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Public Power Feasibility Study

photo of Downtown Library at nightIn conjunction with the award of the gas and electric franchises to San Diego Gas & Electric (SDG&E) in July 2021, a corollary action was identified to investigate the feasibility of an alternative to the provision of electric and gas services from an investor-owned utility through some form of municipalization and establishment of a public power entity.  To conduct this analysis, the City engaged a consultant team to assess the technical and financial feasibility of such an effort.

In October 2022, a consultant contract was awarded to a team led by NewGen Strategies & Solutions and including Bell, Burnett & Associates (BB&A) and Siemens Power Technologies International (Siemens PTI) in October 2022. The Feasibility Study is executed in phases, increasing in focus and detail between Phase 1 and Phase 2. 

The Phase 1 report was released in the summer of 2023 and provided initial findings related to the technical and financial feasibility of setting up a public energy utility in some form, referred to as a Municipal Energy Utility (MEU). The Phase I report focused on four major areas: 

  • Process Map outlining the legal, regulatory and financial steps to municipalize.
  • Public Power Entity Options – options for the structure of a Public Power entity with current examples and pro/con analysis for each.
  • Initial financial analysis regarding the value of SDG&E system.
  • Initial estimate of financial needs and operational options for an MEU.  

The Phase 2 report is now complete. It was sent to City Councilmembers via memo from the Mayor on April 3, 2026. It is anticipated to be presented to the City Council in late Spring 2026. The Phase 2 report expands on the initial findings of Phase 1 and includes: 

  • Updates regarding other municipalization efforts in the state and ongoing regulatory and legislative activities.
  • A review of City policy objectives and considerations for an MEU.
  • An inventory of assets to be acquired by an MEU.
  • A development of Operations and Maintenance (O&M) cost estimates for an MEU.
  • A development of future investment for capital expenditures for an MEU.
  • A revised Financial Capacity analysis to determine feasibility.
  • A review of and update on risks, risk mitigation, and other considerations.

The Phase 2 Report develops a summary of the NewGen team’s analysis of costs, revenues, risks, and implementation requirements for an MEU over a 30-year study period. While the analysis identifies some potential benefits, it also identifies significant and unavoidable risks and the substantial cost and complexity involved in establishing an MEU. 

 

FAQs

  1. Does the Feasibility Study include the gas system? 
    • No. The Phase 1 Report found that development of a municipal natural gas utility would not be consistent with the City’s Climate Action Plan goals, as gas consumption is anticipated to decrease and lead to declining revenues given City and State climate targets.
  2. How does the Feasibility Study account for San Diego Community Power (SDCP)? 
    • The Feasibility Study assumes the continuation of SDCP as the commodity supplier in the City and studied the feasibility of an MEU as an electricity delivery only operation.
  3. Does the Study assume the MEU would become a City Department? 
    • No.  Based on the analysis of different organizational structures in Phase 1 and stakeholder feedback, the Phase 2 study assumes some form of Special District governance structure similar to the Sacramento Municipal Utility District.
  4. How does the CPUC proceeding regarding San Francisco’s effort to municipalize impact the City of San Diego? 
    • The current CPUC proceeding regarding San Francisco’s efforts to municipalize will establish methods and standards for just compensation and valuation of the PG&E system. The outcome of this proceeding will set important precedent for any jurisdiction in California seeking to municipalize its energy utility, with significant implications for the costs and feasibility of such efforts statewide. The City will monitor these proceedings closely. 
  5. Is the City going to municipalize the electric system? 
    • Not at this time. The consultant’s analysis identifies significant risks and substantial costs and complexity involved in establishing a MEU. Should the City ever elect to pursue municipalization, the process could realistically take 10-20 years and would require multiple additional decision points and Council actions.

Have questions or feedback?

Reach out to us at publicpower@sandiego.gov 

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