Study: City-Run Electric Utility Could Face ‘Financial Jeopardy’

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Times of San Diego

A new study by economists at Point Loma Nazarene University concludes that a city-run electric utility would face “financial jeopardy.”

The study by Dr. Lynn Reaser and her team at the Fermanian Business and Economic Institute analyzed a report about the feasibility of San Diego becoming a “Community Chose Aggregator,” or CCA, to buy and resell power to residents.

California has adopted this program, which permits cities and counties to purchase or generate electricity for residents and businesses located within their boundaries, taking over from a privately-owned utility.

“A CCA poses large risks to the city, which could jeopardize its financial stability and its ability to meet other funding priorities. This risk is particularly problematic in that the CCA is unlikely to achieve its objectives in terms of renewable energy, rate savings for customers, or economic benefits,” according to the study released earlier this week.

Among the study’s specific findings:

  • There is insufficient evidence to support the claim that a CCA would reduce consumer electric rates
  • Potential economic benefits of a CCA are overstated, including the number of jobs produced
  • A CCA will not help the city reach it’s goal of 100 percent of energy from renewable resources
  • While a CCA is potentially financially feasible, the city and taxpayers could also lose as much as $2.8 billion

“Given the sizeable financial risks associated with the many uncertainties involved in a CCA, the city should wait, or work with the local utility on potential alternatives that avoid incurring such serious financial jeopardy,” the study concludes.

The San Diego County Taxpayers Association has also criticized the idea of the city assuming responsibility for providing electric power.

“More than anything, Dr. Reaser’s report demonstrates the need for community leaders to continue asking questions about whether or not CCA is right for San Diego,” said Haney Hong, president and CEO of the association.

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