Community Power Leaders Steaming About SDG&E Price Cut Right Before Consumers Compare Rates

When San Diego and other cities created public power companies to compete with San Diego Gas & Electric, they promised the competition would create lower prices. But now as the comparison between the new groups and SDG&E is about to arrive in every customer’s mailbox, SDG&E is lowering its prices in a way the new competitors say is deceptive.  

Soon, ratepayers will receive a piece of mail comparing energy rates between the competing power providers. On it, customers will see the average monthly bill from San Diego’s new public power companies, which vowed to be cheaper or at least more affordable, are now generally more expensive than SDG&E, from a few cents to a full dollar more depending on the city in which you live. 

For the new agencies that promised lower rates, this is an unfortunate development and one they say SDG&E can’t sustain. They’re challenging the utility company’s price decrease at the state level.  

“This situation is temporary. We know SDG&E’s rates will be going up in 2023,” said Barbara Boswell, CEO of Clean Energy Alliance, a new government-run power company selling energy to Carlsbad, Del Mar, Escondido, San Marcos and Solana Beach.  

Cities all over California are banding together to form government-run power companies like Clean Energy Alliance to compete with private ones that have ruled the energy space for more than a century. They want to provide 100 percent renewable energy to participating cities faster and cheaper than the monopoly, investor-owned companies have been willing to do. Clean Energy Alliance, for instance, has a goal of being at least 2 percent cheaper than SDG&E, Boswell said.  

The new agencies purchase the power and the utilities, like SDG&E, still manage the power lines that deliver it. Consumers were supposed to benefit from the option.  

June was a critical month for community power in San Diego as thousands of customers automatically rolled over from SDG&E to that service, as is required by law. Customers can choose whether to opt out of public power and stay with SDG&E for another year.  

Just before that date, SDG&E let California’s state regulator know it was lowering its rates, which went into effect June 1.  

San Diego’s two public power companies challenged SDG&E’s sudden price drop at the state Public Utilities Commission, arguing SDG&E is under-collecting money from ratepayers based on an inaccurate forecast of how much energy will cost the rest of the year. SDG&E will eventually have to raise rates again to make up for that under-collection in 2023, attorneys representing public power argued.  

That’s on top of what the utility already announced: a 9 percent rate hike in 2024.  

“If this is true … SDG&E customers are going to see some steep increases in January and that’s just not fair,” said Joe Mosca, chair of San Diego Community Power’s board during a July meeting.  

San Diego has two public power companies: one representing a group of North County cities called Clean Energy Alliance and another called San Diego Community Power, representing the cities of San Diego, Encinitas, La Mesa, Imperial Beach, Chula Vista, National City and unincorporated San Diego County. Both are just getting off the ground with Clean Energy Alliance only a year into its service and San Diego Community Power recently enrolling San Diego and La Mesa customers in May. 

This means people living in those cities will pay their respective public power companies instead of SDG&E for the actual energy they consume. Everyone still gets a bill under the SDG&E masthead, but there’s a new line item called “CCA Electric Generation,” which shows the public power charge.  

The disagreement at hand is over how much energy SDG&E predicts its ratepayers will need in the coming year. That’s called an energy sales forecast. Once the utility has a good estimate of how much energy their customers will need, then they buy the energy. That cost is divvied out to customers.  

In a June 13 response to public power companies’ protest of the alleged rate under-collection, SDG&E said it’s following the rules and direction from the Public Utilities Commission. The commission didn’t require the company to update its cost-of-energy forecast, the company wrote. Public power companies had an opportunity to ask state regulators to ask SDG&E to make such an update, but they did not, the utility said.  

“This argument wholly lacks merit,” SDG&E wrote.  

SDG&E declined to comment further on the story, citing a state-mandated code of conduct. The utility added that it was making some changes in the timing of how it filed different forecasts with the state regulator, which SDG&E said should help make this process more efficient.  

This isn’t the first time someone fought SDG&E’s cost-of-energy forecast. The California Public Advocate’s Office, a government watchdog, took SDG&E to task over its 2021 energy sales forecast, arguing that, this time, the utility was over-collecting – or overestimating the cost of energy and therefore charging people more than it needed to.  

Though customers would eventually get a credit on their bill if the utility overcharges, that still creates an atmosphere of instability for customers who would suddenly see a spike in their energy bill.  

The Public Advocate’s Office argued SDG&E was using energy sales data from 2019 to predict how much it would sell in 2021. But people used a lot less energy at home that year compared to 2020, when the COVID-19 pandemic sent scores of people inside for most of the year.  

“That would have led to unnecessarily high rates and revenue overcollection from customers whereas,” said Cindy Li, who oversees the Public Advocate Office’s watchdogging over electricity pricing. “We’re trying to protect customers from that.” 

The boards of San Diego’s public power companies strategized how to explain that their price is temporarily higher than SDG&E’s in the upcoming rate comparison mailer. They continue to argue their energy is cleaner, about 50 percent renewable, while SDG&E’s hovers around 31 percent.  

At a July meeting of San Diego Community Power, board member San Diego City Councilman Joe LaCava said the big difference between public and private power also comes down to transparency over rates.  

“We’re not hiding or running away from it, we’re openly discussing it,” he said. “I’m pretty sure SDG&E didn’t open their doors to anybody …. on how they’re making their decisions.”