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Should the City Of San Diego Be Its Own Power Company?

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As Mayor Kevin Faulconer gets close to signing a new deal with a private company, activists push for “municipalization,” which means the city takes over the power grid.

Speaker 1: 00:00 For about a century, San Diego ones have been buying their electricity from San Diego, gas and electric, but the city's agreement with the company is about to expire. Mayor. Kevin Faulkner says he plans to put a new agreement up for bid to private utilities, but KPBS science and technology reporter Shalina chatline. He says community activists have another vision for the city's energy future public power.

Speaker 2: 00:27 It was a scorching hot August afternoon, over a dozen activists, equipped with signs, charts, and graphs of California. Electricity rates lie the stairs of the tall Brown skyscraper at one Oh one Ash street downtown. The building was once occupied by San Diego gas and Electric's parent company, Sempra energy activists gathered here to announce a new coalition, San Diego public power activist brought their demonstration to this building because they say it's symbolic of wasted money. Just like the high rates, San Diego gins pay for electricity.

Speaker 1: 01:05 We're paying 18,000, $18,000 a day to pay for this uninhabitable building the current franchise that SDG and E is delivering a million dollars a day in profits, 50 times larger

Speaker 2: 01:19 That's former energy journalists. Craig Rose Rose explains San Diego gas and electric customers pay the highest rates in the state. Well cities that have their own public utilities like Sacramento have among the lowest rates in the state. Another coalition member engineer, bill powers says there's an even more important reason. A public utility could help the city better reach its ambitious climate change goals. And we can finally start crafting our own

Speaker 1: 01:45 I'm destiny, which is solar power for all battery power for all. And we can do it as one big,

Speaker 2: 01:52 Another activist, Sonia Robinson of the NAACP points out there are also issues of inequity saying low income people can't afford SDG needs, high rates. We're asking for a more just relatable cause effective rates for utilities for San Diego.

Speaker 1: 02:10 Yes.

Speaker 2: 02:17 There's another reason these activists want public power. Now,

Speaker 1: 02:23 Even though

Speaker 2: 02:24 The city faces a deep budget deficit because of the coronavirus pandemic interest rates are at historic lows. And now some say is a good time for a big infrastructure investment City leaders. Aren't on board, the mayor and key members of city council say breaking away from a contract with a private utility like with STG at this time would be too hard and cost too much money. Meanwhile, activists pledge to continue their fight for public power. Now Of course the backing of city leaders is key, but we'll get to that later. The first question for most San Diego fans who've only ever paid SDG bills is how exactly would public power known as municipalization work and how hard would it be to make it happen? Let's go back a hundred years or so with energy consultant, Robert McCullough

Speaker 3: 03:23 At the turn of the last century, we had a number of technological geniuses who revolutionized the world and they brought electricity to the markets in North America.

Speaker 2: 03:37 Newers became utility moguls, turning the invention of electric power generation into investor owned profit making businesses by the 1920s, less than a dozen investor owned utilities sold the majority of electricity in the nation and secured decades of profits by convincing cities to sign franchise agreements with some local regulation.

Speaker 3: 03:57 Well that worked well until the great depression, but in the great depression, people couldn't buy electricity. So there was a wave of bankers, the stock market crashed and those massive

Speaker 2: 04:09 Conglomerates collapsed ruining investor livelihoods and leaving the energy grid in complete disarray. People began demanding a shift away from the corporations,

Speaker 3: 04:19 A desire for public power pass through the country. The city governments took control an example on the West coast, Vancouver British Columbia, Seattle is public power LA the largest

Speaker 2: 04:36 Today. Thousands of other us cities have public power around 45 provide power in California. Other major cities like San Diego and San Francisco still operate with those Relic franchise agreements with investor owned utilities from the turn of the last century. But Nicola believes the investor owned utility model. Won't last as more people opt for technology like solar panels and cities form community energy program.

Speaker 3: 05:01 People are much more efficient, all like Christie. We now can serve faster than we grow. So in me and said sustaining the Haswell. Somebody who's going to restroom and utilities. It's real challenge.

Speaker 2: 05:14 Many cities are reconsidering their franchise agreements, including places like Boulder, Colorado, and Chicago, and even San Francisco has considered the idea of buying out Pacific gas and Electric's local grid for around $2.5 billion.

Speaker 3: 05:29 It sort of boils down to, we can control our own reliability.

Speaker 2: 05:36 Very Moline is executive director of the California municipal utilities association. He says reliability and meeting aggressive environmental goals are two of the main reasons. Cities opt for public power and public utilities are just like private ones. They keep the lights on, but they're run through local utility boards, which were closely with the community. We have a different motive. They're focused on profits.

Speaker 4: 05:58 Our focus is on controlling costs and meeting all of our goals for reliability, affordability, and sustainability.

Speaker 2: 06:05 He brings up the Sacramento municipal utility district or smug as one example, the utility formed in the forties and offers residents among the lowest rates in the state with nearly half of its energy mix coming from renewable sources

Speaker 4: 06:18 And in other public power communities. And they've been pretty good, but this one is just on steroids when it comes to engaging with the community.

Speaker 2: 06:33 But some utility experts say public power. Isn't a panacea for all of our energy woes. For example, when much of California experience planned rolling blackouts during a heat wave smart also had power outages. They weren't because of a lack of power. However, they were likely caused by overheated transmission lines. Also public utilities can make board decisions and waste money just like private ones. The 1960s smug purchased a nuclear power plant repairs voted in 1989 to decommission it, but it still costs the utility and rate payers, millions.

Speaker 4: 07:05 The municipalization just changes who is in charge. What we want is good, responsive, attentive management,

Speaker 2: 07:14 Energy lawyer. Michael Wera says Sacramento is still a good example where public power works, but that's because the management is also good and getting public power in the first place. Isn't exactly a piece of cake. The city has to buy the private utilities, poles and wires, which can cost billions of dollars.

Speaker 4: 07:32 You can't just take them for free. You have to pay the owners of those assets. And there are, it is wildly complicated to arrive at a number and it's creates an opportunity to fight.

Speaker 2: 07:48 In fact, it took Sacramento two decades of court fights with Pacific gas and electric for the right to buy the infrastructure. Other cities now are also finding themselves in years of litigation like those in the South San Joaquin irrigation district.

Speaker 5: 08:03 It, it there's, you know, if we have to shut down the line

Speaker 2: 08:06 At a June, 2019 meeting the discord between the city of Mantica and the irrigation district and PGNE is palpable, here's a PGNE representative explaining why they have to shut off wide swats of power during the fire season.

Speaker 5: 08:18 You know, having to turn off the lights is not something that we enjoy and it's not a decision that we take

Speaker 2: 08:23 And mayor Benjamin Kentu responding.

Speaker 5: 08:26 Well, let me be a little crude. The people in this town are pissed and I put a notice out several weeks ago and I got 68,000 hits from people that did not know what to do, but how do you address a person who has a freezer full of food? And it's going to spoil in a couple of days. And he and other cities in the district

Speaker 2: 08:56 Have been trying to separate from PGNE. Since the early two thousands says Peter recurve, general manager of the irrigation district.

Speaker 4: 09:03 They weren't seeing the level of investment and care in the facilities that they were hoping to receive from PG at the time,

Speaker 2: 09:10 Nearly a decade, but for the district's application to take over the utility was finally approved. And then when they Sue to condemn PG and E's infrastructure and try to take it over right away, PGNE sued the district back.

Speaker 4: 09:22 PG&E actually had a Penn funded local group called stop the power grab that dried up fairly quickly because they saw that the local community was behind us

Speaker 2: 09:34 2008 and 2018. The district spent $27 million on the project. 18 million of that went to legal costs today. The region is still caught in litigation. Limbo. Would you go through that process again?

Speaker 4: 09:49 Um, you the answer's yes. And it's primarily because of the value that we think we can bring to our local constituents,

Speaker 2: 10:08 Even with widespread community support. Municipalization is often an uphill battle. Take Boulder, Colorado in 2010, the city council voted not to extend the city's franchise agreement with its investor owned utility Xcel.

Speaker 4: 10:21 We had just passed our climate action plan and our carbon tax.

Speaker 2: 10:25 Jonathan Cohen is the chief sustainability officer with the city of Boulder.

Speaker 4: 10:28 Our electricity supply, um, was the, the big issue that we needed to wrestle with in terms of meeting our emission reduction requirements.

Speaker 2: 10:36 The city wanted more control over its energy mix. And on several occasions, the public voted in favor of a public utility that would prioritize clean energy sources. But 10 years later in 2020, they're still fighting. Now the city's back to considering another 20 year franchise agreement with Xcel, but Cohen says the fight for public power was worth it because the utility has made commitments to meet climate change targets.

Speaker 4: 11:00 If they're not hitting them, we can buy a boat of the people or a super majority of council boat, exit our franchise and be done and go right back to municipalization

Speaker 2: 11:15 Back in San Diego, as the protest at one Oh one Ash street showed there's some community activists who are still motivated to go into battle for public power, but there are also forces of resistance, namely, among the bulk of current city leadership.

Speaker 4: 11:30 For me, it's an it's a no right now

Speaker 2: 11:33 Council member, Barbara Bree has consistently said public power. Isn't on the table right now. Why?

Speaker 4: 11:39 First of all, it is not free to take over those transmission lines. We have to issue billions of dollars worth of bonds and pay that money back. Second, I'm a have no confidence in

Speaker 2: 11:54 The city to operate anything. San Diego hired consultants to look into the feasibility of public power in their reports. Consultants estimate the costs for taking over STG needs, electricity and gas infrastructure as ranging from around 2 billion to just under $5 billion in all low to medium cost scenarios. The reports say the city would save money with a public power option. The report also says these scenarios are most likely to happen if the city attempts to take over. But the report also says in the highest cost scenario, public power, wouldn't be worth it while the high cost scenario is least likely. That's the advice mayor Kevin Faulkner took his office has moving ahead with an auction to take bids from private utilities to take over the franchise. As for SD genie. The utility did not have a comment for this story, but in an email statement about the franchise negotiations, a company spokeswoman said the company has been a good partner with the city and plans to submit a competitive bid, but on the sidewalk outside the one Oh one Ash street, skyscraper Cody Pederson of the San Diego Democrats for environmental action said activists, aren't giving up.

Speaker 2: 13:14 He says, the city consultants overestimated the costs of taking over the grid and that it's not difficult to find good managers for city owned utility.

Speaker 6: 13:22 So we do need a city that actually starts to work for its citizens more broadly, but this can be done. And we're already working on a path to do that.

Speaker 2: 13:29 That path is trying to work with council members to stop any vote that city council, when the mayor presents a franchise agreement. And if that isn't successful, activists say they'll continue to build community and political support for city owned utility.

Speaker 6: 13:43 Our target is to create, have municipal power in three to seven years. The path there is going to be bumpy one way or another as bumpy as losing a million dollars a day. No, I don't think it is

Speaker 2: 13:54 Since as franchise negotiations move on and the option of public or private power comes up for debate. It's important that San Diego has never lose sight of their rights to have reliable, clean and affordable electricity. Shalina Celani KPBS news.

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Maureen Cavanaugh and Jade Hindmon host KPBS Midday Edition, a daily radio news magazine keeping San Diego in the know on everything from politics to the arts.