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7 Things To Understand About Community Choice In San Diego

A woman charges her electric vehicle in Balboa Park, June 27, 2017.

Photo by Matthew Bowler

Above: A woman charges her electric vehicle in Balboa Park, June 27, 2017.

7 Things To Understand About Community Choice In San Diego

GUEST:

Claire Trageser, reporter, KPBS News

Transcript

Last week, the city of San Diego got its answer on whether switching to an alternative energy program that would bypass San Diego Gas & Electric is possible and cost-effective.

The broad answers, contained in a feasibility report conducted by Willdan Financial Services, were yes it is feasible and yes it is cost-effective. But the study is more complicated than that, and there are a variety of terms and concepts to understand that show how the authors arrived at those answers.

The study looked at a program called community choice, which San Diego is considering using to reach its goal of using 100 percent renewable energy by 2035.

1. What Is Community Choice

Community choice would take the purchasing power away from SDG&E and give it to the city. If the city goes with community choice, the city would still use SDG&E's power grid and electric bills would still come from SDG&E, but the city would decide what energy sources to buy.

The idea is the city could then buy more renewable sources of energy, such as wind and solar power and less natural gas.

If the city switches to using community choice, residents and businesses will get to decide whether to stick with SDG&E or use the new community choice program.

The city's decision will likely be the focal point of a big political battle. SDG&E has formed a lobbying arm called Sempra Services that will try to convince city leaders not to opt for the new program. Already, Sempra Services released a statement saying the study is "incomplete because it is not possible to determine what a government-controlled energy model will cost customers. Until the true costs and benefits of such a program are transparent and shared with the public, we believe it is premature to move forward."

2. Different Scenarios

The study looked at five different scenarios for how much renewable energy community choice customers would use.

Those are:

–98 percent of community choice customers use 50 percent renewable energy; 2 percent of customers use 100 percent renewable energy

–All community choice customers use 50 percent renewable energy.

–All community choice customers use 80 percent renewable energy.

–All community choice customers use 100 percent renewable energy.

–98 percent of community choice customers use 80 percent renewable energy; 2 percent of customers use 100 percent renewable energy.

The study found that in the second scenario, where 100 percent of community choice customers use 50 percent renewable energy, community choice will be cheaper than SDG&E by 2023.

In the third scenario, where 100 percent of community choice customers use 80 percent renewable energy, the study found community choice will be cheaper than SDG&E by 2027.

The study did not project out far enough to see how costs would compare in the fourth scenario, where 100 percent of community choice customers use 100 percent renewable energy.

3. Bundled Vs. Unbundled

There are two ways of acquiring renewable energy:

–Buying the power from a local source along with energy credits from the state, which are called bundled renewable energy credits.

–Buying just the energy credits from a nonlocal source, which are called unbundled renewable energy credits.

The feasibility study includes only bundled energy credits, because those are better for the local economy. However, this could be a point of discussion, because unbundled credits are cheaper.

RELATED: Battle Over San Diego’s Energy Future Will Heat Up Soon

4. Load Forecast

If the city goes with community choice, customers will not be required to switch to the new energy program. The study assumes that 40 percent of customers will stay with SDG&E.

This is a conservative assumption, but if it is wrong and more customers stay with SDG&E, it could impact the study's conclusions.

5. Exit Fees

San Diegans may be hearing a lot about exit fees if they follow the community choice debate. The term, formally called Power Charge Indifference Adjustment or PCIA, means the amount the community choice program would have to pay SDG&E if it opted for community choice.

That is because SDG&E has already bought energy for the city to use in the future, and so if the community choice program does not use that energy, it will have to pay the utility back for it.

The study assumes exit fees will stay the same amount that they were in March 2017, but if they increase by 10 percent then the study's conclusion that community choice is cost effective could be wrong.

However, that scenario is probably unlikely. The California Public Utilities Commission is currently deciding whether utilities like SDG&E should be allowed to set the amounts for these exit fees, and could end up decreasing them.

6. Electricity Rates

When the study talks about costs savings from community choice, it is important to remember that those savings may not be directly visible on residents' and businesses' electricity bills.

That is because the cost of the energy is only part of the bill — consumers also pay for delivery of energy and those exit fees mentioned above.

In fact, in the winter, the community choice charge only makes up 16 percent of a utility bill, while 62 percent goes to delivery fees and the rest to exit fees.

In the summer, community choice charges make up 56 percent of a utility bill, while 27 percent goes to delivery fees and the rest to exit fees.

7. What Comes Next

Now that the study is released, the city will hold a series of workshops to talk to residents about community choice and other options for reaching 100 percent renewable energy.

Then, the City Council is expected to vote in January on what program to use.

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