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The city of San Diego took one step closer toward full government takeover of its privately-owned power utility Thursday.
The San Diego City Council’s Environment Committee approved a $3 million contract to NewGen Strategies & Solutions LLC to study how the city might eventually buy-out its private power provider, San Diego Gas and Electric. The full City Council has to pass the contract before that work can begin.
After a contentious battle over whether the city should renew its franchise agreement with its investor-owned utility, San Diego eventually signed up for another 20 years with SDG&E. While that dashed public power proponents’ dreams of a full takeover of the local energy grid, a contingent of councilmembers swore to keep the option on the table.
Councilmembers Sean Elo-Rivera, Monica Montgomery Steppe and Joe La Cava set up an Energy Independence Fund to bank some of the $80 million SDG&E had to pay from investors’ pockets to eventually win the 20-year contract. The money could be used to pay for a public power study or as a savings account that the city could tap to pay its way out of the franchise fee contract if it wanted.
“Last year during franchise agreement discussions, it was evident San Diegans, including myself, wanted to see the city take every step to deliver affordable energy at the best value,” said Environment Committee Chair La Cava during Thursday’s meeting, who also sits on the San Diego Community Power board. “Maybe this can be done through the current investor-owned utility. Maybe it’s best done through public power. There’s only one way to find out.”
The $3 million NewGen contract would come out of the general fund. There’s just over $2 million in the Energy Independence Fund since it was set up in 2021, according to LaCava’s policy advisor, Brian Elliott.
This study will look at what it might take to buy the grid from SDG&E and establish a fully municipalized utility. San Diego hired NewGen back in 2020 to do similar work during the franchise negotiations and, at that time, estimated the value of SDG&E’s property between $2 billion to $3 billion.
San Diego, along with a handful of other local cities, already purchase their own power through a new government-run company called San Diego Community Power. SDG&E’s role is to deliver that energy by building and maintaining the power grid.
Those cities combine their ratepayers’ purchasing power to buy enough renewable energy so residents can live on 100 percent carbon-free energy, a goal San Diego committed to reach by 2035. SDG&E provides about 31 percent renewable power. Its rates are the highest among California investor-owned utilities. San Diego Community Power provides about 50 percent renewable power in its base product.