The Morning Report
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San Diego Mayor Kevin Faulconer is moving ahead with the city’s plans to buy power from someone other than San Diego Gas & Electric, but he’s given the power company a chance to make its case to preserve its monopoly.
The city has an ambitious plan to fight climate change. It says 100 percent of electricity sold within city limits must come from renewable sources by 2035. Right now, SDG&E is the greenest major power company in the state but still gets most of its power by burning natural gas.
Since the summer, the City Council had been heading toward a vote on whether the city should begin buying power for the city’s 1.4 million residents from someone other than SDG&E. Dozens of cities across the state are talking about parting ways with local power companies and forming public power agencies, known as community choice aggregators, or CCAs. The mayor wants to delay that vote, which had been expected to happen in the coming weeks.
Instead, Faulconer wants the city to develop a business plan for separating from SDG&E, though the company would still deliver the power through its poles and wires. At the same time, Faulconer wants the city to assess a recent offer the company made to reduce its greenhouse gas emissions.
At first glance, the mayor’s move seems only to delay a final decision, and both environmentalists and SDG&E’s allies cheered the move.
But, at least for now, the mayor has in fact advanced an environmental cause that some of SDG&E’s allies have been lining up to delay indefinitely or kill off entirely.
“We consider this a win because he’s committed to moving community choice forward,” said Nicole Capretz, a former city staffer who championed the city’s plan to fight climate change and now runs the nonprofit Climate Action Campaign.
The mayor hasn’t, to be clear, said the city should form a CCA, but he has indicated it deserves further serious study. If the city was going to form a CCA, it would need to do what’s known as a business plan. That was going to be voted on by the City Council. Instead, the mayor simply said the business plan should happen, meaning he avoided having a showdown at the City Council where SDG&E’s allies could lobby to kill the plan and the whole CCA movement in San Diego.
Compare the mayor’s decision to what the County Board of Supervisors did earlier this year: Faced with questions about whether community choice made sense or not, the county decided not to study the idea. Faced with similar criticism, the mayor decided to study it further.
It has seemed for a few months that the mayor has been playing SDG&E against a hypothetical CCA. The city, for instance, released a preliminary study by outside consultants this summer that said the city could provide cheaper and greener electricity than SDG&E. But the study also found the city couldn’t abandon gas within the next decade and still beat SDG&E’s prices. Yet the mayor announced that the city had “at least one option to completely power San Diego with green energy.”
That could have justified a decision to leave SDG&E, if need be. In the past, the company has successfully fended off energy choice across the county – now it had a serious challenge on its hands.
SDG&E recently made a new offer to help the city meet some of its climate change goals. That offer remains sealed, but should be made public in coming days. It seems likely the offer shows the company more interested in trying to meet the city’s climate fighting goals than past offers.
“We stand ready to work with the city of San Diego to develop an energy portfolio that moves the city toward achieving its 100 percent renewable goal by 2035,” SDG&E spokeswoman Christy Ihrig said in an email. “We propose working in partnership with the city to find the best path to achieving greenhouse gas reductions, along with other stated priorities related to safety, reliability, local economic impact and affordability.”
The question is whether it pencils out for the city.
Greg Block, a spokesman for the mayor, said in an email that the city is excited to have two options and that’s why the mayor wants to study both.
The city has already determined a CCA is realistic, under certain conditions, but it has yet to conclude that SDG&E’s offer is similarly realistic.
Now, though, the major decisions of what to do won’t be made for months more.
The mayor and everybody else are waiting on a ruling from the California Public Utilities Commission about what kind of “exit fees” SDG&E and other power companies can charge CCA customers. State regulators are wrestling with that decision and don’t expect to make a ruling until July. If the exit fee is too high, power from CCAs could be too expensive to be able to justify its costs to the public.