Solana Beach community energy program eliminates rate discount compared to SDG&E

As expected, the Solana Beach City Council has voted to eliminate the discount the town’s community choice energy program offers customers in comparison to San Diego Gas & Electric, a move prompted in large part to the financial effects the COVID-19 pandemic is projected to have on the program.

The city council, which serves as the board for the program known as the Solana Energy Alliance, made the change in a 5-0 vote Wednesday, June 24. The alliance serves about 7,000 customers in Solana Beach.

Just like other community choice energy programs that have popped up around California in recent years, the Solana Energy Alliance offers an alternative to investor-owned utilities like SDG&E when it comes to purchasing cleaner sources of energy for electric customers.

In existence since June 2018, the alliance at first offered a rate discount of 3 percent compared to what SDG&E charges customers. But in May, the city council adjusted the discount down to just 1 percent to shore up the program’s bottom line. A number of factors led to the adjustment, including an increase in the exit fees all community choice programs must pass on to their customers each month.

But right after the rate change had been instituted, the pandemic caused a downturn in energy usage by commercial and industrial customers across the state as businesses and manufacturers curbed their operations.

The cutback in energy use by commercial customers in Solana Beach further hurt the alliance’s finances. Facing an estimated shortfall of $25,355 to $161,953, city staff earlier this month recommended tweaking the rate discount again, dropping it to the same as SDG&E’s.

The change will have a relatively small effect on monthly bills. Staff estimated an average customer using 465 kilowatt-hours per month will pay 62 cents more during summer months and 33 cents more in winter months. The change is retroactive to June 1.

In an additional cost-saving measure, the city council also agreed to make changes to the program’s portfolio to maintain a power mix that is 75 percent from carbon-free sources.

Council member David Zito said the move is a testament to “the city of Solana Beach’s commitment to green energy and greenhouse gas-free energy and I’m very proud of the city council continuing to stick to its guns.”

The Solana Energy Alliance is about to become part of a larger community choice energy program, as Solana Beach will join neighboring cities Del Mar and Carlsbad in forming the Clean Energy Alliance. The new group expects to serve about 58,000 customers and is scheduled to begin operations in May 2021.

The Clean Energy Alliance plans to offer rates about 2 percent lower than SDG&E.

-- Rob Nikolewski is a reporter for the Solana Beach Sun