The possibility of moving from San Diego Gas & Electric to a public power utility is both economically and logistically feasible — but comes with an eye-popping price tag — a report presented to the San Diego City Council revealed Monday.
According to the presenters, a switch to a municipal-owned utility would lead to "greater efficiency, local control and potential cost savings." It would also require nearly a billion in up-front costs — a $612 million separation cost and $300 million in start-up costs — and could cost well over $8 billion all-told.
"We've spent millions on consultants and the findings have always been clear," Councilwoman Jennifer Campbell said. "The city cannot afford this."
The report, commissioned by the city through NewGen Strategies & Solutions and Bell Burnett & Associates, said that even with the most conservative estimate, the city's ratepayers could save $7 billion over the first 30 years of moving to municipal power — and $19 billion with the most city-friendly estimate.
Monday's item was informational only, the second phase of a study on the feasibility of switching from private to public utilities. The report also found it would take between 10-15 years if the City Council voted to fully transition to municipal power.
"The transition costs, while substantial, are expected to be dwarfed by long-term benefits," the authors of the report found.
Any future vote on the issue would likely face stiff opposition. At Monday's council meeting, dozens of IBEW 569 members spoke during public comment against any such change, saying jobs were not represented in the report and that municipalization constitutes "union busting."
Chris Cate, a former Councilman and current president and CEO of the San Diego Regional Chamber of Commerce, backed these workers.
"The risks continue to far outweigh and prospective benefits," he said.
Another large subset of the speakers in Council Chambers on Monday were from climate change activists and ratepayers burdened by high energy rates.
"We have the studies and know the facts," said Dorrie Bruggemann, a boardmember of Public Power San Diego. "Not-for-profit power will lower rates and save utility customers thousands of dollars in the coming decades. The council needs to begin the transition to public power and reduce rates for struggling San Diegans."
Councilman Sean Elo-Rivera, chair of the Environment Committee, said the speakers were focused on the wrong enemy.
"While San Diegans are fighting over scraps, SDG&E and Sempra executives are sitting fat and happy," he said. "They don't think we have the nerve to have an honest conversation about alternatives."
The report detailed Monday came with multiple major assumptions, which could vary wildly if any decision is made in the future by the council. Among these are a growing movement toward electrifying buildings, an assumed consistent annual 4% rate increase by SDG&E — owned by San Diego-based Sempra - - and if the valuation of assets the city would acquire would be impacted by depreciation and if so, to what degree.
"Significant unknowns and variables remain," the report read.
SDG&E has downplayed the feasibility of municipalizing in the past, such as in 2023 when the first phase of the report was released.
"We remain confident that once the city has all the facts, they will again arrive at the same conclusion reached in 2021 when they approved the recent franchise agreement: a long-term partnership with SDG&E remains the best option given our nearly 150-year history of providing best in class service, safety and climate innovation, and unmatched grid reliability to San Diego customers," company spokesman Anthony Wagner said.
"Our relationship with the city remains strong, and we are laser- focused on executing on the commitments made during the franchise negotiations while addressing the affordability challenge facing utilities across the country."
The utility submitted a rate-hike proposal to the California Public Utilities Commission of more than 8% just this month.
"We can and will do big things," said Council President Joe LaCava. "We need to keep our options open."
