Across Orange County, businesses are bracing for higher energy bills in the weeks ahead. But they haven’t seen anything yet, according to Susan Corrales-Diaz.
Her Orange-based Systems Integrated Inc., a designer and producer of water and electrical utility monitoring gear, has production and design operations in San Diego. Two years ago, San Diego Gas & Electric became the first California utility to open up under 1996’s energy deregulation law.
Corrales-Diaz said power bills for her San Diego site have tripled from $5,000 per month in 1999 to $15,000 per month.
“Most of Orange County hasn’t even yet begun to see the cost spikes that San Diego has,” said Corrales-Diaz, president and chief executive of Systems Integrated. “Not many companies can absorb a 200% increase in their power bills.”
Some OC businesses in South County already know what Corrales-Diaz is talking about. San Diego Gas & Electric serves about 100,000 OC customers who saw their bills skyrocket last summer. Regulators last year capped the utility’s rates,but at a higher level than the caps for Rosemead-based Southern California Edison, which serves most of OC, and San Francisco-based Pacific Gas & Electric.
The difference between what San Diego Gas & Electric customers pay and what the utility charges is shown on bills as an “electric energy rate adjustment.” That figure is not a credit, but a running tab. It is unclear whether customers, the state or the utility will pay that balance.
Up to now, most businesses in OC have seen steady increases in energy prices but not the big surge that San Diego Gas & Electric customers have endured.
“Everybody in San Diego has had to readjust as best they can,” Corrales-Diaz said. “But we obviously need our basic overhead costs,lights, computers and air conditioners. We have no ability to control those basic costs, so we’re basically stuck.”
Systems Integrated’s San Diego plant and offices employ 70 people, including software engineers, technicians, field officers and assembly workers that produce gear for automating water and electrical utility equipment.
Nice digs, to be sure. But San Diego’s electricity rates have swelled production costs, Corrales-Diaz said.
And she said she expects things to get worse as the weather heats up.
“The summer could be very, very troublesome for us,” she said.
For 25-year-old Systems Integrated, a decision made in the company’s early days to put production near San Diego’s naval facilities,then the company’s biggest customer,has come back to haunt it.
“Back then, the U.S. government was the only customer that could afford any kind of computer systems,” Corrales-Diaz said.
The bottom line: Corrales-Diaz said she is worried about how the high rates will affect her competitiveness in bidding for contracts.
“I bid for contracts in the U.S. and all over the world,” she said. “I’m competing with Chinese engineering firms and automation companies for international jobs and with those from other states if I’m trying to win domestic contracts.”
Last year, Systems Integrated saw revenue fall 16% to $14.2 million, something Corrales-Diaz attributes to normal business trends. The company provides monitoring services to water and electrical utilities based in Mexico City, China and Malaysia.
Systems Integrated’s San Diego facility spans 30,000 square feet. The company counts another 10 employees at its OC headquarters.
Corrales-Diaz said she would like to be able to shift production to off-peak electricity hours in the late evening and early morning.
Systems Integrated participates in San Diego Gas & Electric’s time of use discount program, but Corrales-Diaz said the program does not reflect the real costs of electricity at the time of use, thereby negating any advantage that could be realized by running plant at off-peak demand hours.
“The time of use does not move with the shifting power cost or the real world environment,” she said. “Rather it consists of three broad changes that change twice a year, which we have no real control to modify.”
Despite power wrangles, Corrales-Diaz said she has no intention of moving from San Diego.
“We don’t want to move our engineers from where they are, and it’s tough for us as a medium-size company to easily absorb the costs involved in shifting operations,” she said. “We’re pretty much rooted in San Diego.” n
