Power Pursuit for San Diegans

DATE: September 12, 2000
TO: Board of Supervisors
SUBJECT: Power Pursuit for San Diegans

The County of San Diego is the first under California's deregulation scheme to suffer the effects of outrageous electricity rate increases. San Diegans are paying more than an extra $100 million dollars per month and the rippling effect for business and individuals is staggering. San Diego is the 37th largest global economy and is facing a serious economic disaster.

Immediate action must be taken to avert what one reporter for the Los Angeles Times referred to as the "Perfect Storm".

Today's action provides the Chief Administrative officer with the necessary resources to conduct a comprehensive review of suggestions made during the August 17th Board Conference and directs the Chief Administrative Officer to take additional steps to address the current electricity crisis.


Direct the Chief Administrative Officer and County Counsel to:

1. Explore the use of alternate providers to supply the County's electricity needs and look at options to purchase electricity cooperatively with other agencies and large purchasers.

2. Hire necessary expertise to review and recommend actions on proposals presented at the August 17th Board Conference, including but not limited to, the feasibility of San Diego County becoming a municipal energy provider in order to purchase and sell State, Federal, and private energy in the same manner as Los Angeles Department of Water and Power.

3. Investigate legal remedies against the Federal government and the Federal Energy Regulatory Commission for unfair, unjust and unreasonable energy practices in San Diego County.

4. Work with the 18 cities to determine possible site locations for power plants in the San Diego region.

5. Review options to secure future power blocks of energy from the power grid.

Fiscal Impact: 
The fiscal impact is undetermined.

In August, 1996, the State Legislature unanimously enacted Assembly Bill 1890, which deregulated the electricity market in California and opened the door for competitive prices to be charged based on market demands for energy prices. The intent of the legislation was to allow for competition in the electricity market and to lower electrical rates for consumers. The lack of competition in the California marketplace, however, led to the creation of an unregulated monopoly in San Diego instead of a growing free market.

In the summer of 2000, San Diego consumers experienced exorbitant electrical rate increases, subsequently we are experiencing a devastating effect on the economy of San Diego County. Consumers have seen their bills triple while energy use has remained constant. Small business owners have seen their bills increase and their customer base decrease. Manufacturers have had their production and supply costs increase. Business in San Diego is placed at a disadvantage and cannot compete globally. Citizens' livelihoods and very lives are at risk in San Diego if a long-term solution is not found. Rapid action must be taken to turn back the tide of economic and civic disaster that San Diego is facing as a result of AB 1890.

On August 17th, the Board of Supervisors hosted an electricity conference to develop a plan to attack the rapid increase in electricity rates. The Board directed the Chief Administrative Officer to review the solutions proposed during the conference and to return to the Board with recommendations to permanently reduce and stabilize electricity rates for San Diego consumers.

The Chief Administrative Officer has requested additional expert assistance to accomplish this task.

Respectfully Submitted,