SDG&E Proposes Solution Aimed at Supporting the State’s Clean Energy Goals and Protecting Customer Choice

SAN DIEGO, April 25, 2017 – As San Diego Gas & Electric (SDG&E) works to build a smarter energy future that is better for customers and the environment, the company and other California energy providers today filed a joint proposal with the California Public Utilities Commission (CPUC) to create a real solution for supporting the state’s clean energy goals and protecting customer choice. The proposal is grounded in treating customers equally.

Along with Pacific Gas & Electric and Southern California Edison, SDG&E is requesting a new methodology for addressing benefits and costs associated with long-term energy contracts. The new methodology would ensure that the benefits and costs are fairly allocated among two groups of customers: those that continue to purchase electricity from one of the utilities and those that choose to purchase electricity from another provider.

The new system is urgently needed:

  • To ensure compliance with California law and the long-term viability of customer choice programs in California;
  • To ensure that no customer is better or worse off due to another customer’s choice to move to another energy provider;
  • To correct the current process where some customers benefit and some are harmed.

The proposed approach would replace the current system, which is known as the Power Charge Indifference Adjustment, with an updated system called the Portfolio Allocation Methodology.

“Our customers work hard for their income and we’re working just as hard to keep them in control of how they want to spend it,” said Emily Shults, vice president of energy procurement, SDG&E. “We need a clear system where customers pay for what they get and get what they pay for. Our proposal ensures that all Californians receive the clean energy future they expect and deserve.”

Why Now?

California stands at the crossroads of its energy future. In 2015, the California Legislature passed, and the governor signed into law, what was known as Senate Bill 350. The law created one of the most ambitious renewable portfolio standards in America, requiring 50 percent of customers’ energy to be generated from renewable sources by 2030. SDG&E customers have been leading this effort, and today are already receiving the benefits associated with 43 percent of their energy sourced from the sun and wind.

At the same time that renewable energy use is increasing, customer choice is accelerating, and the CPUC is actively considering options for consumers to choose their own energy providers. The passing of Senate Bill 350 into law also reiterated the need for the CPUC to strengthen regulations to ensure that no customer bears the burden of cost increases because of another customer’s choice to select another energy provider.

Under current regulations, customers that choose another provider would pay only about 75 percent of the cost of the energy purchased on their behalf, leaving a large portion of costs to be picked up by customers that remain with their energy provider. That is because the current methodology for assigning costs to customers relies on forecasted, hypothetical future market prices with no “true-up” for actual costs. 

The new proposal offers an updated system where all customers pay for the energy purchased on their behalf, whether they receive energy bought for them from their current energy provider or someone else. The updated system will reflect actual costs and benefits and a “true-up” process with actual costs incurred to procure energy resources on a customers’ behalf.

And regardless of where the energy comes from, SDG&E will continue to deliver it on the most reliable power grid in the West.

“Imagine a system that will support the growth of customer choice and ensure there are no loopholes in the benefits provided to all customers,” said Shults. “Now is the time to create an updated set of rules that reflects today’s world and sets up all customers for future success.”

To learn more, the filing can be viewed here.

SDG&E is an innovative San Diego-based energy company that provides safe, reliable, clean energy to better the lives of the people it serves in San Diego and southern Orange counties. More than 4,000 employees work to provide the most reliable and clean energy in the West. The company has been recognized by the U.S. Environmental Protection Agency for leadership in addressing climate change, was the first to meet California’s goal of delivering 33 percent of energy from renewable sources, has fueled the adoption of electric vehicles and energy efficiency through unique customer programs, and supports a number of non-profit partners. SDG&E is a subsidiary of Sempra Energy (NYSE: SRE), a Fortune 500 energy services holding company based in San Diego. For more information visit SDGEnews.com or connect with SDG&E on Twitter (@SDGE), Instagram (@SDGE) and Facebook.   

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