Anchor ads are not supported on this page.

4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs

Sempra Energy, Pacific Gas & Electric, Edison overspend with impunity

It’s hypocrisy on steroids, but profitable

Palomar Energy Center
Palomar Energy Center

From the cradle onward, we are told to be thrifty. Unfortunately, public utilities do the reverse. They fatten up their bottom lines spending gobs of money on things they don’t need. Pro-utility, anti-consumer regulators reward the profligacy. The overspending begets overproduction of energy. But utilities’ revenue, profits, and stocks go up. Everybody is happy except ratepayers, who pick up the tab.

Yes, utilities’ road to riches is excessive capital spending. This is especially true in this state, where the California Public Utilities Commission is committed to boosting the revenue and profits of the investor-owned utilities — Sempra Energy, Pacific Gas & Electric, and Edison International — and fleecing ratepayers in the process. Those three utilities have among the highest electricity rates in the nation. According to the Southern California Public Power Authority, San Diego Gas & Electric, a unit of Sempra Energy, has rates that can be double those of municipally owned utilities such as those in Los Angeles, Anaheim, Riverside, and Sacramento.

The state utilities commission caps profits at about 10.5 percent of a utility’s assets, such as transmission lines and power plants. So, the way to boost profits is to increase those assets, necessary or not. Regulators authorize higher returns as construction escalates.

Bill Powers

“The ratepayer gets hosed,” says Bill Powers of San Diego’s Powers Engineering. He regularly testifies against excessive spending by utilities, but the commission, with one eye on Wall Street, permits unneeded plants and lines to be built. It’s double-dealing that involves double-counting. “The ratepayer pays for a plant when it is built by a third party,” says Powers. The plant may be fully utilized and written off. “Then the ratepayer pays again when the plant is sold to San Diego Gas & Electric.”

Sponsored
Sponsored

One of the worst examples is what’s called “affiliate transactions.” This is a parent company building a plant and then selling it to its own operating subsidiary — at a fat profit, often. This kind of hocus-pocus — call it “ledger-demain” — has been heavily criticized, but under Michael Peevey, the president of the commission for a dozen years beginning in 2002, the opposition was squashed. (Peevey, a former president of Southern California Edison, is under criminal investigation for similar transgressions at the commission. He and Edison held illegal, secret meetings to force ratepayers into coughing up for the closing of the San Onofre nuclear plant.)

Powers points to three instances in which Sempra Energy built power plants and sold them to one of its operating units, San Diego Gas & Electric: one was the Desert Star Energy Center in Nevada, formerly called El Dorado; a second was the Palomar Energy Center in Escondido; and a third was the ESJ wind project in Tecate. Sempra agrees that these deals were technically affiliate transactions.

Sempra built Palomar for about $275 million and sold it to its affiliate, SDG&E, for around $450 million, says Powers. The Energy Division of the commission reviews such deals, and it is “notorious for being sympathetic to the utility perspective,” he says. “A lack of oversight is so institutionalized — with the ratepayer getting hosed — that it is standard operating procedure.”

Says Powers, “This is an open scandal, hiding in plain sight. It’s a clear conflict of interest sitting right in front of you.” But the utilities and their handmaiden, the commission, get away with it.

The Utility Reform Network (better known as TURN) of San Francisco cites several examples of the overspend-and-get-rich mentality. Pacific Gas & Electric wanted to build a gas plant in Oakley, California. It would have cost customers $200 million a year, jacking up the utility’s profits. TURN took the matter to court twice and won each time. The reform group also fought utility double-dipping on smart meters. “Utilities received not only guaranteed returns on the smart meters but continued to collect on their investment in analog meters, which were sitting in a trash heap,” says the reform group’s spokesperson, Mindy Spatt.

Mike Aguirre
Maria Severson
Ray Lutz

Then there are electric-vehicle charging stations. San Diego Gas & Electric “wants $103 million to build, own, and operate 5500 charging stations over four years,” says Spatt. This “gives SDG&E too much money for an experimental program that customers will pay for but many will never be able to take advantage of.”

The clandestine way by which the commission and the investor-owned utilities collude to pump up utility profits is exemplified by the handling of the San Onofre decommissioning. Unless there are changes, ratepayers will be billed for 70 percent of the almost $5 billion cost.

“The bigger the disaster, the bigger the error, the more money utilities make,” says San Diego attorney Mike Aguirre, who with his partner Maria Severson is battling the San Onofre decision. “Making mistakes is a good business model.” He says that San Diego Gas & Electric “keeps expanding the number of gas-fired plants it owns, in order to make money for Southern California Gas,” also a Sempra subsidiary that distributes natural gas, now a pariah because of a natural-gas leak at its Aliso Canyon facility in San Fernando Valley. Thousands of citizens of the affluent community of Porter Ranch have had to evacuate.

Ray Lutz of Citizens Oversight points out that “utilities are scared to death of rooftop solar.” That is true. It is much more economical for ratepayers than getting energy directly from utilities. So, the companies do everything they can to thwart the advance of rooftop solar. They build solar farms in the desert. The power comes into metro areas at great expense, and, of course, the utilities can make a bundle on the transmission lines they construct.

Powers estimates that San Diego Gas & Electric is making between $90 million and $100 million a year on the Sunrise Powerlink project, the 117-mile transmission line that brings sun, wind, and geothermal power to San Diego from Imperial Valley. Sempra won’t reveal those numbers.

But “the plethora of geothermal power that could go across Sunrise from Imperial Valley is ignored,” says Severson. SDG&E and regulators have “given lip service to renewable energy but have appeared to forgo the naturally occurring geothermal energy a few miles away” from the Sunrise sources of power.

It’s hypocrisy on steroids, but it is very profitable.

The latest copy of the Reader

Here's something you might be interested in.
Submit a free classified
or view all
Previous article

How to make a hit Christmas song

Feeling is key, but money helps too
Next Article

For nutty pies at Pizza by Aromi in La Mesa

Sicilian cousins add to the Italian goodness they dish out around Lake Murray
Palomar Energy Center
Palomar Energy Center

From the cradle onward, we are told to be thrifty. Unfortunately, public utilities do the reverse. They fatten up their bottom lines spending gobs of money on things they don’t need. Pro-utility, anti-consumer regulators reward the profligacy. The overspending begets overproduction of energy. But utilities’ revenue, profits, and stocks go up. Everybody is happy except ratepayers, who pick up the tab.

Yes, utilities’ road to riches is excessive capital spending. This is especially true in this state, where the California Public Utilities Commission is committed to boosting the revenue and profits of the investor-owned utilities — Sempra Energy, Pacific Gas & Electric, and Edison International — and fleecing ratepayers in the process. Those three utilities have among the highest electricity rates in the nation. According to the Southern California Public Power Authority, San Diego Gas & Electric, a unit of Sempra Energy, has rates that can be double those of municipally owned utilities such as those in Los Angeles, Anaheim, Riverside, and Sacramento.

The state utilities commission caps profits at about 10.5 percent of a utility’s assets, such as transmission lines and power plants. So, the way to boost profits is to increase those assets, necessary or not. Regulators authorize higher returns as construction escalates.

Bill Powers

“The ratepayer gets hosed,” says Bill Powers of San Diego’s Powers Engineering. He regularly testifies against excessive spending by utilities, but the commission, with one eye on Wall Street, permits unneeded plants and lines to be built. It’s double-dealing that involves double-counting. “The ratepayer pays for a plant when it is built by a third party,” says Powers. The plant may be fully utilized and written off. “Then the ratepayer pays again when the plant is sold to San Diego Gas & Electric.”

Sponsored
Sponsored

One of the worst examples is what’s called “affiliate transactions.” This is a parent company building a plant and then selling it to its own operating subsidiary — at a fat profit, often. This kind of hocus-pocus — call it “ledger-demain” — has been heavily criticized, but under Michael Peevey, the president of the commission for a dozen years beginning in 2002, the opposition was squashed. (Peevey, a former president of Southern California Edison, is under criminal investigation for similar transgressions at the commission. He and Edison held illegal, secret meetings to force ratepayers into coughing up for the closing of the San Onofre nuclear plant.)

Powers points to three instances in which Sempra Energy built power plants and sold them to one of its operating units, San Diego Gas & Electric: one was the Desert Star Energy Center in Nevada, formerly called El Dorado; a second was the Palomar Energy Center in Escondido; and a third was the ESJ wind project in Tecate. Sempra agrees that these deals were technically affiliate transactions.

Sempra built Palomar for about $275 million and sold it to its affiliate, SDG&E, for around $450 million, says Powers. The Energy Division of the commission reviews such deals, and it is “notorious for being sympathetic to the utility perspective,” he says. “A lack of oversight is so institutionalized — with the ratepayer getting hosed — that it is standard operating procedure.”

Says Powers, “This is an open scandal, hiding in plain sight. It’s a clear conflict of interest sitting right in front of you.” But the utilities and their handmaiden, the commission, get away with it.

The Utility Reform Network (better known as TURN) of San Francisco cites several examples of the overspend-and-get-rich mentality. Pacific Gas & Electric wanted to build a gas plant in Oakley, California. It would have cost customers $200 million a year, jacking up the utility’s profits. TURN took the matter to court twice and won each time. The reform group also fought utility double-dipping on smart meters. “Utilities received not only guaranteed returns on the smart meters but continued to collect on their investment in analog meters, which were sitting in a trash heap,” says the reform group’s spokesperson, Mindy Spatt.

Mike Aguirre
Maria Severson
Ray Lutz

Then there are electric-vehicle charging stations. San Diego Gas & Electric “wants $103 million to build, own, and operate 5500 charging stations over four years,” says Spatt. This “gives SDG&E too much money for an experimental program that customers will pay for but many will never be able to take advantage of.”

The clandestine way by which the commission and the investor-owned utilities collude to pump up utility profits is exemplified by the handling of the San Onofre decommissioning. Unless there are changes, ratepayers will be billed for 70 percent of the almost $5 billion cost.

“The bigger the disaster, the bigger the error, the more money utilities make,” says San Diego attorney Mike Aguirre, who with his partner Maria Severson is battling the San Onofre decision. “Making mistakes is a good business model.” He says that San Diego Gas & Electric “keeps expanding the number of gas-fired plants it owns, in order to make money for Southern California Gas,” also a Sempra subsidiary that distributes natural gas, now a pariah because of a natural-gas leak at its Aliso Canyon facility in San Fernando Valley. Thousands of citizens of the affluent community of Porter Ranch have had to evacuate.

Ray Lutz of Citizens Oversight points out that “utilities are scared to death of rooftop solar.” That is true. It is much more economical for ratepayers than getting energy directly from utilities. So, the companies do everything they can to thwart the advance of rooftop solar. They build solar farms in the desert. The power comes into metro areas at great expense, and, of course, the utilities can make a bundle on the transmission lines they construct.

Powers estimates that San Diego Gas & Electric is making between $90 million and $100 million a year on the Sunrise Powerlink project, the 117-mile transmission line that brings sun, wind, and geothermal power to San Diego from Imperial Valley. Sempra won’t reveal those numbers.

But “the plethora of geothermal power that could go across Sunrise from Imperial Valley is ignored,” says Severson. SDG&E and regulators have “given lip service to renewable energy but have appeared to forgo the naturally occurring geothermal energy a few miles away” from the Sunrise sources of power.

It’s hypocrisy on steroids, but it is very profitable.

Comments
Sponsored

The latest copy of the Reader

Here's something you might be interested in.
Submit a free classified
or view all
Previous article

Time’s up for Doubletime Recording Studio

Owner Jeff Forrest is trading El Cajon for Portugal
Next Article

O’side Tree Lighting & Gift Market, Holiday Lights at the Museum, The Elovaters and Little Stranger

Events December 5-December 6, 2024
Comments
Ask a Hipster — Advice you didn't know you needed Big Screen — Movie commentary Blurt — Music's inside track Booze News — San Diego spirits Classical Music — Immortal beauty Classifieds — Free and easy Cover Stories — Front-page features Drinks All Around — Bartenders' drink recipes Excerpts — Literary and spiritual excerpts Feast! — Food & drink reviews Feature Stories — Local news & stories Fishing Report — What’s getting hooked from ship and shore From the Archives — Spotlight on the past Golden Dreams — Talk of the town The Gonzo Report — Making the musical scene, or at least reporting from it Letters — Our inbox Movies@Home — Local movie buffs share favorites Movie Reviews — Our critics' picks and pans Musician Interviews — Up close with local artists Neighborhood News from Stringers — Hyperlocal news News Ticker — News & politics Obermeyer — San Diego politics illustrated Outdoors — Weekly changes in flora and fauna Overheard in San Diego — Eavesdropping illustrated Poetry — The old and the new Reader Travel — Travel section built by travelers Reading — The hunt for intellectuals Roam-O-Rama — SoCal's best hiking/biking trails San Diego Beer — Inside San Diego suds SD on the QT — Almost factual news Sheep and Goats — Places of worship Special Issues — The best of Street Style — San Diego streets have style Surf Diego — Real stories from those braving the waves Theater — On stage in San Diego this week Tin Fork — Silver spoon alternative Under the Radar — Matt Potter's undercover work Unforgettable — Long-ago San Diego Unreal Estate — San Diego's priciest pads Your Week — Daily event picks
4S Ranch Allied Gardens Alpine Baja Balboa Park Bankers Hill Barrio Logan Bay Ho Bay Park Black Mountain Ranch Blossom Valley Bonita Bonsall Borrego Springs Boulevard Campo Cardiff-by-the-Sea Carlsbad Carmel Mountain Carmel Valley Chollas View Chula Vista City College City Heights Clairemont College Area Coronado CSU San Marcos Cuyamaca College Del Cerro Del Mar Descanso Downtown San Diego Eastlake East Village El Cajon Emerald Hills Encanto Encinitas Escondido Fallbrook Fletcher Hills Golden Hill Grant Hill Grantville Grossmont College Guatay Harbor Island Hillcrest Imperial Beach Imperial Valley Jacumba Jamacha-Lomita Jamul Julian Kearny Mesa Kensington La Jolla Lakeside La Mesa Lemon Grove Leucadia Liberty Station Lincoln Acres Lincoln Park Linda Vista Little Italy Logan Heights Mesa College Midway District MiraCosta College Miramar Miramar College Mira Mesa Mission Beach Mission Hills Mission Valley Mountain View Mount Hope Mount Laguna National City Nestor Normal Heights North Park Oak Park Ocean Beach Oceanside Old Town Otay Mesa Pacific Beach Pala Palomar College Palomar Mountain Paradise Hills Pauma Valley Pine Valley Point Loma Point Loma Nazarene Potrero Poway Rainbow Ramona Rancho Bernardo Rancho Penasquitos Rancho San Diego Rancho Santa Fe Rolando San Carlos San Marcos San Onofre Santa Ysabel Santee San Ysidro Scripps Ranch SDSU Serra Mesa Shelltown Shelter Island Sherman Heights Skyline Solana Beach Sorrento Valley Southcrest South Park Southwestern College Spring Valley Stockton Talmadge Temecula Tierrasanta Tijuana UCSD University City University Heights USD Valencia Park Valley Center Vista Warner Springs
Close

Anchor ads are not supported on this page.

This Week’s Reader This Week’s Reader