Tommy Nguyen, owner of Cross Street Chicken and Beer, poses inside his new location at Del Mar Highlands Town Center in San Diego, CA on Feb. 28, 2022. (Kristian Carreon/inewsource)
By Anissa Durham
As rising costs driven by inflation and supply and demand issues pile up on residents and business owners, a recent spike in San Diego Gas and Electric bills has left customers even more exasperated. But who is to blame for the rate increase and when will San Diegans get some relief on their bills?
Residents and business owners told inewsource they’ve seen their bills spike in recent months with some more than tripling — and thousands of customers have called on SDG&E to complain about the unaffordable rates.
Tommy Nguyen, owner of Cross Street Chicken and Beer in Convoy, said his bill has increased at least 20% since the new year. He recently opened a third restaurant location and said the jump in his gas and electricity bill has put a strain on his business.
“With the increase now in SDG&E going up, it just literally tackles on another expense and I kind of was already bracing myself for this because everything just got more expensive over the past year or so,” he said. “I’m just questioning why? … Is it because energy is more expensive? Or is it because policies and mandates make them more expensive?”
Nguyen is not alone.
San Diegans erupted in outrage last month after reporting spikes in their electric and gas bills. A month later, some are asking whether they’ll be hit again with a similar expense.
Customers won’t find a clear answer.
Leaders of San Diego Electric & Gas say that the driver of the high bills was an unusual spike in the cost of natural gas, which changes monthly, combined with increased use as temperatures in San Diego dropped to record lows. While they’re hopeful the cost of gas will drop as temperatures rise, there’s nothing to prevent a spike from happening — and getting passed on to customers — again.
Customers will soon have a better sense of whether the electricity portion of their bills, which change annually and increased in January by 11%, will increase again next year. The company files its first rate change plan in the spring with the California Public Utilities Commission, which must approve any rate hikes.
Offering no immediate guarantees that bills won’t spike again, SDG&E executives instead say paths to lower bills lie in legislative action that could take years to come to fruition.
Power lines are shown in San Diego’s Tierrasanta neighborhood, Dec. 15, 2020. (Zoë Meyers/inewsource)
Meanwhile, some public officials are asking for answers and for the state to pick up the tab.
California Assemblyman Brian Maienschein, representing the 77th District, which covers the areas of northeastern San Diego, sent a letter to Alice Reynolds, the president of the California Public Utilities Commission requesting answers to a series of questions about the increase in SDG&E rates.
In the letter, Maienschein wrote, “I have heard from many of my constituents that their monthly gas and electric bills have almost doubled or tripled as a result of recent rate increases.” He requested further clarification by Feb. 25, in light of the families who have struggled throughout the COVID-19 pandemic.
“As many families are already struggling through the COVID-19 pandemic, this increase in a utility as essential as energy is particularly untimely,” Emily Webber, a spokesperson for Maienschien’s office said in an email. “Not only this, but many San Diegans, including myself, were caught off guard by this increase.”
Jim Desmond, who represents District 5 on the San Diego County Board of Supervisors, sent a letter to Gov. Gavin Newsom requesting immediate action to alleviate rising energy costs.
“My office has been contacted by residents concerned with the sudden rise in energy costs and increases in utility rates,” Desmond wrote in the letter. “My constituents are concerned with their ability to pay for recent increased energy bills, especially seniors who are on fixed incomes.”
He requested the anticipated $45.7 billion state budget surplus in 2022 be redirected to relieve ratepayers from the burden of paying for wildfire mitigation and energy infrastructure, thereby lowering energy bills.
How business owners are impacted
The spike in utility bills come at a time when businesses are already struggling with pandemic setbacks.
Nguyen opened his first restaurant location in 2017 in Kearny Mesa. He said his SDG&E bills have been consistent throughout the last five years. But when COVID hit, it contributed to the supply chain crisis and vendors started increasing the prices of fresh chicken.
Nguyen says the pandemic has put a dent in his revenue, which makes the latest sudden spike in his power bill more painful.
“I feel like small businesses kind of get the end of the stick right now,” he said. “I don’t feel like there’s much help going towards us.”
Tommy Nguyen, owner of Cross Street Chicken and Beer, poses inside his new location at Del Mar Highlands Town Center in San Diego, CA on Feb. 28, 2022. (Kristian Carreon/inewsource)
SDG&E offers several programs for residential customers, but only a couple for commercial businesses. The business energy solutions program is only available to local government and public higher education customers and the small commercial program is not accepting new customers, which means Nguyen and other small businesses will not receive bill relief or reductions anytime soon.
“The issue is not in not having customers, the issue is in our overhead and in our expenses every single month. It literally consumes our revenue,” he said. “We’re several hundred thousand dollars in debt and behind on some of our bills.”
Nguyen said he has tried everything to scale back expenses without sacrificing the quality of the food they serve: sending home workers home during slower times, pushing heavily on takeout orders, trying to source new, less expensive vendors and focusing on a counter service model.
He’s also tried to make the latest location even more energy efficient, by using LED lights and tankless water heaters with the hopes of reducing his utility bill.
But the expenses are still mounting.
With little to no relief in sight, Nguyen said he’s taken to trading stocks to continue funding his restaurants, even tapping into his own personal savings to keep the business afloat. He said he’s been waiting for five years to get the business to a point where his family can reap the benefits of it — at this point, it hasn’t been profitable.
“I see the business as a passion project because I love it,” he said. “But at this point when everything is getting more and more expensive for us to operate, I just kind of see that date when going further out (is out of) our reach.”
San Diego Gas & Electric headquarters, San Diego, California. June 2016, (Megan Wood/inewsource)
SDG&E explains the rate hike
Scott Crider, SDG&E senior vice president of customer services and external affairs, said several factors are driving costs up for consumers. In addition to the spike in natural gas costs and increased gas consumption, inflation and the company’s clean energy goals have also caused bills to go up.
“The affordability challenge is not just an SDG&E issue. This is a California wide issue right now that is affecting all the utilities,” Crider said.
Representatives of other major California utilities reported similar spikes in gas prices that were passed on to customers.
Pacific Gas and Electric residents in Northern and Central California saw their gas bill increase on Jan 1. by about $37 on average, with $18 of the increase due to the natural gas commodity.
“Natural gas commodity prices began increasing last spring, accelerated through last fall, and have continued into 2022,” said Lynsey Paulo, a spokesperson for PG&E. “Prices have been about 90% higher in PG&E’s service area. This is consistent with the overall increase in gas prices nationwide.”
Paulo said as of Mar.1 the average gas bill was $69 for residential customers who don’t get discounts through its CARE aid program for low-income customers.
The Sacramento Municipal Utility District is a community-owned nonprofit that provides electricity to Sacramento residents.
“Our rates are on average 37% lower than PG&E and are among the lowest in the state,” said Lindsay VanLaningham, a spokesperson for the Sacramento utility, which is not governed by the California Public Utilities Commission.
Different factors control the cost of gas and electricity for consumers, Crider said.
Natural gas prices change every month, and the utility passes on that total cost to customers. This January, the cost of natural gas was 25% higher than it was in January 2021. San Diegans also used more gas in December and January as temperatures plummeted, which caused their bills to spike.
As the weather starts to get warmer and the supply constraints go down, SDG&E expects the price of natural gas to trend down, too, providing customers some relief.
Electricity prices are a different story. SDG&E sets the price of electricity once a year in November, after review from the California Public Utilities Commission. The price takes effect in January. This year SDG&E was approved for an 11% increase in electricity rates, and customers’ recent bills reflected that increase.
In addition to paying for the amount of gas and electricity they use, customers also pay for several other things in their bills, including the cost of generating that energy and delivering it to their homes and programs mandated by the state, such as those aimed at offering financial relief to low-income customers.
SDG&E also is trying to strike a balance between keeping costs low for customers while also helping California and San Diego meet their climate goals, Crider said.
“The challenge for the state is how can we continue to invest in reliability in wildfire safety, clean energy and help get ready for the electrification needs to help decarbonize the grid,” Crider said. “How can we continue to manage all of those investments while at the same time making sure that we’re keeping an eye on affordability?”
Power lines are shown in San Diego’s University Heights neighborhood, Dec. 15, 2020. (Zoë Meyers/inewsource)
Edward Lopez, the executive director of Utility Consumers Action Network in San Diego, said he has heard from numerous members “expressing outrage and pain” due to the increase in SDG&E bills.
For more than 30 years, UCAN has intervened on behalf of utility customers in utility regulatory proceedings.
“We always advocate on behalf of the SDG&E customers in the case of program cost, rate hikes or rate proposals,” he said.
Every three years, all of the utilities governed by the California Public Utilities Commission meet for a review of the cost of capital to determine the return on rate base and return on equity, which figure into how much profit the company makes, Lopez said. UCAN is arguing that SDG&E could save ratepayers more than $16 million dollars by allowing an already scheduled reduction of the company’s return on equity.
Instead, SDG&E is fighting that downward adjustment, citing the pandemic as a reason to keep the profit margin in place.
Although there is much uncertainty about when SDG&E customers can expect to see their bills decrease, Lopez asks that the company listens to the struggles of its customers.
“Just be thoughtful, considerate and mindful of the fact that customers end up paying for all these operations and expenses and programs,” Lopez said about what he’d like to see from SDG&E executives. “It’s becoming very difficult, increasingly so, for residents to achieve the California dream.”
What SDG&E taking action means for San Diegans
SDG&E provides energy service to 3.7 million people through 1.4 million electric meters and 873,000 natural gas meters in San Diego and southern Orange counties.
In recent weeks residents and business owners throughout the county have flocked to SDG&E with complaints, questions and many are demanding answers. Crider said he has personally spoken with many customers and understands the concern and frustration.
“I would tell them we’re listening. We’ve heard from thousands of customers in recent weeks and we know that a lot of families are struggling right now. And we’re taking action,” he said.
“Bill stability is an absolute priority for us.”
When asked what steps SDG&E is taking to lower costs for customers, Crider said the utility is pursuing legislation to have the state cover the costs of several energy programs customers are currently paying for, but legislation can take a while to pass, he said.
The legislation, if it becomes law, “would save customers more than $350 million annually, reducing the average family’s bill by about $90 a year,” according to Helen Gao, an SDG&E spokesperson.
To meet the state’s goal of 100% clean energy by 2045, Crider said SDG&E is going to need additional investments from the state and federal governments — funding that the company cannot generate while relying solely on monthly customer bills.
SDG&E also is waiting to see what impact the $1 trillion infrastructure bill will have on energy infrastructure.
“This is a multi-decade transition,” he said, adding he knows customers want to see “immediate action.”
When will relief come?
Customers of SDG&E on social media have criticized the company, including its highly paid executives, asking whether the company could have done more to prevent the spike in bills.
When inewsource asked whether executives could have shouldered some of that burden, Crider said, “Executive compensation isn’t allowed to be in rates in California for the utilities. There was legislation passed in 2018. When somebody looks at a chief executive officer’s salary, that’s not actually in rates.”
Rates are always set and approved by the California Public Utilities Commission, Crider said. Electricity prices will remain in place for the remainder of the year, but an initial filing by SDG&E around spring time will determine what the costs for utilities will be in 2023.
The California Public Utilities Commission did not respond to multiple requests for comment.
Crider pointed to multiple of SDG&E’s customer support programs aimed at helping eligible customers lower their bills; a couple of these programs rolled out last summer. The CARE program provides a 30% or more monthly bill discount to residential customers who meet certain qualifications, and the FERA program offers an 18% monthly discount to families of three or more.
“A third of our customers get a 35% discount on their bill,” he said. “For our most vulnerable customers that’s a lot of relief.”
Customers may also receive debt-relief from the $62 million of pandemic relief funding California received due to the pandemic. Crider said this is being applied to customer bills now, and SDG&E is partnering with local governments who had about $15 million in debt relief using federal funds.
Residents still have questions
For some SDG&E customers, the spike in their bills raised questions about whether the company’s leadership had their best interests in mind.
Tia Kuhl, a homeowner in Linda Vista, said her house has 48 solar panels that power the electricity in her house. But she is stumped as to how her bill went from $90 a year to $2,700.
“So that came as a tremendous shock particularly for two people who are on a fixed income,” she said. Kuhl and her husband are retired teachers.
Kuhl says she called SDG&E several times but was unable to get a clear explanation for the jump in her bill. “We paid that bill which hurt,” but since the increase SDG&E has sent them regular notices to help her keep track of the rates, she said.
“It’s rather ridiculous to have 48 solar panels and to be charged these amounts of money which we’ve never been charged before,” she said.
SDG&E chief executive officers make millions of dollars a year — Kuhl said. “I’m surprised these people aren’t ashamed of themselves.”
“The CEO’s want to keep making their bonuses and their huge salaries to the detriment of those around us,” she said.
Kuhl said her bill spiked despite trying to conserve energy, even on colder days.
“We’re cold, we don’t turn the heat on a lot. I just grin and bear it,” she said.
Penny Anders, a Linda Vista homeowner, said her SDG&E bill has jumped from $92 to $240 to now more than $300.
“It’s essentially tripled and I want to say almost quadrupled since last year,” she said. “My concern was that I had a spinal cord injury in August … now my income has just been reduced to nothing.”
On a fixed income, Anders said that after her injury the only income she can rely on is her disability checks. She says she applied to multiple SDG&E bill relief programs but she has yet to see any reduction in her bill.
The best she can do is to continue being frugal with her electricity, Anders said.