Our Power, Our Choice

Can SDG&E Offer San Diego Green Power While Locked Into Gas?

Excerpted from the Voice of San Diego, May 2, 2018 and May 15, 2018; by Ry Rivard

We would like to direct your attention to two recent articles in the Voice of San Diego by Ry Rivard, who reports on water and power issues. SDG&E has countered the City of San Diego’s pursuit of a Community Choice Energy provider of electricity with an alternative proposal that would commit them to meeting the city’s goal of 100% clean energy by 2035. However, besides not clearly outlining a plan of action, SDG&E continues to expand their commitment to burning gas to generate electricity, calling into question if they are serious about embracing the city’s goal.

We highly recommend that you read both articles, as they are comprehensive and go in depth into the issues. Due to their length, we are only attempting a high-level summary of the salient points in the articles, along with some of our own commentary.

The first article, The City’s Two Paths to Clean Power, leads off with: If the city creates its own power utility, that agency would likely buy power from the energy market at first, and eventually build its own projects to generate power. Or, the city could stick with SDG&E – but it’s less clear how the company would transition to clean power sources.

San Diego is considering two paths to get 100 percent renewable energy, mostly solar and wind, that doesn’t emit greenhouse gases. The city could form its own CCE utility to buy and sell power to its 1.4 million residents. If this happens, San Diego Gas & Electric would still own its power lines but the city would choose what power runs through them. The other path is to let SDG&E keep its monopoly but change how it does business.

The city conducted a feasibility study that determined it’s possible to start its own utility but is still working on a business plan for how it would operate. Faced with this, SDG&E made a counter offer to avoid having to compete with the city. But (quoting the article) “it’s so thin on details that the company is testing the patience of city staff.”

If San Diego decides to compete against SDG&E, the city will join dozens of other local governments in California. By the mid-2020s, most of the power consumed in the state could come from cities that are doing their own buying and selling. At first, these local-government-run utilities buy nearly all of their power from the energy market, a pool of power that is traded every day. Some of these local agencies are also beginning to build their own power supplies or to sign long-term contracts. So far, Community Choice Energy has been cheaper and greener than the power offered by the power companies.

A 2 MW solar farm developed in their service area by MCE Clean Energy, a California CCE (source: www.mcecleanenergy.org/local-projects)

It’s not clear what SDG&E’s plans are if it’s able to hang on to its monopoly. While it’s 43% green power is the highest of a California utility, it is less than that of the eleven operating CCEs (see our comparison page), and some of its biggest projects are not local: According to a 2016 filing, three of its 10 largest sources of renewable energy are in Montana, Mexico and Arizona. SDG&E has told the city it could concentrate on building projects in San Diego and Imperial. But it has not made a firm offer about what, when, or where it would build anything. A consultant hired by the city said SDG&E’s offer lacked details. But that seems intentional, because the company doesn’t seem to have a vision yet of how it would transform the grid itself.

The second article, SDG&E Will Find it Hard to Put the Brakes on Gas, exposes the incongruity of SDG&E’s offer to get the city to 100% renewable energy while they are doubling down on gas-fired generation. The company is already locked into long-term contracts to buy gas well into the future, and is about to buy an additional gas-fired power plant.

It has become clear that SDG&E hasn’t planned for lots of gas to go away anytime soon. SDG&E owns and has long-term deals for a whole bunch of gas-fired power. The company owns four gas-fired plants – three in San Diego and one in Nevada. It’s also planning to spend $280 million to buy a fifth, the Otay Mesa Energy Center along the border. The company is fighting to keep the California Public Utilities Commission from interfering with that deal.

The biggest plant that SDG&E owns, the Palomar Energy Center, won’t be paid off until 2036. According to a review of recent state and federal regulatory filings, SDG&E’s longest contract for gas power expires in May 2042. That’s seven years after the 2035 deadline the city of San Diego set to be gas-free. SDG&E recently proposed a major new pipeline to bring gas south into Southern California, but a draft decision by a CPUC judge rejected the $640 million project because the state is trying to move away from gas. “Applicants have not shown why it is necessary to build a very costly pipeline to substantially increase gas pipeline capacity in an era of declining demand and at a time when the state of California is moving away from fossil fuels,” the draft decision said.

The two articles paint a picture that SDG&E’s offer to partner with the city of San Diego to achieve 100% clean energy by 2035 is disingenuous, given their continuing and planned investment in gas-fired electricity generation to and beyond that date.