San Diego mayor takes first step toward a city-run electric JPA

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The San Diego mayor wants to create an alternative to the city's investor-owned electric company.

After three years of weighing options, San Diego Mayor Kevin Faulconer announced late Thursday during a presser at the Alvarado Water Treatment Plant that he wants to create a regional joint-powers authority aimed at lowering energy costs for ratepayers.

The new joint-powers authority would take over the “responsibility of purchasing power for its residents and, potentially the San Diego region,” Faulconer said.

The mayor now has to present his plan to the City Council for its approval. It's expected to take several years before the city would actually be providing power to residents.

The water treatment where the presser was held is where the mayor first introduced the draft Climate Action Plan in 2014 with then-City Council President Todd Gloria during Faulconer’s first year as mayor.

“San Diegans deserve access to clean energy at a price they can afford,” said Gloria, who has served as a State Assemblymember since December 2016. “Community choice makes that possible and truly enables each of us to create a safe and clean future for our children and grandchildren.”

The mayor selected Community Choice Aggregation as the preferred pathway to reach the 100% renewable goal in the city’s Climate Action Plan by 2035.

"This gives consumers a real choice, lowers energy costs for all San Diegans, and keeps our city on the cutting edge of environmental protection," Faulconer said.

Electric utilities have been raising rates as the shift to green-energy sources cuts into their bottom line. San Diego follows other states and cities in California that are exploring different methods of meeting their communities electric needs in a manner that dovetails with environmental mandates.

While evaluating potential pathways to reach the renewable energy goal, one of the biggest drivers of the decision was the ability to provide competitive pricing for ratepayers.

The new JPA would create healthy competition to benefit San Diegans, lower energy costs by 5% or more for ratepayers, and help the City reach its renewable energy goal by 2035 – a decade ahead of the state’s goal, Faulconer said.

The mayor will now seek City Council approval of a resolution of intent to establish a Joint Powers Authority that would implement and operate the CCA and allow other cities and government agencies in the San Diego region to join. A regional approach would allow for greater negotiating and buying power as well as create efficiencies in operations and service, according to the mayor.

The city conducted a CCA feasibility study in 2017 that included extensive analysis and third-party peer review. It concluded that the CCA program would be reliably solvent and financially feasible. The City then tasked MRW & Associates — a firm with more than 20 years of experience advising the City, other municipalities and utilities on energy issues — to develop a business plan for the CCA.

Earlier this month, the California Public Utilities Commission (CPUC) made a final ruling on exit fees — the charges ratepayers pay to switch from an investor-owned utility to a CCA — that allowed the City to determine the financial impacts of creating its own. With this new information, the city now estimates that a CCA would have the ability to provide a cost reduction of 5% or more compared to the utility’s energy generation rates residents and businesses are currently paying.

Several other cities in the region are currently exploring the feasibility of a CCA and have expressed interest in joining a Joint Powers Authority.

“San Diego joins other cities in leading on California’s clean energy future,” said Jodie Van Horn, Director of the Sierra Club’s Ready for 100 Campaign. “This model is an answer for the public’s desire for cleaner air and a healthier place to live for all communities, especially low-income communities of color.”

The creation of a regionwide CCA will be a multi-year process. After the formation of a JPA and appointment of its board of directors in 2019, the board would then hire an executive leadership team, including a chief executive and chief financial officer, which would guide the JPA through the CCA implementation process. The JPA would then seek CPUC approval with the goal of delivering power as soon as 2021.

“We have an opportunity to create a structure where all San Diegans will have a choice in how their energy is created and delivered,” said City Councilmember Georgette Gómez. “I look forward to the next steps and making sure that all San Diegans benefit from what we do here.”

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