San Diego Creating Its Own Municipal Utility Opposed by All the Usual Suspects

by on April 29, 2021 · 8 comments

in Energy, Labor, San Diego

It’s really no surprise that a study recently released by a business institute at Point Loma Nazarene has come out strongly opposed to the City of San Diego creating its own utility company, which would be then publicly-owned.

The study by Nazarene’s Fermanian Business & Economic Institute claims it would cost the city nearly $9 billion in taking over SDG&E’s assets – way too costly – and there would be no benefits to the process called “municipalization.”

At a recent press conference, Nazarene chief economist Lynn Reaser and primary author of the study, stood outside a SDG&E substation. Reaser was joined by all the usual suspects: President and CEO of the San Diego Regional Chamber of Commerce, Jerry Sanders – the former San Diego Mayor; other opponents of municipalization most notably the head of the labor council and members of the union that represents the workers at SDG&E.

Reaser claimed: “After careful consideration of the costs versus benefits, one would conclude municipalization is not a path the city should follow.”

Lynn Reaser of PLNU

And it’s really not surprising that Reaser would fall on this side of the controversy. She has for years been the chief pro-corporate and pro-capitalist advocate of San Diego academia. Her every opinion enunciated in a business column at the San Diego Union-Tribune consistently sides with corporations and big capitalists, over the little people, the workers, consumers – and the environment.

Expecting a non-biased opinion – much less a 28-page study – from Reaser is not reasonable. A quick study of the study finds most of it comprised of biased evaluations of other municipalities trying to create public utilities. There is no mention and no graph to display how SDG&E rates compare with other utilities, counties or even nations.

Sure, Jerry Sanders was at the press conference. His Chamber is the primary pro-capitalist entity in the city. And while mayor, Sanders attempted – like Gloria is now – to balance a failing city budget on the backs of San Diego’s public libraries with threats of cut-backs and even closures. Across the city – and especially in Ocean Beach – residents gathered and protested those proposed closures – and Sanders had to back off. He famously said, it was the resident protests in OB that caused him to rethink it all. But, Sanders tried to run the city like a business – if a department wasn’t paying for itself, it should be closed or cut-back.

Government is not a business, the residents of San Diego had to remind Sanders and his Republican buddies. Libraries are not supposed to make money. It’s a service to the people sponsored by the government and demanded by the people. As is the Post Office and education and … the list can go on.

Yet, the Chamber of Commerce is powerful. It co-funded the study, and of course, SDG&E and its parent company, Sempra Energy, are members of the Chamber. The U-T reported:

In 2020, Sempra and SDG&E combined to spend $222,900 in San Diego Regional Chamber of Commerce dues, charitable organizations, event registrations and event sponsorships. Sempra contributed $28,348 to the chamber’s political action committee.

The other party at the press conference was IBEW Local 465. The International Brotherhood of Electrical Workers represents several thousand workers at SDG&E. The union – and the leadership of the San Diego and Imperial Counties Labor Council – also oppose municipalization. Well, of course. They fear for their wages, benefits, healthcare plans and retirement plans. Keith Maddox, executive secretary-treasurer of the labor council, said: ““You always have to be concerned with that. There’s no guarantees, as we know in the labor world. We have to fight for everything we get.”

Okay, this is understandable. The members of IBEW would probably throw out any leadership that did not fight for the members’ current jobs. Their current jobs are with SDG&E. At this moment, it’s all theoretical and there is no other physical entity that could hire them. So, to resolve this side of it, the city council needs to pass a resolution that guarantees the jobs and benefits of the non-management people at SDG&E if the city goes ahead and creates a utility –  now. Not down the road.

In response to IBEW concerns, Craig Rose of the Citizens Franchise Alliance said worker rights and benefits would be protected if the city created a municipal utility. “Anybody who advocates for public power recognizes that the overwhelming majority of the workforce, short of some executives, will be retained in any transition,” Rose said. “These are the people who know how to do their jobs. We want them to do their jobs, we want them to be well-paid, we want them to be represented by a union.”

Another local labor leader has chimed in on the issue. Brigette Browning, Executive VP of San Diego and Imperial Counties Labor Council, said, “Municipalization will not make power bills lower for San Diego residents or small businesses, it will not make our power any greener or produce substantive environmental benefits. As labor leaders we are devoted to making a more green and environmentally just economy. Unfortunately, as this study makes clear, municipalization would spend billions of dollars without making progress on those critical goals.”

Browning, District 2 residents – and union members and working people – should remember was one of the signatories to Councilmember Campbell’s so-called compromise on short-term vacation rentals. Which is one of the reasons there’s a recall movement against Campbell. Browning’s spouse is managing the contra-recall campaign campaign. (BTW, what has the union response been over the years to SDG&E’s astronomical rates? Their members pay bills too.)

Rose of the Citizens Franchise Alliance also said a municipal utility would save money in the long run. “There’s more than 40 public electric utilities in California and they’re all different,” Rose said. “But they all share one characteristic — they all have lower rates than SDG&E.”

The U-T:

The city has the right to form its own utility, such as the Los Angeles Department of Water and Power and the Sacramento Municipal Utility District. And some members of the city council want a new deal with SDG&E to include a “right to purchase” clause that will make it easier for the city to buy out a privately owned power company.

Bill Powers, board member of the Protect Our Communities Foundation, a local environmental group in favor of municipalization, said, the study “was put together by people who have a reason to try to undercut public power.”

Powers added that the study’s estimated costs of creating a municipal utility were way too high. Citing cited a pair of city-funded studies, Powers extrapolates the total cost of municipalization comes to about $3 billion. The PLNU “report says most of the cost is in power supply,” Powers said. “They obviously have not been reading their electric bills because two-thirds to three-quarters of the retail cost is transmission and distribution. The way to reduce rates is to have control of that transmission and distribution and own it and prevent the (investor-owned utility) from packing more and more costs on, year after year.”

The pro-corporate world and its supplicants do not see the benefits of a non-profit public utility serving us our electricity and gas – or at least they won’t admit it to the rest of us. Power – electrical power – is a public resource. So is natural gas. They already belong to the people – so why should private investors be making lots of money in the delivery of those assets we already own?

{ 8 comments… read them below or add one }

Avatar Harry April 29, 2021 at 2:54 pm

By all means, let’s have the City take over power. We all know how well the City runs businesses, like real estate acquisitions of the A Street building and the sky diving center. And don’t forget the streamlined contracting ability imposed by the State to easily contract or buy anything. Then let’s layer on civil service protections to the union workforce to ensure we get the hardest working disciplined labor force. If we’re lucky, we wind up with something akin to that model of efficiency and productivity, the LA Department of Light and Power.

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Avatar Don Wood May 1, 2021 at 4:16 pm

It’s LADWP, the Los Angeles Department of Water and Power. At least get their name right.

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Avatar Sam April 29, 2021 at 5:26 pm

Hey Harry, you wouldn’t happen to be an SDGE troll would you? LADWP electricity rates are much less than they are an SD.

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Avatar Harry April 29, 2021 at 6:31 pm

No, I’m not an SDGE Troll. Actually I put in an oversized solar system to avoid paying them. But I do take the LA Times and I have followed the never ending corruption scandals at the LADWP. And ALL electric providers are cheaper than SDGE so what does that prove. But I sure don’t think the answer is a City run provider.

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Frank Gormlie Frank Gormlie April 29, 2021 at 6:54 pm

I’d rather have a fumbling public entity taking a few years to get on its feet than a corporate, profit-making enterprise raking it all in from rate payers. Why do we allow private investors making money off our resources? With the well-functioning workforce already in place, the public entity will operate with transparency for all our benefit.

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Avatar Sam April 29, 2021 at 9:29 pm

Who cares about corruption at that level? At the end of the day the electricity rates are about 1/2 of what SDGE rates are.

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Avatar Geoff Page April 30, 2021 at 4:09 pm

This is a tough one. Having witnessed the city’s ineptness in managing anything, the idea of having them run the public utility seems like madness to me. I do agree that SDG&E needs to be reined in. They only care about their stockholders, that needs to change. They sell a product to a captive audience, so they are guaranteed to be successful and to make a profit. That profit needs to be a reasonable mark up like any commodity. They don’t need to be racking up big profits to make stockholders happy. If they need investment money, they easily can borrow it just like other businesses. I don’t know a lot about the business but it seems to me a better approach would be to work on remodeling the arrangement rather than having the city take the wheel.

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Avatar Don Wood May 1, 2021 at 4:13 pm

Not to mention that the San Diego Chamber of Commerce is propped up economically by very large annual contributions from Sempra, SDG&E and their executives.

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