The Southern California city of 1.4 million residents will announce later today that it is forming its own government-run power program.
San Diego is on track to becoming the largest city in the U.S. to create a community-choice aggregation program, with a goal of 100 clean energy by 2035.
“This is not a partisan issue,” said Republican San Diego Mayor Kevin Faulconer, at a Thursday event in Los Angeles. “It’s a ‘right thing to do’ issue.”
“And we’re actually going to save dollars by doing it,” he added.
The Southern California city of 1.4 million residents will officially announce that it is forming its own government-run power program, as an alternative to service from investor-owned utility San Diego Gas & Electric. The program is expected to lower electricity rates by up to 5 percent, and achieve 100 carbon-free electricity a decade before the state of California hits that milestone.
“There are Republicans out there that are smart and are going in the right direction, and they don’t see [climate action] as a divided issue or a partisan issue…they see it as a people’s issue,” said former California Governor Arnold Schwarzenegger, who hosted the Thursday morning event at the L.A. Cleantech Incubator.
The San Diego plan is based on a sound business model and has backing from both environmental and business leaders, said Faulconer. The program is scheduled to be in place by 2022, and will automatically enroll San Diego electricity customers, although they can choose to remain with SDG&E. The propsal is still subject to final city council approval.
Mayor Faulconer’s announcement comes shortly after the California Public Utilities Commission voted to increase the “exit fees” that community-choice aggregators have to pay. CCA advocates have said the change will burden communities and stifle CCA growth.
San Diego has been weighing a move to a CCA model for several years as a way to meet its Climate Action Plan targets. SDG&E has been working with city officials on a counterproposal that would allow San Diego to contract for increasing amounts of renewables without moving to a CCA model. But on Tuesday, the utility withdrew from those negotiations.
In a letter to city officials, the utility said “there is no clear scenario” to develop a 100 percent renewables plan that would hold the city free from legal and financial liabilities for procurement contracts, as the city requested. SDG&E said it does not believe such an arrangement would win regulatory approval, “due to potential exposure to remaining SDG&E customers not covered in this program.”
The utility also cited “significant and evolving legislative and regulatory actions related to energy procurement” as a reason for withdrawing. California recently passed legislation to materially expand direct access, and the California Public Utilities Commission is considering a new procurement model in light of the growing adoption of customer choice. The CPUC is holding an en banc meeting on Oct. 29 to discuss recommended actions.
“These actions are just a couple of recent changes that will impact our ability to provide an alternative in the near term, even if the City’s financial risk priorities were relaxed,” SDG&E wrote.
Under the CCA model, SDG&E will continue to maintain transmission and distribution lines and manage customer billing, while the local government will decide what kind of power is purchased to serve the area. SDG&E’s decision to cede control of energy procurement to the city, which represents around half of all SDG&E customers, comes despite its efforts to oppose and delay the switch to a CCA.
California’s three largest investor-owned utilities have opposed CCAs since they were first formed, but were barred in 2011 from lobbying directly against them.
SDG&E and the City of San Diego will have to continue working together closely when the CCA takes effect in 2022, assuming that the plan doesn’t somehow get derailed along the way.
Working with the utility is “a big part of what we’re doing in terms of making that infrastructure, SDG&E, available for the electrification of transportation,” said Mayor Faulconer. Cleaning up the transportation sector in particular will have a major impact on reducing carbon emissions.