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Report Casts Serious Doubt on SDG&E’s Green Power Plan

A city-funded review by an outside consultant found SDG&E’s offer to provide city customers with 100 percent green power “gives little or no information about the approach, costs or risks,” and may threaten the city’s ambitious plans to fight climate change.
Community choice aggregation supporters

Community choice aggregation supporters rally in downtown San Diego. / Photo by Adriana Heldiz

Last fall, San Diego Gas & Electric said it could provide city customers with 100 percent green power in coming years. At first glance, the offer was remarkable for a company with “gas” in its name.

But the company’s plan isn’t much of a plan, according to new review of SDG&E’s proposal paid for by the city.

The review found that SDG&E’s offer “raises more questions than it answers,” “gives little or no information about the approach, costs, or risks,” and may well threaten the city’s ambitious plans to fight climate change.

Right now, the power company is scrambling to maintain its monopoly. A 2015 city rule says all electricity sold within city limits must come from renewable sources within two decades.

Some city officials think the city could meet its goal and also provide cheaper power than SDG&E if it creates its own government-run agency to buy and sell green energy. Mayor Kevin Faulconer’s administration is working on a plan for such an agency but has given SDG&E a chance to hold on to its monopoly, if the 140-year-old company changes how it does business.

SDG&E said it could change. In October, it offered to team up with the city to buy green energy. The company would continue buying and selling power, but the city could have more control over what kind of power that was.

The company’s offer was 130 pages long, but lacked many details. Some of SDG&E’s critics laughed at the proposal in private and worried it was just a delay tactic. For one thing, a unique partnership between a shareholder-owned power company and the city would require special approval by the California Public Utilities Commission – an unpredictable bureaucracy that works at its own pace.

The city hired a consultant, Oakland-based MRW & Associates, to pore over SDG&E’s offer. The review, released Thursday, is not flattering to the power company.

MRW said SDG&E failed to offer details and certainty.

That’s a problem, because if something goes wrong along the way, the city may be unable to meet its climate goals.

In a statement, SDG&E said the MRW review left out critical facts and context and offered to meet with the consultant and the city to talk more, plus it plans to respond to questions MRW said were unanswered.

“Our response provides a comprehensive and innovative approach to developing an energy portfolio that provides the city with a means to achieving its 100 percent renewable goal by 2035,” SDG&E spokesman Joe Britton said in an email. “Our proposal recommends a flexible procurement plan to give the city an attainable path to realizing its greenhouse gas reduction goals, along with other stated priorities related to safety, reliability, local economic impact and affordability.”

While SDG&E is currently the greenest major electricity provider in California – about 43 percent of its power is renewable – it has historically been unable or unwilling to abandon natural gas, which it burns to create about another 42 percent of its power. So, saying it could try to get rid of gas was a big step in its own right. (This doesn’t count gas that is used in ovens and water heaters, just gas that is burned to make electricity.)

In its offer to the city, SDG&E seems to be waiting on the city to tell it what to do – what the company calls flexibility. But it’s possible this strategy is rubbing some city officials the wrong way, because they have repeatedly made clear what their goal is: to provide green energy across the city by 2035 – a goal the mayor has mentioned in each of his last four State of the City speeches. If city officials agree with MRW that SDG&E isn’t offering a clear and concrete way to make that happen, it’s possible they will conclude SDG&E is not a sincere partner.

On Thursday, the city released a separate but related review by MRW. That review looked at a study by another consultant the city released last year. (Yes, the city paid a consultant to do a study, and then paid another consultant to review that study.) That earlier study concluded the city could provide greener, cheaper power by forming its own power-buying agency to compete with SDG&E.

MRW found a few problems with the earlier study. For one, it relied on a “crude” way of predicting SDG&E’s future rates. SDG&E’s allies made the same point last year to argue that the city might be unable to truly provide cheaper power than the company.

Ironically, MRW found a similar problem in SDG&E’s own proposal, because the power company did not provide the city with rate forecasts.

Disclosure: Mitch Mitchell, vice president of state government affairs for San Diego Gas & Electric, is a member of Voice of San Diego’s board of directors.

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