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We all know that San Diego incomes are a good deal higher than the nation's, but the cost of living is far higher. The result is a squeeze. And energy costs are a big part of that squeeze.

The National University System Institute for Policy Research has done an eye-opening study for the California Business Roundtable and the allied Californians for Affordable & Reliable Energy. The bottom line is that the high cost of energy — particularly electricity provided by utilities — is a significant drag on the San Diego economy.

Erik Bruvold

Erik Bruvold, president of the institute and author of the study, points out that according to the California Energy Commission, between 2000 and 2012, residential electricity costs in San Diego County averaged 12 percent more per kilowatt hour for San Diego Gas & Electric residential customers than for customers of Pacific Gas & Electric and Southern California Edison. The former utility serves the highest-income, most manufacturing-intensive area of the state (and perhaps the nation) and the latter also serves an area with a robust economy.

Since 2009, SDG&E's average cost to commercial customers has been 16 to 18 percent higher than PG&E's and SCE's, according to the United States Energy Administration. These PG&E and SCE locations are ones with with which San Diego competes for business.

People who defend the high rates often note that San Diegans use less electricity because of the mild climate. However, Bruvold points out that since 1990, more than 200,000 San Diegans have moved into areas where temperatures reach or exceed 80 degrees more than 180 days of the year. It takes more electricity to cool homes in such areas. Global warming trends put an additional squeeze on electricity usage.

The high costs put pressure on San Diego housing prices — already among the highest in the nation — the overall cost of living, and industries such as manufacturing and certain areas of construction, says Bruvold.

Bruvold does not say, but I will add gratuitously, that the big beneficiary of these high costs is SDG&E and its parent, Sempra Energy.

SDG&E's earnings for 2014 rose to $507 million from $404 million in 2013, despite some closure costs of the now-shuttered San Onofre nuclear plant. Sempra's earnings also zoomed last year.

Debra Reed

Boasts Debra Reed, chief executive of Sempra, "We have made great progress toward achieving compound annual growth in earnings per share toward the upper range of our stated growth-rate range of 9 percent to 11 percent from 2014 through 2019."

The Merrill Lynch unit of Bank of America thinks Sempra can achieve the goals. Sempra's stock has risen stoutly even though its dividend yield is significantly lower than that of comparable utilities.

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Comments

Dennis March 20, 2015 @ 5:27 p.m.

Use less, pay more, how does that help with conservation? Meanwhile SDGE wants to build more "peaker" power plants that are hugely expensive and only run part time.

2

ImJustABill March 20, 2015 @ 8:09 p.m.

Conservation of CASH. Sempra likes to conserve THEIR cash by forcing ratepayers to pay for maintainence and upkeep of power lines.

3

JustWondering March 20, 2015 @ 9:03 p.m.

Fortunately San Diego's climate also provides ratepayers with alternatives such as solar and wind power. Add the Federal Government offer of a 30% tax credit and electricity becomes somewhat more palatable. With that said, I don't understand the comment on competition between the three stockholder run utilities. Since each has their own service territory, where or how do they compete with each other?

0

Don Bauder March 20, 2015 @ 9:17 p.m.

JustWondering: I didn't mean to say that SDG&E, PG&E, and SCE compete with one another. I meant to say that the San Diego economic enterprises compete with similar enterprises in PG&E and SCE territories, and SDG&E's high rates make San Diego less competitive. Best, Don Bauder

1

Anon92107 March 21, 2015 @ 3:23 a.m.

Don, we can blame Jerry Brown for this never-ending outrage, he looked the other way while his best buddy Peevey got away with murder, literally, and other gross criminal acts. If Peevey doesn't go to jail, it will prove beyond all doubt that there is no justice in California to protect consumers from out of control criminals in politics.

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AlexClarke March 21, 2015 @ 5:38 a.m.

IID (Imperial Irrigation District) which serves the Imperial Valley and eastern Coachella Valley is ratepayer owned and as a non-profit has one rate per KWH and is 40% lower than SDG&E, SCE & PG&E. They provide reliable service, have excellent customer service, new equipment and well paid employees with benefits. A perfect example of why utilities should be ratepayer owned not greedy for profit private companies.

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Visduh March 21, 2015 @ 9:30 a.m.

One component of the cost of living here and one that slips by "under the radar" for many households is water rates. The rates have increased relentlessly, especially in the past 25 years. But is the water supply ample now? Uh, no. Is the quality better? Not really. So where does all the money go? The excuse I keep getting is that there are expensive capital projects that "improve storage and delivery." And so, the local water districts are at the mercy of the MWD and the state, and cannot avoid these incessant rate boosts. What is being done to increase the supply? Well, the Poseidon Desal Plant in Carlsbad is going to add more water to the local supply, but it is costing about $1 billion to construct, along with the pipeline. But let's remember that in the city of SD, all that capital outlay is upstream. The city's own water delivery system is aging, is unreliable, and an embarrassment.

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AlexClarke March 21, 2015 @ 5:33 p.m.

IID rates are 80% lower than San Diego's.

1

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