Is the public better off sticking with corporate power providers like SDG&E, or would it be better to switch to a non-profit utility provider? That is the question San Diegans are increasingly asking themselves.
SDG&E is a known provider with a long history. Switching to other alternatives is more speculative, though there are advantages and disadvantages to each form of utility ownership and power distribution.
Hoping to shed some light on this hot-button issue, the San Diego Community Newspaper Group reached out to two locals involved in the Pacific Beach civic scene to do a Q&A to get their contrary perspectives.
Speaking for switching to nonprofit ownership of utilities is Carolyn Chase, a PB community planner and former San Diego City planning commissioner. Favoring the corporate perspective is Louis Cumming, a retired financial industry executive who was PB’s “Honorary Mayor” in 2015.
Q. Why is SDG&E a superior alternative, or not, to supplying San Diego’s power needs now and into the future?
Chase: Ownership and control by the people of San Diego of the electric distribution grid is needed to provide rate relief to residents and to best address climate change. The rates of “every other” nonprofit utility in California are lower than every for-profit utility. Nonprofit utilities are just that, they take away the profit motive and necessity to perform for shareholders out of the equation. So that’s how we can say that people will save money when we get public power because structurally, the costs are at least 20% lower.
The mission of the Power San Diego electric utility is to provide its customers in the City with reliable, affordable electric service in the most transparent, effective, and affordable manner possible. They are run and managed by professional public utility managers who make great salaries but not the excessive multi-million dollar packages afforded in for-profit corporations including Sempra/SDG&E.
Cumming: Power San Diego (PSD) vs. SDG&E. Heart vs. mind. Emotion vs. analysis. PSD is basing its action on a general frustration ratepayers have over the electricity rates currently being charged by SDG&E instead of on a “full” knowledge of what it will take to create an operational MEU (municipal electrical utility). There are so many critical components to the making of this decision that are lacking in the public domain that it borders on being reckless, insofar as hoodwinking the general public into thinking that an MEU will bring a new billing nirvana that will save them dollars every month. This is deception on steroids.
Q. Are nonprofit municipal utilities structured differently than corporate ones like SDG&E?
Chase: The proposed structure for the nonprofit includes a five-member expert board, competitively selected senior professional management, and a nine-member citizen’s oversight committee. Ultimately the budgets would be approved by the City Council as one of their Enterprise Funds. Enterprise Funds are rate-based and restricted funds and in San Diego, they exist for sewer, water, landfill, golf, and maybe others.
Cumming: What will the board of directors equivalent be for PSD? Will it be composed of government bureaucrats with no experience? Or will it be business-knowledgeable and experienced folks? Will an annual retainer be paid to all outside board members? At what cost? How will the day-to-day operational staff, i.e. engineers, electricians, office staff, etc. be acquired? No doubt a significant number will have to come from SDG&E. They are probably all unionized, so will PSD have to match their contract terms in effect on the transfer date? What are those terms?
Q. Is it possible to form a nonprofit municipal utility that is both practical and cost-effective?
Chase: Yes, three independent municipalization studies for San Diego, one by a non-profit (2017) and two by the City (2020, 2023), have concluded that the City should proceed to form a public electric utility. This is what the Power SD proposal does based on the most recent study estimates. Also, non-profits rank high in customer service and reliability. SDG&E will likely trumpet the risks of public power, however, it does not rank very high for reliability. SDG&E’s plan, approved by the California Public Utilities Commission, is based on importing expensive remotely generated electricity and includes rate increases of 10 percent per year for the next four years, on top of the already doubled rates over the last seven years.
Cumming: A PSD, as a city-owned MEU, is not regulated by the state but rather is regulated only by its “appointed” board of directors, which could have carte blanche to issue debt without end without City residents having to give any further approvals via the ballot box. How scary is that?
What is needed is a detailed business plan to include cash flow projections by month for the initial (PSD) start-up period, however long that is, before achieving operational status. Without such a BP the PSD ‘movers’ assertion that PSD will generate ratepayer “savings” of approximately 20% is just that, an assertion not supported by a BP, which should be available for the public to study. Instead, we are asked to accept their word. And when the magnitude of this initiative is envisioned, that is just not good enough.
