Independent Review Pokes Holes In SDG&E’s Green Energy Plan
Tuesday, April 3, 2018
Photo by Andrew Bowen
Independent Review Pokes Holes In SDG&E's Green Energy Plan
Andrew Bowen, metro reporter, KPBS
SDG&E said it has a plan to help San Diego reach its goal of 100 percent renewable energy by 2035. A review of that plan, however, found it lacks critical information and could easily fall apart.
San Diego Gas & Electric's proposal to help San Diego reach its goal of 100 percent renewable energy by 2035 lacks important information and could fall apart at the hands of state regulators, according to an independent review commissioned by city officials.
SDG&E submitted its plan last October as the city was seeking options for growing its renewable energy portfolio, which is a key component of its Climate Action Plan. The city has to get 100 percent of its electricity from carbon-free sources by 2035 to achieve its greenhouse gas emission reduction targets.
The climate plan suggests "community choice energy" as one potential path to 100 percent renewable energy. Under community choice, SDG&E would continue to bill customers, deliver energy through the grid and profit from that delivery — but a public agency would decide which sources to purchase the energy from.
City officials last year issued a request for proposals seeking alternatives to community choice, and SDG&E was the only entity to respond. The proposal involves carving out a separate rate structure for residents and businesses within the city of San Diego. In November, Mayor Kevin Faulconer announced he would seek a third-party review of SDG&E's plan.
The review, completed by the consulting firm MRW & Associates and posted to the city's website last week, found "SDG&E's proposed approach is possibly feasible, (but) overall the Response raises more questions than it answers."
Chief among the concerns is that the program would require approval from the California Public Utilities Commission. A rejection by that body, or a lengthy review process, could put the city's compliance with the Climate Action Plan at risk.
The review also found SDG&E did not attempt to estimate the real-world impact on ratepayers' bills. State law requires utilities to charge customers only what it costs to serve them, plus an authorized profit margin.
"(T)he Response gives little or no information about the approach, costs, or risks associated with the proposed joint City‐SDG&E effort," the review concluded.
Nicole Capretz, executive director of the nonprofit Climate Action Campaign and one of San Diego's most vocal supporters of community choice energy, said she found the review "pretty dismissive" of SDG&E's concept.
"Overall that just reinforces what we've been saying the entire time, which is there is only one feasible pathway for the city to reach its commitment to 100 percent clean energy," she said. "And that's community choice."
MRW & Associates also conducted a review of a community choice feasibility study released last year. That study found the program could feasibly offer more renewable energy to customers at a lower cost than SDG&E.
The consultants found the feasibility study was overall "detailed and comprehensive" and its "assessment of loads and load forecast are thorough and reasonable." It also found the study may have been overly conservative in its cost estimates, meaning community choice could be cheaper than the study imagined.
MRW did, however, point to a handful of concerns, especially surrounding the study's estimates of future SDG&E electricity rates, which the consultants said was a simple extrapolation of the current rates.
Capretz said MRW made some valid points, and that she expected the concerns would be incorporated into the city's community choice business plan that is to be unveiled later this year.
Shareholders in SDG&E's parent company, Sempra Energy, have created a marketing and lobbying organization that is asking the city to delay a decision on community choice. That firm also anchors a group called the Clear the Air Coalition.
Tony Manolatos, a spokesman for the coalition, initially declined to comment on the review of SDG&E's proposal. But he said the review of the community choice feasibility study "undermines the entire basis for the study's finding that a government-controlled energy program would be financially feasible."
"The truth is government-controlled energy providers are simply not delivering on their promises to create more jobs and provide cheaper and greener energy, and we should not expect the results in San Diego to be any different," he said.
After the publication of this story, Manolatos sent KPBS the following statement: "The study makes some good points (about the SDG&E proposal) and those questions need to be addressed."
Editor's note: This story has been updated to clarify that investors own stock in Sempra Energy, not SDG&E.
To view PDF documents, Download Acrobat Reader.