In-Depth: SDG&E's century-long monopoly ends Sunday in San Diego, Chula Vista

San Diego Community Power activates service May 1
Power lines
Posted at 4:37 PM, Apr 26, 2022
and last updated 2022-04-26 20:59:42-04

SAN DIEGO (KGTV) – Next month, residents throughout San Diego and Chula Vista will be automatically enrolled with a new electricity service provider, ending a century-long monopoly by San Diego Gas & Electric in the county’s two largest cities.

The change is designed to transition hundreds of thousands of residential customers to more renewable forms of electricity while maintaining competitive pricing.

The new provider, San Diego Community Power, will offer rates that are priced 2 percent below SDG&E’s service, at least initially. SDCP plans to review its rates about once per year with input from a board of local elected officials representing each city in its service area, SDCP chief operating officer Cody Hooven said. (SDCP has a bill comparison tool here.)

“Electricity is a traded commodity, so we don’t know what the prices will look like in the future, but what we can commit to is that we will always have as much clean energy as we can, and we will always have competitive pricing,” said Hooven.

SDCP is what’s called a community choice aggregator, a type of government-run non-profit organization that is becoming increasingly common in California. Nearly 40 percent of California’s electricity will be delivered by CCAs this year, according to trade group Cal CCA.

Customers enrolled with SDCP can choose to opt-out at any time and return to SDG&E, however, in other cities with community choice models, fewer than 10 percent of customers opt-out and there is little reason to do so at this stage, said renewable energy consultant Eric O'Shaughnessy.

“It’s proven to be a good model in California,” O'Shaughnessy said.

For more than 100 years, SDG&E has been in charge of all aspects of San Diego’s electricity. The utility generates or buys the electricity, transmits it over power lines, fixes the lines when something breaks, and sends out bills to residents.

Going forward, SDG&E will continue to handle billing and repairs on the power grid, but San Diego Community Power will take over one important part of the process: buying the electricity.

This year, SDCP began servicing customers in Imperial Beach, La Mesa, and Encinitas. Once San Diego and Chula Vista come online in May, SDCP will serve an estimated 770,000 customers, Hooven said.

Customers will be automatically enrolled in SDCP’s standard plan, which is made up of 50 percent renewable energy from solar, wind, and hydroelectric dams. SDG&E currently offers a mix of electricity that is about 31 percent renewable.

Residents can choose to pay slightly more for a 100 percent renewable energy plan, or they can opt-out altogether and go back to getting all aspects of their service from SDG&E. The lone exception is in Encinitas: customers there will be automatically enrolled in the premium all-renewable plan from the start.

The only visible difference for customers will be a single line item on the SDG&E bill.

“The reality is, folks probably won’t notice a change at all. That’s really a good thing. If nothing changes in their day-to-day and they’re just getting cleaner power at a slightly reduced rate, that’s a win for us,” Hooven said.

How can SDCP offer electricity that is both greener and cheaper? Community choice aggregators like SDCP aren’t subject to the same long-term contracts for renewable energy that the utilities are, O'Shaughnessy said.

“Renewable energy used to be a lot more expensive. SDG&E or other utilities bought renewables when they were rather expensive. CCAs are buying them when they're cheap,” he said.

Massachusetts authorized the first CCA in 1997. The model has since been adopted in Ohio, California, Rhode Island, New Jersey, Illinois, and New York. Three more states will launch CCAs soon.

“It has mostly worked,” O'Shaughnessy said. “For the most part, CCAs do get lower costs through negotiating with suppliers. Not always. A good example is Illinois.”

From 2015 to 2020, Illinois customers in these community choice programs paid higher rates than they would have otherwise, overpaying by more than $1 billion, according to the Citizens Utility Board.

However, California’s CCAs have not been plagued by the same issues, which is why the Golden State now has the largest community choice program in the country, O'Shaughnessy said.

The primary goal of CCAs in California is to accelerate the green energy transition.

In San Francisco, the model allowed the city to cut greenhouse gas emissions to well below what they were in 1990. Most customers seemed to like the service: the opt-out rate was below 4 percent in 2019.

“What we’re encouraging folks to do is stay with us,” Hooven said. “See how you like it. Maybe go on our website and play with the bill comparison tool and do some research. If you don’t like it after a few months, you always have the choice to opt out.”

Customers can switch between SDCP’s two renewable plans or opt-out at any time. However, customers who opt-out and return to SDG&E are locked into the utility’s service for at least one year, Hooven said.