SDG&E's Move to Renewables May Result in Rate Hike

South Orange County is receiving a renewable energy upgrade that will help reduce carbon emissions but may result in higher electricity bills for its customers.

San Diego Gas & Electric has entered into two long-term contracts with Manzana Wind, LLC and the Mount Signal Solar Project, purchasing 300 megawatts of renewable energy for the south Orange County and San Diego areas. These contracts are still awaiting approval from the California Public Utilities Commission.

Both contracts contribute to putting SDG&E on track to achieving California’s state mandate that requires 33 percent of power retail sales to be produced from renewable energy by 2020. If approved, an increase in retail pricing is inevitable.

Currently, solar and wind power are generally more costly than obtaining energy through fossil fuel.

“We have a very robust, creative and aggressive power purchasing team at SDG&E whose ongoing goal is to obtain competitively priced renewable power for our customers,” said SDG&E’s SVP of Power Supply James P. Avery in a press release.

Another downside to switching to these renewable energy sources is the unreliability of wind and sun exposure.

“We’re putting in place an infrastructure that maintains power reliability and quality," said SDG&E spokesman Art Larson. "Obviously the wind doesn’t always blow and the sun doesn’t always shine … [SDG&E] will bring in some clean natural gas fueled power generation that can provide the flexibility to utilize the emissions free energy that is intermittent by its nature."

SDG&E will still have enough capacity from traditional fuels to keep the grid live when the weather is gloomy or calm.

“We still have enough natural gas fire or nuclear power to back it up,” said Larson.

The first agreement is a 20-year contract to purchase 100 megawatts from Manzana Wind, a wind power facility that will be completed in late 2012. This project is comparable to removing more than 21,500 cars from California’s roads for one year, according to the company. The contract will add enough power to provide energy to about 65,000 average single-family homes at a given point in time.

The second contract is a 25-year agreement to purchase 200 megawatts of solar energy from the Mount Signal Solar project, with the first 100 megawatts of energy expected to be on-line by mid 2013. That's enough to power about 130,000 average single-family homes at a given point in time.

In 2012, SDG&E expects five new renewable projects to become operational.