Here comes San Diego Community Power: Five-city community choice energy program launches

After seven years of discussion and debate, a five-city San Diego community choice energy program that will provide an alternative to San Diego Gas & Electric when it comes to purchasing sources of power has rolled out the first phase of its operations.

San Diego Community Power — consisting of San Diego, Chula Vista, La Mesa, Encinitas and Imperial Beach — began serving municipal accounts across the five cities Monday in places like school districts, fire stations and libraries. By the end of March, about 700 municipal customers are expected to be lined up.

The community choice aggregation, or CCA, program plans to add an additional 72,000 commercial and industrial customers in June and is scheduled to fold in 695,000 residential customers next January.

With about 767,700 total customers, San Diego Community Power, or SDCP for short, will be the second-largest CCA in California.

“People were very skeptical that this was going to be possible,” said Mayor Todd Gloria, who in early 2014 helped lay the groundwork to establish a CCA when he served as interim mayor of San Diego. “Well, here we are, launching this program ... and this shows you what’s possible.”

Gloria said SDCP is key to assure that San Diego meets its climate mandate to go to 100 percent renewables and reduce greenhouse gas emissions by 50 percent by 2035.

SDCP offers two rates plans — PowerOn, which promises to deliver power from 50 percent renewable sources and 5 percent from sources that are free of greenhouse gas emissions; and Power100, a slightly more expensive option that pencils out to 100 percent renewable and carbon-free sources.

SDCP interim CEO Bill Carnahan and Chief Operating Officer Cody Hooven said that while rates vary by class, they estimate customers who opt for PowerOn will pay a monthly bill that is about 2 to 3 percent less expensive than SDG&E. If customers choose Power100, the costs will be about the same as SDG&E.

“All our advocates and families have been asking for is choice and competition, so we’re excited to be able to offer that,” Hooven said. “We can do big things here.”

Growing in popularity in California for just over a decade, CCAs now serve more than 11 million customers. With its launch, SDCP becomes the state’s 24th community choice energy program.

CCAs were created to boost the use of cleaner energy sources such as wind and solar at rates equal to or lower than investor-owned utilities.

Under a CCA model, local jurisdictions take over one portion of what has historically been a responsibility of investor-owned utilities such as SDG&E — purchasing power for a given community. The decisions regarding power purchases are made by the government officials in a given CCA.

In addition to purchasing power, community energy programs look to use the revenue they generate from customers to invest in renewable energy projects in their areas.

The establishment of a CCA does not, however, mean incumbent power companies go away. SDG&E, for example, will still perform all of the tasks outside of power purchasing, such as transmission and distribution of energy and customer billing.

In accordance with California rules, all customers in SDCP’s five cities will be automatically enrolled in the new CCA. If customers want to remain with SDG&E, they can opt out of SDCP for free.

Last week, the Encinitas City Council voted to make the slightly more expensive Power100 option the default rate for its customers. Those who want to select the cheaper PowerOn service will be able to make the switch for free by contacting SDCP.

“We saw this as an opportunity to move even faster and help everybody else,” said Encinitas councilman and SDCP board chair Joe Mosca. “How do we do that? Because we start to send market signals, saying this region wants renewable energy and we want it now.”

CCAs have their skeptics, though. La Jolla businessman Bill Roper questions whether SDCP can consistently beat SDG&E when it comes to lower rates over an extended period of time.

“They’re going to be buying power from the same people SDG&E is buying it from,” said Roper, a member of the Strategic Roundtable, a local group that includes retired business leaders. “I’m underwhelmed but I wish them well.”

SDCP supporters say a joint powers agreement among the five cities creates a legal and financial firewall in case of fiscal problems and point out that in more than 10 years of existence, no CCAs in the state have gone bankrupt.

The California Public Utilities Commission recently announced that 3.3 million residential customers across the Golden State have fallen behind on paying their bills to the major investor-owned utilities in the wake of the financial distress caused by COVID-19.

In SDG&E’s service territory, more than 300,000 residential customers — representing 22.6 percent of the utility’s residential base — are behind on their monthly bills to the tune of $145.3 million.

Since residential customers in SDCP’s five cities will automatically be enrolled in the new CCA, will those customers with accounts in arrears lead to the new CCA absorbing a big financial hit just as it comes online?

“We check our models regularly and a lot of the COVID issues are built into the models so we’re aware of that and are planning for that,” Hooven said. “We’re also seeing a lot of relief coming for ratepayers so we’re hoping that will be really helpful by the time we enroll” residential customers early in 2022.

“It hasn’t impacted us yet and it won’t for several months,” Carnahan said, “but I don’t see anything that will be devastating to us because everyone (the CCAs and the investor-owned utilities) is in the same boat.”

In addition to SDCP, another CCA in the San Diego region will soon begin operations. The Clean Energy Alliance — made up of the cities of Del Mar, Solana Beach and Carlsbad — will serve about 58,000 customers. Its rollout is scheduled to begin in May and wrap up in June.

The San Diego County Board of Supervisors is also considering forming or joining a CCA for unincorporated areas of the county.

— Rob Nikolewski is a reporter for The San Diego Union-Tribune