San Diego’s City Council gets few chances to save households thousands of dollars, but it has that opportunity now, with the release of its latest study about creating a nonprofit public electric utility.
All studies confirm that San Diegans could save billions in coming decades by dumping for-profit San Diego Gas & Electric in favor of a public electric utility.
The latest study estimated that a nonprofit utility might save up to $19 billion over the next three decades. An earlier analysis by Public Power San Diego projected savings over that time could be up to $100 billion.
It’s logical that eliminating SDG&E’s profits will lead to big savings on electric bills.
Over the last decade, SDG&E’s profits have grown rapidly, reaching about $900 million annually. Though a one-time regulatory ruling last year decreased them substantially, there’s reason to believe the utility’s profits will rebound to their historic levels — and keep growing.
That leaves utility customers in San Diego paying more than $1 million each day just for SDG&E’s profits.
More than 40 cities and 10 million Californians already have nonprofit public power and pay substantially lower rates than customers of SDG&E. The latest report notes that customers served by nonprofit utilities across California pay about half what SDG&E charges for electricity.
Our local utility’s rates are typically the highest or nearly the highest in the nation. About 1 in 4 San Diegans are behind in their payments to the utility. The high rates are also a significant burden to businesses.
These burdens will grow, as San Diegans transition to electric cars and fully electrified buildings, which will increase electric usage.
So this recent study — technically phase II of a second study — should be the charm, the point when our city moves decisively to create the nonprofit utility that could lower rates, as it has everywhere else.
But for that to happen, more San Diegans need to understand SDG&E’s business.
It surprises many to learn our local utility earns nothing from the sale of electricity. What the utility pays for power is what it charges us. It profits largely from delivering electricity.
So SDG&E is less an electric generating company and more like DoorDash, the food delivery service. But unlike DoorDash, when you order from SDG&E, the delivery costs more than the meal.
Diving into our nearly indecipherable monthly utility bills, most customers will find their electric delivery charges exceed their electric generation charges.
That is why longtime advocates of public power want a local public utility to maximize development of in-town electric generation — to reduce those delivery charges.
By maximizing local generation with rooftop, parking lot and big-box store solar installations, backed by battery storage, a nonprofit utility would also create a more resilient electric system, minimize building generating facilities on precious backcountry lands and avoid lacing rural areas with more expensive and fire-prone transmission lines.
In industry parlance, proponents of public power call for an electric distribution utility, which would own the local distribution grid and minimize the high costs — those delivery charges — of using higher voltage transmission lines.
While San Diego’s first public power study focused on creating a local distribution utility, subsequent reports have mistakenly studied only a distribution and transmission utility.
This would shackle a public utility with the cost of buying expensive, unneeded transmission lines. It would also delay creation of a public utility because purchasing transmission assets triggers multiyear bureaucratic reviews.
So anything but an electric distribution utility — without expensive transmission lines — makes less sense and could lead to years more of paying SDG&E’s high rates.
It’s past time for the city to move forward on public power, which will take years in any case. Residents need relief from high rates and the city itself labors under a hefty and ever-rising power bill, adding tens of millions to its deficit.
As important as all that, leaders and utility customers should remember the DoorDash example: Just like home cooking, local generation is best and cheapest. And that’s what an electric distribution utility can deliver — for a whole lot less.
Rose, a former Union-Tribune staff writer, is a board member of Public Power San Diego, a nonprofit organization advocating for a community-owned electric utility to replace investor-owned utilities.