A recently released report prepared for the City of San Diego, Calif., concludes that it is financially feasible for the city to acquire specific electric assets of investor-owned utility San Diego Gas & Electric in the city, but also notes that there are several difficulties and challenges that would require the city to examine the various political, operational, and financial risks associated with forming a public power utility.
The report was discussed at the San Diego City Council’s Environment Committee on July 20.
The report notes that the City of San Diego’s strategic plan is founded on the principles of customer service, community empowerment, equity and inclusion, and transparency. “In line with the directive to be responsive to resident needs, the city is actively investigating options to expand public utility services to include electric delivery,” the report said.
This effort resulted in the development of a Phase I report for a Public Power Feasibility Study, a multi-phased approach to evaluate the processes, costs, risks, and opportunities associated with municipalizing the energy infrastructure assets of San Diego Gas & Electric within the city.
NewGen Strategies and Solutions partnered with Bell, Burnett & Associates and Siemens Power Technologies International to provide a consulting resource to the city to support its needs for the study and to create the Phase I report released this month.
The specific elements of Phase I include, among other things, reviewing public power entity options, developing initial financial determinations regarding existing electric and gas systems in the city and developing initial financial and operational options and needs for a public power entity.
The city requested the development of municipalization “process maps” for the report. The process maps lay out a series of analyses, decisions, and activities to be undertaken by the city over the course of its municipalization effort. The process maps are also supported by a series of “sub-process” maps, which provide detail into various elements critical for the City’s municipalization effort.
Each process map consists of two or more horizontal “swim lanes” which are assigned to an entity or entities, such as the city, and include the activities and the responsibilities of those entities within the lane.
As identified in the Public Power Process map, Phase II activities focus on performing in-depth analysis and assessing community priorities and support, culminating with the development of a Municipalization Strategic Plan, anticipated to be completed by June 2025.
The results of the Municipalization Strategic Plan will prompt a decision by the city to determine if moving forward with municipalization is warranted, the report notes.
If so, the next step in the process is a decision by the city to apply to the Local Agency Formation Commission for regulatory approval to form a municipal utility (Phase III of the Study). However, if the city decides not to apply to the Local Agency Formation Commission, the municipalization process is terminated.
Recommended next steps for activities are also included in the report.
Those activities include, among other things:
Development of a Preliminary Electric Municipalization Strategic Plan: This document will address the policy objectives of the proposed MEU as they relate to the City’s CAP and other environmental policies and strategic documents. The Municipalization Strategic Plan should incorporate the findings from this Phase I report as appropriate;
Prepare/Facilitate Stakeholder Engagement: “A critical element to a successful municipalization effort is the support of the community,” the report noted. As part of this Phase I study, a stakeholder process has been identified for this purpose. Phase II would include initiating the stakeholder process with the various groups identified in the stakeholder process. Stakeholder groups would be identified and engaged in parallel with a preliminary Municipalization Strategic Plan which will then be iterated through continued feedback and communication with the stakeholder groups;
Assessment of Transmission System Expansion: The city should assess the benefits and costs of expanding the transmission system acquisition to include 230 kV within the city and 138 kV and 69 kV yards of border substations and lines to SDG&E outside the city and metering there instead of at the city’s substations;
Creation of Phase II Report: At the conclusion of the Phase II efforts, which is anticipated to be summer 2025 should the city decide to proceed, the city will be faced with another decision point if it wishes to move forward with forming a municipal electric utility. The purpose of the Phase II report would be to provide further insights and information on the financial feasibility of a city-owned municipal electric utility and to prepare for the next phase in the process, development of a Local Agency Formation Commission submission packet.
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