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Residents buying all their energy from San Diego Gas and Electric could see a $34 increase in their average monthly bill on January 1, more than the utility forecasted earlier this month.
SDG&E presented details on the hike to the San Diego City Council Tuesday, part of a new series of public rate disclosures the utility agreed to provide as part of a 20-year renewed franchise agreement with the city.
But that presentation didn’t tell the full story of the energy price increases San Diegans should brace for next year.
San Diegans pay for two basic things on their utility bill: the cost of buying the energy itself, called generation, and the cost of delivering the energy over poles and wires. SDG&E presented the price increase on the delivery of electricity. That’s because, in June, San Diego customers began buying their actual energy from a new public power company San Diego Community Power, unless they chose to continue buying from SDG&E.
Ratepayers living in one of 14 jurisdictions that are part of a public power company now pay that public power company for the energy itself and SDG&E for delivering it. About 62 percent of SDG&E’s customer base buys power from one of these public companies.
For San Diego Community Power customers, the SDG&E portion of their bill – the electricity delivery rate – is slated to increase about 8 percent on January 1. An average customer using 400 kilowatt hours of electricity monthly would pay about $15 more per month.
Among SDG&E-only customers, though, the average monthly bill would rise an estimated $34 per month. That includes electric delivery and generation, an extra $28 per month, and gas delivery costs, expected to rise $6 per month. However, that $34 monthly rate hike will likely be more because it doesn’t include the cost of the gas itself. Natural gas prices change on a monthly basis so its cost won’t be factored in until later in the year.
Adam Pierce, head of SDG&E’s customer pricing, said these cost increases are due to the utility is investing more in grid safety and reliability, like hardening the grid against wildfires, and because natural gas prices are driving up the cost of electricity.
“We’re at a 14-year high for natural gas and because our electricity supply has a lot of natural gas in it, when natural gas prices rise, the cost of electricity also rises,” Pierce said.
Local public power companies have been battling to keep their rates under SDG&E’s. They accused SDG&E of artificially lowering the price of their energy to make public power look more expensive earlier this year. Attorneys for public power argued with the Public Utilities Commission that SDG&E would likely have to again raise rates in 2023, as it is now doing.
“I want to be very clear there was no intent of lowering our prices intentionally,” said Scott Crider, senior vice president of external and operations support at SDG&E. “Quite frankly, this (was) the first time we’ve been criticized for lowering prices for customers.”
It’s unclear whether those public power companies will be able to make good on their promise to keep rates lower than SDG&E next year. The governing boards made up of elected officials from its respective cities don’t set rates until late January or even February, after the state Public Utilities Commission officially OKs SDG&E’s rates.
Late Monday, San Diego Community Power spokeswoman Jen Lebron said the utility was reviewing SDG&E’s October update.
“We’re working to determine the impacts to customers’ total bill, as well as the commodity rate versus transmission and delivery fees,” she wrote. “San Diego Community Power is aware of rising costs throughout the region, which is why we are committed to a transparent process and providing competitive rates for our customers.”