Leaders of San Diego’s public power company voted Monday to set electricity prices three percent lower than its investor-owned competitor, San Diego Gas and Electric.
The San Diego Community Power board could have opted to lower electricity prices even more, but staff of the three-year-old agency encouraged its leaders to focus on banking more cash in reserves so the company can better stabilize rates during future heat waves or other unpredictable changes in energy markets. The young company also wants cash reserves to earn a better credit rating so it can borrow money at lower interest rates when it builds its own energy projects.
“It means less liability for power producers and more favorable terms for San Diego Community Power,” said Lucas Utouh, the company’s director of data analytics and account services, during Monday’s board meeting. “It means savings we can pass onto customers once we achieve that credit rating.”
Six cities and unincorporated San Diego County banded together to form the government-run power company to compete with SDG&E, which has ruled the energy space as a monopoly for more than a century. San Diego Community Power was created to provide 100 percent renewable energy by 2035. Right now, its approximately 770,000 customers receive around 55 percent renewable energy with an option to pay more for 100 percent renewable power. San Diego Gas and Electric’s most recent reported energy mix is around 45 percent renewable.
San Diego Community Power controls only the electric generation portion of customers’ energy bills, but SDG&E still delivers the power to customers. Investor-owned utilities cannot profit off buying and selling energy – they instead make money by a guaranteed rate of return on infrastructure they build, like electric poles and wires. SDG&E argues it must charge ratepayers what the energy costs to generate.
San Diego Community Power isn’t obligated to shareholders to turn a profit. It instead answers to the public on its ability to deliver on the reason it was created: providing more renewable energy faster and cheaper than its competitors. In that regard, it can decide what to charge customers based on competing priorities, which is why the board considered Monday offering either a 5 percent electricity discount or 3 percent savings.
Under the new 2023 rates, an average San Diego Community Power residential customer who uses 327 kilowatt-hours of electricity would save about two dollars on their monthly bill over staying with SDG&E, according to the company’s calculations.
Customers in San Diego Community Power’s member cities and county automatically buy electricity from the public power company, unless they opt out.
San Diego Community Power’s 3 percent discount includes some other SDG&E costs that public power customers still have to pay. One of those is a charge the utility collects that pays for energy it bought for customers before they left for San Diego Community Power, a charge known as the “exit fee.”
But the company’s savings over SDG&E excludes one cost that customers have to pay. Including the cost paid to SDG&E for delivering the energy shrinks a San Diego Community Power customer’s savings to 1.5 percent.
While San Diego Community Power can offer cheaper electricity for now, SDG&E may appeal to the California Public Utilities Commission to raise or lower rates, since energy markets and prices are constantly on the move. SDG&E did so back in June, which San Diego Community Power lawyers called a deceptive and temporary under-collection of money from ratepayers based on an inaccurate forecast of how much energy would cost the rest of the year. San Diego Community Power has maintained its rates, but its electricity at that time was a dollar more expensive than SDG&E, after the utility’s rate cut.
SDG&E electricity rates indeed rose in January, by almost 20 percent per kilowatt-hour. The cost of gas, which is part of the energy mix SDG&E provides to customers for electricity, doubled.
San Diego Community Power can also choose to raise or lower rates at any point by a vote of the board. However, the company has so far committed to setting rates once per year, by February.
Oh Boy! $2 per month, that’s huuuuuge!!! If they are still here in 5 years then perhaps I’ll be interested. Based on the record of the other CCA’s that is not a sure thing.
If the CCA were a real company instead of a GOV agency they would be sued over their false claim that they are 3% cheaper than SDGE….never mind the fine print in paragraph 8 – CCA customers must also pay a resort fee which cuts the $2 / mo savings in half. No thanks , I’ll stick with the devil I know (SDGE) vs. some redundant bureaucrats, this will not end well for the taxpayers.
So you would rather pay $2 more per month, and to a company that just increased their rates 20% for electricity and 100% for gas? Great way to stick it to the libs!
p.s. It’s not a “resort fee” it is a charge that SDG&E has wrangled out of those leaving their electrical supply system to supposedly pay for long-term contracts for electricity SDG&E had bought to cover them. When SDG&E has announced they are getting out of the energy supply business, you have to wonder why they continued to buy long-term contracts for energy.
Also, this is not a GOV agency. It is a non-profit that is not part of any government body, like a water district.
The energy delivery fee paid to SDG&E is about $.35 per kilowatt hour and the energy cost is about $.10 per kilowatt hour. A 3% reduction means that the energy rate would drop to 9.7 cents per kilowatt hour. Mostly optics. Pretty good article. We need more discussion about giving choice to everyone so that everyone can choose their own energy service provider for the supply of their electricity.
If people read their energy bills they will see the cost of “generation” is not the cause of us having the highest utility rates in the US:
It’s the cost of DELIVERY & TRANSMISSION
E.g.: Over the course of 3 days I used $2 worth of electricity from SDCP
The transmission charge paid to SDGE/Sempra: $6
So 2/3ds of the electricity costs I paid were not for how much I used:
They are simply the delivery fees via miles of expensive transmission towers and lines
This is why San Diego ratepayers need to insist that the decarbonization proposal the County is working on accurately evaluates the value of locally generated rooftop solar and storage vs. these transmissions costs
The problem is: SDCP has purchased power via agreements with companies in New Mexico and other generation facilities that are 100s of miles away.
THAT’S the real problem with the SDGE/Sempra franchise agreement: We are paying them the nation’s highest utility rates, which they use to build more transmission lines, while they generate no power (sustainable, renewable, or otherwise.
And while they get more profits than ever they are paying record-breaking bonuses to their executives.
Bottom line: SDGE takes over $1 million/day out of the San Diego economy via these high rates, then passes the money along for natural gas pipelines owned by their parent corporation- Fossil Fuel provider Sempra- and contributes to our climate crisis.
“Climate crisis” Read a book for gods sake. Earths climate has been cyclic for millions of years, and will continue to be.