Q: Do San Diego’s relatively high utility rates pose a long-term problem for continued economic growth?
Marney Cox, San Diego Association of Governments
Answer: NO
California and San Diego have had relatively high electric utility rates for decades, this is not new. In 1990 local prices were 27 percent above the US average and remain 33 percent above in 2013. Additional upward pressure on prices will come from state specific cap and trade rules and regulations requiring 33 percent of the supply of electricity to come from renewable sources. The state and San Diego are not good locations for heavy energy s, such as the Tesla battery plant, but other less intensive energy s will continue to locate here. A local option has been energy intensive factories locating in Tijuana.
Phil Blair, Manpower
Answer: NO
Although every consumer and business would like their utility rates to be lower, the reality is that our moderate weather and our business mix, is based much more on our innovative economy and much less on the use of high utility production and manufacturing needs.
Kelly Cunningham, National University System
Answer: YES
San Diego has some of the nation’s highest utility rates. The National University System Institute for Policy Research found local residential electricity costs averaged 12 percent more than other California investor owned utilities and 60 to 70 percent higher than competitor regions such as Seattle, Portland and Austin. This acts as a tax, raises costs of doing business and makes the region less competitive. More troubling, the gap is growing worse. Commercial per kilowatt costs increased 38 percent between 2010 and 2012. With higher labor costs, real estate, and regulatory burdens, San Diego and other California regions continue to receive poor marks by corporate executives when asked about the region’s business climate.
Gina Champion-Cain, American National Investments
Answer: NO
It’s true and of concern that all of our local utility rates are comparatively high and increasing. While this is an unquestionably negative economic factor it must be viewed as a relative component of overall cost. Rising electricity, like water costs, have only a marginal impact on all but a few industries and large residential s. Large price increases on low percentage balance sheet costs do not restrict economic growth. Residential and small business’ are the most negatively impacted groups. Help is not on the way, the Sun Tax is healthy and includes rising utility costs.
Alan Gin, University of San Diego
Answer: YES
But high utility rates a long line of issues that make if more costly to do business in San Diego. These include high land and housing costs, high taxes, high regulatory burden, and the scarcity of water, among other things. Some directly affect business, such as the utility rates, land costs, and taxes. Others impact the cost of living for workers, which raises the wages that firms have to offer those workers, which in turn means higher labor costs. This makes San Diego less competitive compared to other places in the country and even other parts of California, which could eventually slow our growth. Hasn’t happened yet though.
Steven Cox, TakeLessons
Answer: NO
I don’t believe so, due to market forces. If enough companies choose to locate in areas where their expenses are lower (cost of land, energy, etc.), it will force balance in the rates that SDGE charges in comparison to the other utility companies. However, if all utility companies have rates that are substantially higher than other areas, San Diego may eventually lose businesses to other regions.
James Hamilton, University of California San Diego
Answer: NO
While San Diego electricity costs are higher than most other cities, our mild climate helps keep the total electricity bill down for many residents. Most of the key employers in San Diego do not depend on cheap electricity in order to compete internationally, and high prices help encourage conservation. However, I believe that California needs to do more to make sure that electricity supplies are dependable, as blackouts can be very costly.
Jamie Moraga, intelliSolutions
Answer: YES
Living and working in San Diego is not cheap. Our high utility rates contribute to this by straining the pocketbook for consumers and stifling long-term economic growth for businesses. These costs could dissuade businesses from relocating to San Diego or growing or expanding their existing operations. San Diego has a lack of renewable energy resources readily available, and with San Onofre closing, delays on infrastructure projects, and state policy issues, our costs continue to rise in comparison to other cities across the country. Solar energy and the ability to put systems on residential and commercial spaces could help offset these higher costs.
Gary London, The London Group Realty Advisors
Answer: NO
My answer is by no means an endorsement of high utility rates, nor the monopoly on the delivery system which contributes to this, both of which I find disturbing. However, what matters more to our long term economic growth is the cost of housing, mostly caused by its scarcity that is festered by an incredibly long approval process characterized by environmental reviews and arbitrary politics. The rise in utility rates can also be partially offset by when and how we utilize gas and electricity, coupled by technology improvements like solar energy installations. Certainly the already high rates have discouraged high intensity s from this region, but these types of manufacturers have never been a cornerstone of our overall economic picture, so not much is lost there.
Gail Naughton, Histogen
Answer: NO
Speaking for the biotech and life sciences sector the number one concern about utilities, such as power and water, has been to ensure consistency of supply. Although the high cost of electricity can be a burden, especially to developmental stage companies, our industry requires the utilization of sophisticated equipment such as air handling systems and computer controlled manufacturing units. There are strict regulatory (US FDA, and the FDB in California) requirements on our facilities and manufacturing processes in order to ensure patient safety. Inconsistent supply of electricity could significantly jeopardize product quality as well as manufacturing licenses.
Norm Miller, University of San Diego
Answer: NO
While the high utility rates in San Diego suggest that we will rarely be the first choice for data server centers, there is a silver lining in having higher energy costs. When you invest in non-polluting energy generation such as solar and wind power, natural waste gas power and so forth you get a much higher return here. Likewise the payoff from solar skylights or tubes that bring in natural light is also greater here. This leads to a better, cleaner environment and more efficient business operations. The point is that businesses and people adapt to local circumstances and pricing.
Bob Rauch, R.A. Rauch and Associates
Answer: NO
Like other costs of doing business in California, SDG&E’s rates may be higher relative to the country as a whole but they do not give San Diego a disadvantage compared to other areas of the state. SDG&E and its parent company, Sempra, are world leaders in advanced technologies including smart metering, renewable energy, and other advances intended to reduce the utility’s carbon footprint. These technologies will create a long-term strategic advantage for our region including reduced reliance on fossil fuels, cleaner air, and ultimately a healthier environment that is already the envy of much of the country.
Lynn Reaser, Point Loma Nazarene University
Answer: YES
This is a state-wide problem. According to the U.S. Energy Information istration (EIA), California electricity rates averaged 14.5 cents per kilowatt-hour (kWh) in December, a 44 percent over the national average. Much of the differential reflects the public’s endorsement of alternative energy sources. Specifically, utilities must generate one-third of their electricity from solar, wind, geothermal, or biomass sources by 2020. This clearly puts us at a disadvantage when the price of natural gas, along with oil, has plummeted. This may be critical to achieving a reduction in our greenhouse gas emissions, but it does come at a cost.
John Sarkisian, SKLZ
Answer: NO
High utility rates contribute to the overall story of San Diego not being competitive with other areas of the country for individual’s cost of living and the cost to do business. Combine those costs with lack of affordable housing, high taxes, fees, and regulations and you create an argument against long-term economic growth. Fortunately there are far more positive factors, including a highly educated workforce, diverse entrepreneurial economy, ability to live a healthy active lifestyle and others that favor continued economic growth for San Diego and the region.
Dan Seiver, Reilly Financial Advisors
Answer:
Not participating this week
Chris Van Gorder, Scripps Health
Answer: YES
Higher utility costs — and other higher costs — make it more difficult for local businesses to compete with others outside the region. And for residential customers whose income has not increased, rising rates are a real hit to household budgets. Part of the reason businesses and families here pay more than elsewhere is that SDG&E has a smaller customer base than other utilities across which it can spread the costs of mandates and subsidies. Bearing this burden could mean businesses may struggle (and perhaps fail) to come back from the recession and consumers may spend more on their utility bill — and less elsewhere.
