Study finds Escondido would benefit from forming energy program

A study determined that establishing a community choice energy program is financially feasible for the city of Escondido, either on its own or in conjunction with neighboring cities, and would save residents about 2 percent on their energy bills over service with the region’s utility, San Diego Gas & Electric Co.

The study was jointly commissioned by Escondido, Vista and San Marcos, and Escondido’s share of the cost was $21,021, said a city staff report. The council recently received a presentation on the study, but took no action on whether to move forward with forming a community choice energy program, or CCE.

The issue is not expected to come before the council for a final decision until next year, following additional analysis now underway, said Mayor Paul McNamara.

A CCE is formed by a city, county, or a group of municipalities to give local officials control over the sources of energy, and the rates, for residents in their community. Under such an arrangement, local elected officials can decide how much of their energy to purchase from renewable sources such as wind, solar or hydroelectric, vs. non-renewable sources such as fossil fuels, and rates charged to homes and businesses.

Currently, the task of procuring energy falls to the local utility, such as SDG&E in San Diego County. Under a CCE, the utility would still handle transmission and distribution of power over its grid, as well as billing customers, said Howard Choy of EES Consulting, which prepared the study.

CCE’s have been operating in California for about 10 years. More than 20 CCEs are in operation across the state and two in San Diego County launched earlier this year — San Diego Community Power, serving San Diego, Chula Vista, La Mesa, Encinitas and Imperial Beach; and the Clean Energy Alliance, serving Carlsbad, Del Mar and Solana Beach.

Earlier this month, a CCE in Riverside County shut down due to financial pressures, a first in California.

The study found that if Escondido set up its own CCE, it would face start-up costs of about $600,000, and would need to secure a loan of $9 million to pay for initial energy purchases. The study said the loan and start-up costs would be recovered through revenue generated by the program in five years. Start-up costs would be lower if Escondido joined an existing CCE or partnered with neighboring cities.

Under questioning by Councilman Joe Garcia, city planner Adam Finestone said the biggest potential benefit to a CCE is that it would help the city achieve its goal of using 100 percent renewable energy by 2030, which is contained in the city’s climate action plan.

“This is one of the best-known ways to accomplish that,” Finestone said.

Garcia also asked about the biggest potential risk. Choy said if the city buys energy through long-term contracts and SDG&E offers lower rates than the CCE, residents could switch back to the utility and the CCE would not have enough revenue to operate.

Choy said if Escondido formed a CCE, city residents would automatically be enrolled, but they could opt out and return to SDG&E.

The study found that over a 10-year period, a joint powers CCE including Escondido, Vista and San Marcos would generate surplus revenue — or a profit — of $15.5 million, or $1.6 million per year.

The council received eight written comments, most of them supporting Escondido’s joining or forming a CCE. Council members also sounded supportive of the idea, although acknowledging potential downsides.

“I definitely am in favor of this, I do believe it will help us with our climate action goals,” said Councilwoman Consuelo Martinez.

“This sounds very intriguing, saving money plus saving greenhouse gases and helping with the environment to reach our 100 percent goal, I think that’s a good thing,” said Garcia.

McNamara said, “Looking at all the ‘what ifs,” it looks pretty good and it’s probably the way we should go. But it’s not without risks.”