Customers of San Diego Community Power, the community choice energy program that provides electricity generation for nearly 940,000 accounts across the county, are due to get a break on electric rates in 2024.
The SDCP board on Thursday evening approved 2024 electricity generation rates that will be 17.7 percent lower on average this year than what customers paid in 2023.
The bad news? SDCP customers will pay 2.7 percent more over the course of the year than customers who stayed with San Diego Gas & Electric as their power provider — presuming that SDG&E’s current rates stay in place throughout 2024, which is an open question.
SDCP officials estimate a typical customer on its default plan will save $14.50 on average per month in their 2024 total generation bill compared with last year.
SDCP’s new generation rates will be 23.2 percent lower during the winter months compared with last year, and 12.3 percent lower during the summer months of June through October. Averaged throughout the course of the calendar year, that comes to a 17.7 percent reduction for 2024.
“Ultimately, what our rate-setting is all about is making sure our customers get the best value possible,” said Jen Lebron, SDCP’s director of public affairs, “while making sure that San Diego Community Power, as an organization, continues to build on the strong financial foundation that we began four years ago.”
For the years 2024 through 2027, SDG&E is looking for a rate increase in the General Rate Case it has before the California Public Utilities Commission. A proposed decision from the utilities commission is expected to come out in the second quarter, with a final vote by the CPUC’s five commissioners likely coming shortly thereafter.
Depending on what the utilities commission decides, SDG&E’s rates by the end of the year could end up exceeding SDCP’s 2.7 percent differential.
Breaking down your bill
Electricity generation is just part of what customers — both from SDCP and SDG&E — pay on their monthly bills. It also includes a number of other expenses, such as the transmission, distribution and delivery costs.
For a better understanding, it’s important to look at the relationship between a community choice energy program and an investor-owned utility.
SDCP is one of 25 community choice aggregation programs, or CCAs, that have sprung up across the state in recent years that purchase electricity generation for the residents and businesses in their respective municipalities.
CCAs were created by the California Legislature in 2002 to encourage the growth of renewable energy and provide competition to traditional investor-owned utilities such as San Diego Gas & Electric by offering customers higher percentages of renewable sources at comparable or slightly lower rates.
Under the CCA model, the decisions to buy power contracts become the responsibility of local government officials.
Utilities such as SDG&E do not go away for those who opt into a CCA. They still perform every other duty outside of power generation purchases — such as maintaining poles, wires and power lines in their respective transmission and distribution systems, plus handling customer services, such as billing.
As per state rules, once a jurisdiction establishes a CCA, customers are automatically enrolled. But if customers want to remain with the incumbent investor-owned utility, they can opt out.
SDCP customers are found in seven communities in the San Diego area — within the cities of San Diego, Chula Vista, La Mesa, Encinitas, Imperial Beach, National City and the unincorporated areas of San Diego County.
Created in 2020 and serving customers since 2021, SDCP is the second-largest CCA in the state.
A breakdown on the electric delivery charges and a community choice aggregation program’s electric generation charges on a monthly bill.
(Rob Nikolewski/San Diego Union-Tribune)
SDCP customers receive their bills from SDG&E. On the first page of the monthly statement, there is typically a summary of charges — Electric Delivery, which is attributed to SDG&E, and CCA Electric Generation, which comes from SDCP.
If a customer opts out of joining a CCA, the electric delivery and generation charges come solely from the utility.
2024 generation rates
Overall energy costs — for utilities as well as CCAs — are lower this year than in 2023, for a variety of reasons, including significant drops in natural gas prices that spiked more than 80 percent last winter.
Since natural gas is a major source of power generation in California, high gas prices have ripple effects on electricity rates. But going into 2024, market prices for power are much lower than last year.
SDG&E customers who have opted to not join a CCA received a notice on Jan. 5 telling them typical residential customers can expect to see decreases of about 15 percent on their overall electric bill (which includes not only generation charges but transmission and distribution, too) during the winter months of this year.
Before adopting its 17.7 percent reduction on Thursday, the SDCP board also considered two other proposals — one that would have decreased generation rates by an average of 16.4 percent compared with last year and another that would slash rates 24 percent.
But reducing rates 16.4 percent would have translated into SDCP customers paying about 8 percent more compared with SDG&E’s current generation rates. And opting for a 24 percent reduction would have eliminated the cost differential with SDG&E, but would have eroded SDCP’s reserves and potentially put the community choice energy program in danger of not meeting state mandates to procure sufficient amounts of energy resources.
SDCP board chair Joe LaCava said the 17.7 percent option gives customers a break while also bolstering the program’s financial reserves.
“We wanted to provide as much relief as was fiscally prudent,” said LaCava, who is also a member of the San Diego City Council. “The other lever was to try to hold the line on our reserves. We’re still a young company. We’re still trying to build a reserve so that we can (establish) our credit rating, which will accrue significant benefits to our customers.”
While SDCP’s generation rates for 2024 are 2.7 percent higher than SDG&E’s, the community choice energy program has a larger content of renewable resources in its portfolio.
The SDCP default product — called PowerOn — offers customers energy that is 55 percent carbon-free while SDG&E’s comes in at 44.8 percent, according to the most recent Power Content Label the utility published last September.
“We still provide a product that is cleaner and greener,” SDCP’s Lebron said, “but we understand that every customer needs to make the right choice for themselves.”
For a few bucks more per month, both SDG&E and SDCP provide customers an option to select programs that pencil out to 100 percent carbon-free sources.
Along with signing new agreements aimed at blunting the effects of swings in the market, SDCP officials say a typical residential customer will save an average of $21.10 per month on their overall SDCP bill compared with 2023.
There’s one other community choice energy program in the San Diego area — the Clean Energy Alliance, with customers based in North County.
Its board recently decided to keep its 2024 electricity generation rates the same as 2023.
“We’ll see how things shake out with SDG&E” and its general rate case, CEO Barbara Boswell said, “and make changes if needed.”
Clean Energy Alliance’s customers are located in Carlsbad, Del Mar, Solana Beach, San Marcos and Escondido. Oceanside and Vista are scheduled to join in April , which will expand its roster to 220,000 accounts.
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