City Council Moves To Establish Public-Sector Energy Provider
Tuesday, February 26, 2019
Photo by Andrew Bowen
The San Diego City Council voted 7-2 Monday to begin the process of establishing a public-sector energy provider to compete with companies like San Diego Gas & Electric.
Environmentalists have long supported the concept, known as community choice energy. Proponents say a community choice energy provider would lower energy costs, introduce a new revenue stream for the city and offer choice in the often-monopolized energy market.
With the vote, the city will begin the process of establishing a joint- powers authority to provide energy throughout the San Diego region, with the intention of inviting the county's other jurisdictions into the fold as the program gets fleshed out. The council will vote to officially form the authority in the third quarter of 2019 if it adheres to the city's current timeline.
While the concept of a community choice energy provider drew no resistance from City Council attendees, local labor representatives warned of the necessity to work only with unionized energy companies.
"Other CCAs in California include labor values like collective bargaining, project labor agreements, community benefit agreements and supporting a unionized work force," said Gretchen Newsom, political director of the International Brotherhood of Electrical Workers Local 569. "We urge the progressive members of the council to align San Diego with national progressive priorities and other CCA models and build strong labor provisions."
Council President Georgette Gomez said she would not support the joint- powers authority going forward if it does not contain protections for laborers and apprenticeship programs.
Councilman Scott Sherman, who voted against the resolution, called a provision to work with only unionized labor discriminatory against non-union employers. He also suggested that the city sort out its ongoing issues with its Public Utilities Department before dabbling in a new public utility agency.
"I would like to see competition with SDG&E, I really would," Sherman said, "because I don't think a monopoly — whether it be a government- regulated monopoly with SDG&E or a government-controlled monopoly with CCAs — is the way to go. Let's have competition and let the open marketplace dictate and the customer will actually be the beneficiary in the end."
A community choice energy provider composed solely of the city of San Diego would have the capacity to serve roughly 600,000 residents and would be the third-largest in the state. A joint-powers authority including the rest of the county's municipalities would become the second-largest in the state, according to city officials. The Clean Power Alliance, which serves nearly 1 million residents in Los Angeles and Ventura counties, is currently the largest community choice energy provider in the state.
City officials estimate the program could have a total net income of $1.75 billion from 2020 to 2035, with an average annual income of roughly $110 million. The city also estimates that it could reduce its greenhouse gas emissions by roughly 50 percent by 2035 through the community choice program.
"At the end of the day, this will help us met our greenhouse gas emissions goals, it will lower rates for consumers, we will be able to reinvest in our communities and we will create good jobs for San Diegans," said Councilwoman Barbara Bry. "It's a win-win for the environment and for rate- payers."
If the city remains on its current timeline, the joint-powers authority would hire a CEO and CFO by the end of the year and begin hiring staff and securing funding in early 2020.
City officials hope to have the project off the ground and providing energy in 2021, but would need to submit the proposal to the state's Public Utility Commission by the end of the year to make that deadline.
"For decades, San Diegans have only had one option on where they get their electricity," said Mayor Kevin Faulconer. "Community Choice will change that by injecting healthy competition into the marketplace, allowing customers to benefit from lower energy costs, and pick greener energy sources to power their home or business."
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