JUICE: Community Choice Threatens SDG&E Monopoly

By Published On: April 5, 2013

San Diego Gas & Electric may become the first utility in California to serve largely as a distributor of power—shedding most of its responsibility for providing power. Eventually, the utility could merely be a backup system for distributed generation. A decision by a relatively small group of elected officials could pave the way for a community choice aggregation program that would cover most of the utility’s customers, particularly its core commercial and industrial customers. While that won’t happen immediately, it could be the ultimate end of what looks like the beginning of a trend due to the unique geography of SDG&E’s service territory and a confluence of political, economic, and social factors not seen in other utility territories in California. Geographically, the utility stands alone among the state’s investor-owned utilities with a service area tied almost entirely to one county (although it serves a small slice of Orange County). Also, the county has few cities compared to others. Both Southern California Edison and Pacific Gas & Electric serve multiple counties with hundreds of separate cities, but there are just 17 cities in San Diego County. With four of them—San Diego, Chula Vista, Santee and Solana Beach—plus the county potentially interested in community choice. Action by 30 elected local officials could set more than two-thirds of the county’s population of 3.1 million —including its largest businesses—down the road of community choice. There’s no comment on the plan from SDG&E because the utility is prohibited by state regulation from speaking out on a community choice aggregation plan or program. However, if choice could offer advantages over SDG&E’s power—on grounds of price, green attributes, local control, safety, and local economic development—it’s likely that other jurisdictions would flock to the program. While these geographic factors have always existed in SDG&E territory, what’s new is the potential for political consensus. San Diego—once a province of the U.S. Navy and assorted Department of Defense contractors, a city where retired admirals ran the local newspaper—is no longer your grandfather’s town. Since the end of the Vietnam War, the city has seen the rise of the University of California, San Diego, and assorted scientific research centers serving as a hub for the florescence of small, but highly technical businesses in fields such as medical research, pharmaceuticals, biofuels, scientific instruments, and electronics. Its population is more educated, technically savvy, entrepreneurial, and affluent than in most other counties in the state. Even some of the old defense industries—like Solar Turbines and General Atomics—have beaten their swords into ploughshares and now make products for the civilian economy. Solar Turbines—with its sprawling plant near downtown San Diego once used to make fighter aircraft—now focuses on microturbines to be used in distributed power generation. General Atomics is busy developing technology to make biofuels from algae, which could be prolifically grown in the hot desert to the east of San Diego in Imperial County. Local politics has changed to reflect the economic shift in San Diego too. While it used to be conservative, the electorate has become more liberal as demonstrated by the recent election of San Diego mayor Bob Filner, an ardent supporter of solar power and energy efficiency. Filner—who before being elected as mayor in November 2012 represented a portion of San Diego and Imperial County in the House as a Democrat—has a new vision for the region’s energy future. He seems to be picking up support. “People who use energy have to move to renewables,” he told Current. His immediate goal is to power city buildings with solar energy and to retrofit them to make them more energy efficient. The San Diego Unified School District and San Diego County have tentatively joined Filner in that goal. If they succeed, Filner said 2,000 major buildings—from schools to libraries and office buildings—would run on rooftop solar systems within five years. Filner reasons such a large purchase of solar panels would build up the local solar industry—which includes a Soitec panel manufacturing plant in San Diego and a Kyocera plant just across the international border in Tijuana, Mexico—and achieve economies of scale that would be passed on as savings to local residents and businesses that also go solar. The mayor said the city and county plan to develop a PACE financing program (i.e., property assessed clean energy program) to help finance energy efficiency and distributed generation in the region. Net metering and a feed-in tariff can sweeten the incentives for distributed generation too, he said. Meanwhile, the county is updating an energy strategy that calls for more distributed generation, including greater use of microturbines (such as those made at Solar). They can burn gas produced at landfills and wastewater treatment plants to make power, or at businesses, with loads of 1 MW or more. The county also is preliminarily studying community choice. County supervisors further want more direct access, an arrangement under which businesses can choose their own power supplier, with the utility serving merely as a distributor of that power or as a backup if the power is generated on site. It’s all part of enhancing “competition” to expand “consumer choice” and bring down the cost of power in San Diego, according to another newly elected official, San Diego County supervisor Dave Roberts. The new elected officials just might be onto something given the rise of new technology that threatens to make centralized power systems less central to the economy in the future than they have been in past. In addition, to tapping a well of local producers and installers of those technologies that stand to make money and create new jobs from a transition to renewable energy, elected officials also are tapping a well of discontent with SDG&E. The dissatisfaction stems from many recent problems, which are economic at their root. Most recently, residents are riled about the safety of the ailing and shut down San Onofre Nuclear Generating Station, not to mention paying more for replacement power. The plant is operated by Southern California Edison, which is its majority owner. SDG&E holds a 20 percent interest. They also remember a major power outage that created rush hour chaos and economic losses in in 2011. Back country residents live in fear of wildfires. The investor-owned utility was implicated as a cause of fires in 2007. SDG&E power lines were found to have sparked devastating brushfires that burned down almost 2,000 homes and structures, injured 40 firefighters, and caused two deaths. Large areas were evacuated. San Diego residents pay more for power than anywhere else in the state. And, the memory of the major escalation of electricity bills during the energy crisis of 2000-01 that threatened many small enterprises has not yet fully receded. Filner and other elected officials think that distributed generation, energy efficiency, more direct access, and an eventual shift to community choice could address the grievances.

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