High rates push San Marcos to form a municipal utility Sept. 11 (Public Power 
Weekly) 
Frustrated by the high electricity rates charged this summer by San Diego Gas 
& Electric Co., the city of San Marcos, Calif., has voted to form a municipal 
electric utility and is considering signing up with Enron. And the Board of 
Supervisors of San Diego County is expected to meet tomorrow (Sept. 12) to 
discuss the feasibility of the county becoming a public power provider. 
Last month, the San Marcos City Council voted 4-1 in favor of creating a 
city-owned utility. Now, former mayor Lee Thibadeau is urging the city to buy 
its power from Houston-based Enron. The city could save an estimated $17.5 
million a year in wholesale power costs if it bought electricity from Enron, 
he told Public Power Weekly. Other cities served by SDG&E might want to 
follow suit, he said. 
Thibadeau said he had discussed with Enron a deal under which the energy 
giant would sell electricity at about 4.37 cents per kWh. That compares to 
about 20.5 cents per kWh that is currently charged by SDG&E, a unit of Sempra 
Energy. 
Last month, the municipal utility in Roseville, Calif., approved a $114 
million contract to buy power from Enron Power Marketing over the next five 
years. Roseville will pay 4.9 cents per kWh. (See Public Power Weekly, Aug. 
14, page 1.) 
Earlier this month, Bill Horn, a member of the San Diego County Board of 
Supervisors, called for the creation of a public power district. San Diego 
County, which is the second largest county in the state, faces economic 
disaster because of out-of-control electricity rates, he said. Horn said he 
and the board,s chairwoman, Dianne Jacob, will ask the supervisors on Sept. 
12 to approve the hiring of a consultant to study the idea of creating a 
county-wide utility. 
Horn said his goal is to have the public power utility operating by next 
summer. His idea is to find cheaper wholesale power only, not to take over 
SDG&E,s wires. &I am assuming we can work with SDG&E,8 he said. &I don,t want 
to take over lines or become a power generator.8 
Residents of the San Diego area have been hit with surging power costs this 
summer as a result of SDG&E,s entry into free-market electricity. Their bills 
have doubled and even tripled, compared to last year,s prices. 
&Rates have been getting more and more out of hand,8 said Thibadeau. 
San Marcos, a city of 55,000 about 35 miles north of San Diego, has been 
interested in creating a municipal electric utility for years, said City 
Manager Rick Gittings. &We,ve been looking at this for almost a decade, on 
and off,8 he said. The City Council had not brought the issue to a vote 
because it was fairly well satisfied with the electric service provided by 
SDG&E, he said. However, recent developments &have certainly stimulated a 
different opinion,8 Gittings said. 
Within the next two months, the city expects to put out a request for 
proposals for a consultant to advise it on the road to municipalization, 
Gittings said. 
Thibadeau, who was mayor of San Marcos in the mid-1980s and early 1990s, is 
running for a seat on the City Council in the November election. He is urging 
city officials to move as fast as they can to find a new supplier. The 
difference between SDG&E,s residential rates (as of late August) and the cost 
of buying power from an alternative supplier such as Enron amounts to $48,000 
a day, he said. 
Other cities in California have kept electric rates low by forming municipal 
utilities, he noted. In Anaheim, residents are paying about 10 cents a kWh, 
or less than half what San Marcos residents are paying SDG&E, he said. 
&That,s what a municipal utility can do,8 Thibadeau said. 
SDG&E has said that it does not want to sell its distribution system within 
San Marcos and has urged the City Council to reject the idea of operating its 
own utility. &The city would have to pay SDG&E fair market value for our 
facilities, and that would cost millions and millions of dollars,8 said SDG&E 
representative Carol Dorman. &You would also have to hire between 200 and 300 
employees to design and maintain the system.8 
But Thibadeau said the city would not have to buy the investor-owned utility,
s distribution system in order to reap savings for its residents. He would 
like to see the city buy the system eventually, but for now the city could 
simply shop for electricity and pass the savings on, he said. SDG&E would be 
owed a fee for its transmission and distribution expenses, but residents 
would save on the cost of bulk power, he said. As a municipal utility, San 
Marcos also will be eligible for a share of low-cost federal hydro power, 
which currently is selling for 2.7 cents a kWh, he said. 
And the city could require all new utility easements to be dedicated to the 
city-owned utility rather than to SDG&E, Thibadeau said. This would gradually 
reduce the transmission and distribution costs being charged by the private 
utility, he said. 
Earlier this month, the California Assembly passed a bill to reduce wholesale 
electricity rates of SDG&E customers to about 6.5 cents a kWh. The payment 
ceiling would last until 2003, with the utility footing the bill for the 
remaining costs. But eventually those costs, plus interest, would become due, 
said Thibadeau. &What have we done?8 he asked. &Just spread out the problem.8 
The uproar over electric rates in the San Diego area has drawn attention from 
the federal government. The U.S. House Subcommittee on Energy and Power will 
hold a hearing today (Sept. 11) in San Diego on electricity deregulation. 
Tomorrow, the Federal Energy Regulatory Commission will hold a hearing to 
investigate soaring wholesale electricity prices in the region. 
?