San Diego City Council Approves Community Choice Energy Program
Tuesday, September 17, 2019
Photo by Andrew Bowen
The San Diego City Council voted 7-2 on Tuesday to establish a joint-powers authority to buy and sell energy in competition with private companies like San Diego Gas & Electric, five days after the council's Environment Committee approved the proposal.
The council approved an ordinance implementing public sector energy service as well as a resolution authorizing Mayor Kevin Faulconer to establish the JPA, formally titled the San Diego Regional Community Choice Energy Authority. City Sustainability Director Cody Hooven said the city is likely to change the name to something more marketable in the future.
"We will be able to create our own destiny because we will have full control over where we purchase power from — and it will be clean energy," Faulconer said.
The quick turnaround was required to keep the city on its timeline to submit the community choice proposal to the California Public Utilities Commission by the end of the year, ensuring that energy service can begin in 2021. If the JPA missed that deadline, it would have to push back energy service by a year, according to city officials.
The council is expected to hold a second vote on the ordinance, as required by the city charter, on Oct. 1. On that same day, the council intends to vote on an appointee to the JPA board. The appointee and all future board members representing the city will be nominated by the mayor and approved by the council.
City officials expect the JPA board to meet for the first time in October. By the end of the year, the JPA board is also expected to select a banking partner and a vendor from which to buy energy.
Environmentalists have long supported the concept of a public sector energy provider, 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.
City officials have estimated 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% by 2035 through the community choice program.
"I'm optimistic that this will create new opportunities for San Diegans, new jobs, new businesses and that we will be a model for the rest of the country,'' City Councilwoman Barbara Bry said. "We have an entrepreneurial culture in San Diego and I think we will be the gold star for what community choice energy should look like around the country."
The proposal received some pushback from the International Brotherhood of Electrical Workers Local 569 and the Sierra Club. Both groups said the JPA agreement should have stronger language favoring labor unions and a categorical ban on nuclear power. City officials said those concerns were best addressed by the JPA board at a future meeting.
City Council members Scott Sherman and Chris Cate voted against establishing the JPA due to concerns over the makeup of the board — alternate board members are not required to be elected officials — and the efficacy of the government providing utility service.
Sherman pointed to the city's embattled Public Utilities Department, which provides water service and completes adjacent projects like replacing broken water meter boxes and lids.
"I don't know much of anything that government has done that actually reduced costs," Sherman said of his seven years on the dais.
The council voted in February to begin the process of establishing the JPA, with the intention of inviting the county of San Diego and other jurisdictions within the county into the fold. 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.
Encinitas, Chula Vista and La Mesa and have voted to join the program while the Imperial Beach City Council is expected to vote to join during its meeting Wednesday night.
La Mesa Vice Mayor Bill Baber called the JPA a "monumental achievement" of cooperation between cities, quipping that its difficult getting five cities to even agree where to go for lunch.
"I would say that the JPA in front of you is a great example of regional collaboration and the city of San Diego reaching out its hand to the other cities and saying 'we want you to be partners with us' instead of going it alone," said Encinitas Mayor Catherine Blakespear.
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