Some important changes are taking place in the economics of the energy industry.
Electricity rates keep going up. This is happening across the board, but there’s good reason to take a close look at the downstream effect on businesses: Rising electricity rates drive up consumer costs and cause businesses to pick up and move elsewhere. We certainly see that dynamic here in San Diego, where commercial electricity rates are among the highest in the country.
But there’s an alternative model under consideration here that can help keep commercial electricity rates down. The basic idea behind Community Choice Aggregation is that a local government agency, staffed with energy industry professionals, buys power for residents and businesses. Meanwhile, the utility continues to run the power lines and charge customers for the service. Participation is optional, and the utility continues to buy power for those who prefer to stick with their existing plans.
There are currently two of these alternative energy providers in Northern California: Marin Clean Energy (which, full disclosure, is a client of mine) and Sonoma Clean Power. Notably, these programs champion renewable energy and provide greater renewable content than Pacific Gas and Electric, the utility in that area.
The city of San Diego is in the early stages of studying this concept, and hasn’t yet started to design a program. But these alternative providers can be designed to keep commercial electricity rates down. Here’s how.
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SDG&E opposes anything that has the potential to negatively impact profits, because it is an investor owned entity that exists to reward its investors. The Public Utilities Commission approves various infrastructure costs which we (ratepayers) underwrite, along with guaranteed rates of return. Of course, the PUC is being investigated for corruption on a rather dramatic scale at the moment. Any structure that introduces competition into this rigged system would seem to be of great value to the average ratepayer. Expect lots and lots of lobbying money (underwritten by the profits that come from ratepayers) to fight it.