A new report to the city of San Diego found that forming a public utility company would save San Diegans money in the long-term – even assuming higher acquisition and operating costs and slower rate growth.
The city council’s Environment Committee was scheduled to hear a presentation on the study on Thursday.
“This studied the municipalization in one of the most conservative ways possible, and it still shows long-term savings for San Diegans,” said Isaiah Glasoe, program coordinator for the advocacy group Public Power San Diego.
The study, commissioned by the city of San Diego from the utility consulting firm NewGen Strategies and Solutions, LLC, estimates it would cost the city between $2.4 and $7.6 billion to buy the required infrastructure from San Diego Gas and Electric, but that transition costs would be “dwarfed” by long-term benefits.
“Every version of public power is cheaper. It's no longer a debate like if public power is cheaper, it's just a matter of like, when the savings hit and how much the savings are,” Glasoe said.
The study found that savings “would translate to billions of potential dollars governed by local decision-makers with local accountability.”
The savings could be used to reduce rates, improve service, invest in aging infrastructure, or even community programs, the report said, and they would compound over time.
“The financial benefits would potentially accelerate over time, with annual savings exceeding $600 million in later years, which could result in an average of approximately $500 per customer per year in savings,” the report said. “This would compound further past the 30-year mark, signifying that this would be a multigenerational investment for the city.”
The study estimated the city would begin to see savings anywhere from the first year to 12 years in, depending on how high San Diego Gas and Electric’s (SDG&E) assets are valued.
In a written statement, SDG&E said the study is flawed, omits major risks to safety and reliability and understates the costs of seizing its electric grid. The company values its infrastructure at $9 billion.
They also said the study doesn’t reflect established California Public Utility Commission (CPUC) requirements designed to prevent customers outside the city from facing higher rates.
“Meeting those requirements would likely require billions of dollars that are not included,” SDG&E said. “Using one of the valuation approaches that aligns with CPUC precedent, the study shows little to no financial benefit even decades into the future, and only after years of higher rates. Small changes in assumptions could erase projected savings entirely or increase costs to customers.”
Some of the cost drivers they argue are omitted or understated include: physically separating the electric infrastructure within the City from SDG&E’s regional network; boundary substations; wildfire liability and insurance; lack of access to the State Wildfire Fund; and full transmission and California Independent System Operator market participation costs.
“These gaps would, if not properly accounted for, shift financial risks onto customers and taxpayers,” the SDG&E statement said.
SDG&E rates are more than six times what they were in 2000. At the end of 2025, more than one in three customers were behind on their bill, according to the CPUC.
A public utility could potentially charge lower rates because it wouldn’t have to deliver profits to shareholders. There are dozens of public utilities in California. They charge about half the rates of SDG&E on average, according to the state Legislative Analyst’s Office.
“Fifty percent less expensive is not a drop in the bucket,” said Serena Pelka, policy advocate for Climate Action Campaign. “That is significant cost savings that can go to taking stress off of feeding your families, of having more leeway in your budgets every month.”
“The only guarantee we have with our current system and staying with SDG&E is that rates will go up year after year after year after year, and we've already let SDG&E pick our pockets for over 100 years. And it's time that we say enough is enough and we take our power back,” she said.
A public utility would also offer local control, so the city could make utility decisions that align better with its climate and equity goals, the study said.
It estimates the process of making the utility public could take a decade, even without major obstacles. Much longer, if the city and SDG&E can’t agree on a price and the city has to seize the property through eminent domain.
The push for the study stretches back to 2020, when the city was approaching the deadline to renew a 10-year franchise agreement with SDG&E.
“There was a massive mobilization of community activists and organizers to ask the city not to renew the franchise agreement and to switch to public power,” Glasoe said. “Sort of the consolation prize for the city continuing the franchise agreement was to study municipalization that would lay the groundwork for a potential negotiation.”
This “Phase II” feasibility study follows a “Phase I” feasibility study, after which the city requested a more in-depth and robust analysis.
Glasoe said there’s still a lot left to explore – like how to guarantee labor protection for SDG&E’s current workforce, how to avoid regulatory delays in the process, whether to adopt a transmission and distribution model or distribution-only, and what the governing body would look like.
“There's a lot of, like, flavors of public power, you know?” he said. “There's a lot of ways forward. I think the main point of this report, though, is that public power is certainly cheaper than investor owned utilities.”
SDG&E debates that certainty.
The study is not yet on the full city council’s agenda for discussion.
