Community Choice Aggregation (CCA) is the latest fad captivating our political leaders. The proposed CCA would take over purchasing of electricity for residences and businesses, replacing San Diego Gas & Electric. Control of the CCA (also known as CCE) would be in the hands of city and county bureaucrats. The result could be another potential financial fiasco for San Diegans, similar to the massive pension problems that still haunt us today.
California has mandated that 60% of electrical power be produced from renewable sources by 2030 with a policy to be 100% renewable by 2045. San Diego has an even more aggressive goal of achieving this result by 2035. We commend our political leadership for establishing goals to reduce our carbon footprint. However, what is missing is a roap identifying exactly how we get there.
CCA proponents base their on the flawed premise that rerouting existing power through a new, untested quasi-government agency will somehow reduce prices and increase “green energy” content. This is a classic case of focusing on an achievable but useless action, much like rearranging the deck chairs on the Titanic while ignoring the large icebergs in the water ahead.
A fundamental requirement for meeting our green energy goals is the construction of more large-scale solar, wind, and hydroelectric power plants. However, San Diego’s CCA will not produce a single additional kilowatt-hour of electrical power! CCAs merely fragment the supply chain between existing power producers and local utilities, which will continue to be responsible for transportation and distribution of electricity to residences and businesses, along with providing monitoring, meter hookup and turnoff, and other critical customer service functions, including emergency response. However, this does nothing to increase the supply of renewable power to the grid.
There is some good news. The move to greener energy in San Diego is already well under way. Today, 45% of SDG&E’s energy procurement is from renewable sources, the highest level in California, and among the highest anywhere.
However, the rush to establish a CCA seems to be happening without a clear understanding of where, when and by whom additional “green energy” will be produced for San Diego County. New plants, such as a proposed San Bernardino project, are expensive, difficult to entitle and build, and routinely face community opposition to construction of utility-scale power production facilities in their area.
CCA proponents also appear to be ignoring the problems of existing CCAs. Early adopters in Solana Beach, Los Angeles and San Francisco are already experiencing unexpected costs and higher financial requirements than originally promised.
Another early warning for San Diego comes from the Clean Power Alliance (A), which serves nearly a million customers in Los Angeles and Ventura Counties, delivering electricity with only 36% “green energy” component (versus 45% for SDG&E) at a cost of only 1% less than the existing Southern California Edison (SCE) rate for the same area. According to the Ventura County Star, four municipalities that participated in the A have returned to buying some of their power from SCE due to high costs, with two more cities considering similar actions.
San Diego has a history of flawed execution with respect to complex undertakings, such as when the city increased pension benefits without providing additional funding — expecting things to somehow work out over time — and thereby becoming infamous as “Enron by the Sea.” Unfortunately, the pension fiasco is not an isolated misstep:
The city recently itted to serious problems with its water meters overbilling customers. Purchasing and managing long-term energy contracts is far more challenging than producing accurate water bills!
The county suffered a sizable financial drain when it entered the trash reclamation business until the private sector took over and restructured the business.
Fragmenting the energy supply chain doesn’t produce less expensive electrical power, nor can it result in an overall increase in the supply of green energy. The core problem is a shortage of additional production sources of renewable energy, which will not be overcome by the creation of another multi-jurisdictional, quasi-government bureaucracy.
San Diego’s elected leaders should hit the “pause button” on establishing a CCA. As citizens and taxpayers, we must insist that our leaders focus first on incentivizing and facilitating the development of locally based renewable energy production plants to meet our current and future power requirements. Rushing to establish another bureaucracy to merely reroute existing power production just so our leaders can appear to have gone green is not worth the substantial taxpayer risks involved.
Roper is a technology investor and former executive vice president and chief financial officer of SAIC. Boggs is a retired law partner (DLA Piper and Gray Cary). Meier Wright is retired CEO of the San Diego Regional Economic Development Corp. and former California Secretary of Trade & Commerce. They submitted this op-ed on behalf of the Strategic Roundtable, a bipartisan group of 38 retired and semi-retired executives from across the San Diego region.
