San Diego Mayor Kevin Faulconer announced Thursday he will pursue an alternative energy program that would see the city take over energy purchasing and price setting for residents and businesses.
The city's Climate Action Plan, proposed in 2014, states that San Diego must achieve 100 percent renewable energy by 2035, and community choice aggregation is laid out as one option to reach that goal. The mayor had entertained a second option proposed by SDG&E, but the utility withdrew its proposal in a letter on Monday.
If approved by the City Council, San Diego's community choice program would be the largest of its kind in the state. SDG&E would still take care of energy delivery, grid maintenance and customer billing.
Nicole Capretz, executive director of the nonprofit Climate Action Campaign and a chief proponent of community choice, praised the mayor's decision.
"Today is a watershed moment that will transform both our energy and political systems," she said in a statement. "It's about the community taking control of our energy destiny and putting the public interest above corporate profits. We could not be more excited about this new day in San Diego."
Ratepayers can choose to opt out of the community choice program and allow SDG&E to continue purchasing energy on their behalf. Proponents of community choice say this introduces competition into the energy market and can put downward pressure on rates. San Diego customers pay some of the highest electricity rates in the country.
SDG&E's parent company, Sempra Energy, has been fighting against the city's exploration of community choice through an independent marketing and lobbying district called Sempra Services. It has argued the program, also called CCA, would put taxpayers at risk, and that community choice programs are only green if they manage to commission new renewable energy plants like solar or wind farms.
"The evidence indicates a San Diego CCA would not meet the city's goal of 100 percent clean energy by 2035 or create many new jobs, but it would create risk for taxpayers, who are ultimately the backstop of any government-controlled energy program," Lynn Reaser, an economist at Point Loma Nazarene University and ally of Sempra Services, said in a statement.
San Diego may consider minimizing any risks to the city budget by forming a joint powers authority that would be the official manager of the government energy program. Solana Beach is so far the only jurisdiction in the SDG&E service area that has already formed a community choice program, though several other cities in the county are exploring it as an option.
Faulconer had been waiting to make the final decision on community choice until after a key decision from the California Public Utilities Commission earlier this month. The state regulator made an adjustment to how it calculates so-called "exit fees" that community choice programs pay to reimburse utilities for obsolete contracts they signed with energy providers.
The mayor is expected to give more details on his plan in a press conference Thursday afternoon, where he will also present an annual progress report on the city's greenhouse gas reduction efforts.
Climate Action Campaign's Capretz said she expects the city to take up to two years to fully set up a community choice program, which involves hiring staff, lining up energy procurement contracts, securing regulatory approval and establishing the program's governing structure.