It’s one of those rare times when local government can have a positive impact on the fixed expenses that we all have.”
By comparison, lobbyists working with Sempra to challenge the adoption of community choice in San Diego County released a statement Thursday that said the commission’s proposal could likely make adoption of community choice “riskier and more costly.”
“A critical question we’ve been asking is how much will a government-controlled energy program – or Community Choice Aggregation – cost hard-working San Diegans? The fact is that no one knows,” said Tony Manolatos, spokesman for the Clear the Air Coalition, which pairs Sempra lobbyists with some of the region’s most powerful groups, from the San Diego Regional Chamber of Commerce to the Downtown San Diego Partnership to the San Diego County Taxpayers Association.
Specifically, the commission’s proposal would refine how utilities are compensated for customers who join a community choice program — overhauling a highly technical formula for calculating the so-called exit fee, also known as the power charge indifference adjustment.
Under community choice, an electrical utility, such as SDG&E, continues to operate the electrical grid and charge for delivering power.
However, once a program is approved, elected officials assume control of the buying and selling of electricity for customers in their jurisdiction — inking new contracts for everything from natural gas to wind and solar power.
The Legislature has maintained that ratepayers are automatically enrolled in a community choice program once it’s formed, despite numerous attempts by utilities to change the state rule. Consumers can choose to opt out if they prefer the rates of their local utility company.
Community choice programs pay the exit fee to their local utility on behalf of households and businesses that join the government-run operation. This is to ensure that customers who remain with a utility don’t end up paying higher rates as a result of long-term investments by the utility, most notably for contracts with power providers.
The commission said last year that it planned to tweak the formula after utilities and community-choice advocates all complained about its methodology. The commission is expected to vote on the proposal on Thursday, Sept. 13.
SDG&E spokeswoman Helen Gao said the company would continue to push for changes to the proposed fee structure in the run-up to the decision in order to “address deficiencies” that run afoul of state rules.
“For example, there are proposed protections for community choice aggregation programs that could increase costs for customers who choose to remain with their traditional utility,” Gao said in an email. “We will continue to work with the commission to ensure that California is in compliance with the law, and importantly that all customers are treated equally.”
The outcome of this week’s proposed ruling has been the subject of much debate, especially in the city of San Diego, as elected officials weigh adoption of community choice to help meet a local pledge to dramatically slash greenhouse gases in coming decades.
The city is expected to vote on whether to adopt community choice by the end of the year as part of its goal of using 100 percent renewable energy by 2035. SDG&E is offering a competing proposal, but so far details have been scant on how its program would work.
Supporters of community choice said that an annual cap on adjustments to the fee outlined in the new proposal should provide financial assurances for cities such as San Diego that are considering the program.
Mayor Kevin Faulconer’s office did not respond by press time.
“Now that the state issues are resolved, we are confident that the mayor will do the right thing and bring this opportunity forward to City Council for a vote.” Captrez said.
In the last decade, local governments from Marin to Los Angeles County to Solana Beach have embraced the model as a way to boost investments in green power, as well as create competition for investor-owned utilities.
Currently, SDG&E, Southern California Edison and Pacific Gas & Electric together buy and sell roughly 75 percent of the state’s electricity. Their collective share could plunge to just 10 percent within the next five years, with community choice programs accounting for most of the shift, according to the state’s most aggressive forecast.
Supporters of government alternative to SDG&E claim victory in highly-anticipated PUC ruling, by Joshua Emerson Smith, The San Diego Union-Tribune, August 2, 2018.