So you want out? It’s gonna cost you.
San Diego Gas and Electric says that if the city wanted to form its own public energy grid, it would have to cough up about $8 billion. That would be enough to buy the poles, wires and substations — and physically separate from the grid.
That’s several billion dollars more than consultants hired by the city came up with in a 2023 study that said municipalization — shifting a privately-owned power grid to one held by the government -– would eventually save ratepayers money.
SDG&E hired its own consultant, Concentric Energy Advisors, Inc., to study the same question in the face of a proposed ballot measure by a group called Public Power San Diego to create a municipal utility by a vote of the people. SDG&E’s consultants say, all-told, the city would be out $11 billion if it includes the money it makes off SDG&E via property taxes and its franchise fee contract.
The franchise fee contract is like a rental agreement: The city (the landlord) signs with a private utility company (the renter) saying, sure, you can build your stuff on public land — typically along the public rights-of-way that border streets. But in exchange, you have to pay the government a fee (the rent) to do so.
Except SDG&E doesn’t pay that rent. Ratepayers do in the form of recouped franchise fee costs on their utility bill. That fee generates anywhere from $50 million to $80 million for the city’s general fund each year.
The Concentric study is more evidence that SDG&E is taking the public power ballot measure seriously. The company formed its own political action committee, Responsible Energy San Diego, to fight the initiative.
“We want customers to understand what a huge risk this is to the city,” said Scott Crider, a senior executive at SDG&E and a principal officer of the PAC.
Bill Powers, a leader of Public Power San Diego, said SDG&E’s study throws the city’s studies “under the bus.” The city has done three studies now since 2017 that tell us the value of SDG&E’s city grid is $2.5 billion, at the high end, Powers said.
There’s growing tension between public and private power as energy costs continue to rise. About 26 percent of SDG&E’s customers are at least one month behind on their energy bills. Critics point to the fact that SDG&E’s posted record profits two years in a row.
Use something like imminent domain to buy them at the price the City says. It’s on City property already anyways, don’t let SDGE be a bully
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What a joke sdg e . Two years of profits. Two, thanks for obviously wanting tax payers to fund your outdated infrastructure, as well as deceiving customers about what their available rates actually are. What a joke . So profits that make the oil industry jealous aren’t enough to improve the safety hazards that represent our current grid ? All these decades of rate increases but not a drop for infrastructure? But now I am to pay for the power that I produce to put it back on the grid? Possession is nine tenths of the law… ill keep my own power don’t let the door hit you on the way out. Absolutely disgraceful. How can you call yourself a business with a civic duty. Your only duty is to your profit margin and it shows.
The buy out and separation cost is just the beginning in cost for the city to purchase the pipes & wires. I saw no mention of how the city plans to maintain the infrastructure including pipes, wires, poles, transformers, and more leading to homes & businesses. The required skill set of linemen, substation workers, troubleshooters, engineers, low pressure & high pressure gas service techs for installation & gas leak repairs, dispatchers, etc., would have to be hired by the city to maintain their own customer base.. Would require response 24/7 that SDG&E would not be required to work on customer, the City’s equipment once it is owned by the city. Not to mention once the city cuts ties from SDG&Es infrastructure, the city would have to come up with its own billing system & require hiring employees to do so and we’ve heard what’s happening with their water meter billing system. Setting up & billing the gas, electric & solar billing rates is very complex.
The city, the city residents & city businesses need to take a very close look and the big picture before they bite off more than they can choose.
They can hire the same union workers!
Stop the scare tactics.
You literally just hire the same people that used to work for SDG&E. Stop being silly.
Let’s see. . . it takes the city 2 yrs to fix a broken streetlight, our roads look like a 3rd world country, our drainage system has fully grown trees growing in the canals, and it took a month to set up help centers for the flooded residents.
Now the city is proposing to take of our power system? So when the power goes out, you call the “Outage Line.” It takes an hour to get through. The person at the call center tells you that your outage is on the list, estimated repair is in 2027.
Greedy Corporations, record profits at the cost of human lives! Shame on you SDG&E
The city should use eminent domain and seize all the lines, transmission stations, etc. We have paid for the upkeep through the fees we pay. We have paid for expansions with public bonds. They should not be able to claim ownership of the lines outright and no matter what, they should not be allowed to set the price to take them over.
And we’ve been paying extra for 20+ years for promised underground utilities that have never been delivered. I think the harder SDG&E pushes back, the more closely we should consider this. The near universal experience of city owned utilities is that the costs to the consumers are far lower.
Think of the coast savings. By not paying off local leaders to look the other way…
As bad as I don’t want gouge and extort, is as bad as not wanting an unreliable mismanaged city taking over
Forget eminent domain. We are the people, NOT THEM. It was our money that put those lines and poles into place.
Time to act like our forefather would.
Given that SDG&E made one billion in profits last year according to Sempra, its parent company, it’s still a great deal for customers especially considering that the buyout financing will be structured over years.
Yep, you actually did the math here, that profit margin is pure waste unless you’re an investor in Sempra Energy. Even given their own biased study and their estimated buyout (which the city could negotiate downwards), this still has us saving billions in ten years.
The article included “…-and physically separate from the grid”, but then mentioned nothing more on this reliability (vs economic) based topic. Would the SD muni owned wires be physically/electrically separated from the non-SD muni distribution system still owned/operated by SDGE? If yes, definitely need more info on this aspect of the proposal.
so SDGE had net profits of $900M and Sempra earned $3B, so $3.9B from San Diegans. which means that’s 2.8 years to recoup costs, or 5.6 years if we cut our power prices in half. with literally the same workers doing the same jobs, the same union, everything.
remember profits are what’s left over after they’ve already paid the employees… arguably there should never be profits, because the people doing the work earned that money for the company. and right now it’s going to stockholders and executives, not people doing the work
Haha, SDGE worried about people’s money! Very funny. SDGE must go. Corrupt company, ran by Newsom’s cronies.
Somehow still sounds cheaper to cut ties. They say $8B like that’s not normal profits for them over a couple years. Rather pay that to leave than pay that anyway in profits to some rich people.
Visit http://www.powersandiego.us to find the petition to sign to get it on the ballot to FIRE SDG&E and replace with a non-profit utility!
There is no legitimate reason not to buy them out. We paid for the original infrastructure, the same people who work and repair the lines for SDGE would keep there jobs (get rid of top management of course ), the profit SDGE makes now would return to the people to support lower electrical costs and affordable solar, and we, the public, would have more control over the grid. Don’t believe their lies. Go to the data for the truth. Use your vote to make sure only people who support the public good stay in office. Let’s clean house!