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California's biggest utilities are losing their monopolies. Is that a good thing?

Sammy Roth, Los Angeles Times on

Published in Business News

San Diego's decision to go into the power business was the last straw.

Ever since the city's announcement last year, San Diego Gas & Electric has been telling state lawmakers it wants out of the business of buying and selling electricity. That may sound like a radical plan for a monopoly utility with nearly 1.5 million customers and annual profits that regularly exceed $500 million.

But given the state's rapidly shifting energy landscape, it might actually make sense.

California's three big investor-owned utilities -- Southern California Edison and Pacific Gas & Electric are the other two -- are losing a growing number of customers to government-run power providers called community choice aggregators, or CCAs. There's a good chance the monopoly utilities will lose the vast majority of their energy sales to CCAs and other energy providers over the next few years.

And the utilities don't profit from energy sales, anyway -- they're allowed to charge customers only what they paid for electricity on the market.

But the investor-owned utilities do earn a regulated profit when they invest in infrastructure projects, such as building and operating the poles and wires of the power grid, or installing electric vehicle charging stations. So why not stop signing contracts for electricity supply and become infrastructure companies exclusively?

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"We don't think we should be signing big, long-term contracts for customers that have made a conscious choice to be served by a different" power provider, said Kendall Helm, SDG&E's vice president of energy supply. "We think our primary role and our primary value is in the safe and reliable delivery of that power."

Here's how local governments are replacing California's biggest utilities »

Edison and PG&E, whose poles and wires span most of the state, haven't suggested they're ready to stop buying and selling power. But they face the same conundrum as SDG&E: Dozens of cities and counties across their service territories are choosing to become their own energy providers.

California had 19 community choice providers serving 2.6 million homes and businesses last year. Nearly 1 million homes in Los Angeles and Ventura counties are being enrolled this month in Clean Power Alliance, the state's biggest CCA.

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