Heads Up San Diego:  Community Choice Aggregation Or Expensive…

bill_02 cropped reversedIn 2017 a number of residents of America’s Finest City – San Diego – opened their mail and found something not-so-fine:

Their water bills had increased dramatically.  In some cases, doubled.  In some cases, a 500% increase or more from one billing cycle to the next.

Bewildered, these residents called the water department at San Diego Public Utilities for an explanation.  The residents knew they weren’t using more water than the previous month – in the drought-ridden, fire-prone San Diego area most of us tend to be very vigilant with our water use.

The water department offered a number of possible reasons for the residents higher water usage:Voting and protest concept

  1. Higher water rates
  2. Longer billing cycles
  3. Changes in the weather
  4. Overwatering their landscaping
  5. Leaks inside their homes
  6. A child home from college
  7. Relatives visiting for the holidays

At no time did any water department customer service rep indicate that the water bill amounts might – just might – be an error on their part.

The unhappy customers, as the song goes, couldn’t “get no satisfaction.”

And since they didn’t want their water shut off, they paid up.  Emphasis on up.

Here’s just one of many examples:

kelli sandman-hurley billKelli lives in a 900-square-foot house with her husband and their nine-year-old.  For years, she’d received San Diego water department bimonthly bills of around $150.

Then in January 2018 she opened her bill and saw that the city had charged her $3,334 for using 234,140 gallons of water, up from 6,732 gallons in the same billing period last year.

Kelli knew there was something wrong because “We did not use that much water.  It’s impossible.”

Following a February 2018 story in the San Diego Union-Tribune, her bill was lowered from $3,334 down to $187 after officials confirmed that her meter had been misread.

So I guess it wasn’t her nine-year-old “home from college” (see #6, above).

In addition to coverage by the Union-Tribune, additional help was at hand.

One of San Diego’s TV stations, Channel 7, is home to Bob Hansen, better known as Consumer Bob_01“Consumer Bob.”  He’s been covering consumer news in San Diego for close to 30 years, and in 2016 launched NBC 7 Responds, to “research concerns, look for answers and find solutions to make things right” for consumers.

I’ve watched a lot of Consumer Bob’s stories and I’m telling you – this guy is a pit bull.  In the best possible way.  When he and his team “make things right” for consumers – and that happens a lot – he does a follow-up story on the news.

And I cheer.

Consumer Bob wins another one for the little guy!

So when those water department customers couldn’t get any satisfaction regarding the spike in their bills, some of them contacted Consumer Bob.

In January 2018 viewers learned that NBC 7 Responds had been investigating the water bill situation since July 2017, and that – if you’ll allow the expression – opened the floodgates:

February 2018:

Feb 2018 Headline

July 2018:

July 2018 Headline

October 2018:

October 2018 Headline

At the same time, other water department stories were surfacing about:

  • Meter reader error – one reader alone misread 334 meters.
  • Meter reader employees who’d learned ways to hide mistakes made out in the field.
  • San Diego’s $67 million+ problem-riddled “smart” meters program, which won’t be completed until 2020.
  • A backlog of 21,605 water meter boxes in San Diego that are in need of replacement or repair; perhaps not a surprise when …
  • In August 2018 an auditor found staff for the Water Meter Box Repair and Replace Division worked an average of 3.6 hours a day during a full eight-hour shift:

Cutting Out Early Headline.jpg

And the hits just kept on coming:

  • June 2018 – Deputy Director of SD Water Dept. retires.
  • August 2018 – Director of Public Utilities Dept. resigns after less than a year.
  • August 2018 – Installation of “smart” meters put on hold – no new meters are being connected to that system, according to NBC 7 Responds.

And…

October 2018:

Channel 10 Headline

What’s it all mean?

It means San Diego is doing a lousy job managing your water.

And?

Now San Diego wants to manage your electricity, too.

warning cropped

It’s called CCA – Community Choice Aggregation.

Dumbed-down so I can understand it, in some parts of the country, cities are entering into or considering CCAs:

national_map_9_18_18 CCA

Community Choice Aggregation allows “any city, county or combination thereof to form an entity to take over the responsibility for purchasing power for their community.”

The goal of CCA is to reduce power costs to customers, and to go greener by obtaining more power from renewable sources like natural gas, solar, and wind.

Once elected officials decide in favor of CCA, customers have these choices:Community-Choice-Aggregation icon

  1. Staying with CCA.
  2. Opting out and continuing as is with their current power provider – in this case, San Diego Gas & Electric (SDG&E).

With either option, the traditional power provider (SDG&E) continues to maintain the transmission and distribution system, and handles billing and customer service issues.

Sounds grand, doesn’t it?  Stay with CCA, spend less on your energy bills, and feel good about getting more power from renewable sources.

A win-win!

I think not, and here’s why.

warning cropped

In San Diego, the elected officials who will make the decision about entering into CCA are the mayor and city council.  They are, bottom line, responsible for running the city.

Including the water department.  See above.

With CCA, elected officials are responsible for making decisions about where and howmoney_02 much power will be provided by other sources.

And as we all know, elected officials are never subject to greed, graft, bribery or corruption.

Yes?

Since elected officials often don’t have expertise in energy markets, many CCAs hire third parties with experience in energy markets to perform all sorts of complex scheduling and marketing transactions.

They are paid by CCA organizations, using rates charged to their customers.

Another charge – customers who opt to stay with CCA will pay a monthly Power Charge Indifference Adjustment (PCIA), or “exit fee,” to the traditional provider.

In California, the California Public Utilities Commission sets the amount of the exit fee.  For San Diego it was first set at 2.5 cents per kilowatt hour, then raised to about 4.25 cents.  For the average customer, this amounts to around $17-$20 per month.

Raised the exit fee.  CCA has not even been approved and it’s become more expensive.  And there’s no doubt there will be future increases.

On page 23 the city’s October 2018 CCA Business Plan estimates start-up costs of $105 million:

Start Up Costs

Page 24, here’s the ongoing administrative costs of CCA, estimated at $16 million a year:

Ongoing Costs

And as we all know, bureaucracies never spend more than they first estimate.

Yes?

In October San Diego’s mayor announced his support for CCA.  The City Council is poised to vote in December 2018 to move forward with it.

This could put CCA up and running in 2021.

As I research CCAs I see a lot of words like “could” – I call them hedge words, as in

Hedge (verb):  To avoid making a definite decision, statement, or commitment.

CCA could save customers money.  CCA could help San Diego reach its renewable energymaybe one day cropped goals.

And here’s another hedge word:  “should.”  With CCA it should be cheaper than buying power from SDG&E.  It should provide more renewable energy jobs.

And “may” – other cities in the county may join San Diego’s CCA plan.  And their customers may save money, too.

Check out another hedge word, the “Uncertainties” from page 32 of San Diego’s CCA Business Plan:

Uncertainties page 32_01 with lines

Based on this business plan, one media source stated that with San Diego’s CCA:

A Joint Powers Authority (JPA) would be formed in 2019, along with the appointment of a board of directors.  From there on, the board would hire an executive leadership team, a chief executive and a chief financial officer.

These executive positions would guide the JPA through the CCA implementation process, in hopes of delivering power to customers by the plan’s target date of 2021.

“In hopes of.”  More hedge words.

“A billion-dollar bureaucracy,” summed up another media source.

There are many individuals and groups both in favor of, and opposed to, CCA for San Diego.

Supporters say that 18 other communities in California have adopted CCA, and many more across the country.

I say San Diego is doing a lousy job managing your water.

Now San Diego wants to manage your electricity.

Heads-up, residents:

you have been warned.png

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