3 COUNCIL MEMBERS CALL FOR CHANGES TO DEAL WITH SDG&E
Franchise agreement will require approval from at least 6 of 9
Three members of the San Diego City Council say they want to see changes to a potential franchise agreement between the city and San Diego Gas & Electric. Council members Sean Elo-Rivera, Monica Montgomery Steppe and Joe LaCava each spoke Monday at a rally organized by local environmental groups.
While the council members did not go so far as to say they would absolutely not vote for a new deal with SDG&E, all three said they want Mayor Todd Gloria and the city to beef up some of the pact’s provisions.
“Where we’re at isn’t close to good enough,” Elo-Rivera said at the gathering, which attracted about 40 people at Civic Center Plaza.
Under city rules, any franchise agreement has to receive final approval from a supermajority of
the City Council, which means “yes” votes from at least six of the council’s nine members.
On Friday, the city opened sealed bids from energy companies looking to win the right to provide electric and gas services within the city limits of San Diego. But in a repeat of an earlier round of bidding under former
Mayor Kevin Faulconer, SDG&E was the only company that made an offer.
As per the terms laid out by Gloria, a new deal sets out a list of requirements — including the franchisee paying at least $80 million to the city ($70 million for the rights to electric service and $10
million for gas service).
Another major provision calls for the deal to run 10 years, with an automatic 10year renewal if the city deems the franchisee has complied with all terms and conditions — something
Gloria has called a “10plus-10” agreement.
As many council members did, Montgomery Steppe sent a memo to Gloria last month, noting items she wanted to see in a new agreement. Among them, she called for a pact running no more than five years and said the $80 million minimum was too low.
Montgomery Steppe told the Union-Tribune on Monday that she would not vote to approve the franchise agreement as it is currently written. “The terms laid out in my memo are clear,” she said.
Montgomery Steppe is the city of San Diego’s representative on the board of San Diego Community Power, the five-city community choice energy program that recently launched as an alternative to SDG&E when it comes to purchasing energy contracts.
The city’s existing franchise agreement with SDG&E, in place since 1970, runs through June 1. Gloria plans to bring a proposal before the City Council next month.
The terms of a potential deal are not set in stone. In a change from the Faulconer administration, Gloria and the city reserve the right to continue negotiations with SDG&E — even after the utility has submitted its offer.
“The current 10-year term, with an automatic renewal,
does not allow for competition, preserve our city options, nor secure accountability,” LaCava told the crowd.
In a brief interview afterward, LaCava said he was “a little bit disheartened by some of the elements of the bid from SDG&E” but would not say what specific items would need to be in a new agreement to win his vote.
“Until I actually see what the mayor brings to City Council, I’m going to reserve judgment,” LaCava said.
“Any franchise agreements will need to be ratified by at least six members of the City Council, so their input is valuable as I review SDG&E’s bids and prepare for negotiations,” Gloria said in an email. “I am committed to reaching agreements that represent a fair deal for ratepayers and taxpayers, advance our climate goals, provide equitable access to environmental benefits across all our communities and ensure strict accountability.”
SDG&E spokeswoman Helen Gao said the utility looks “forward to meeting with the mayor to discuss our bids and ways to implement a plan that ensures the development of the energy delivery system necessary to benefit all neighborhoods in the city.”
Of the three council members who spoke, EloRivera’s remarks were the most forceful, and he made
reference to the city’s lawsuit against SDG&E over $36.5 million the city spent to move the utility’s equipment that was obstructing the city’s Pure Water San Diego recycling project.
“Right now, while seeking two more decades of billions of dollars of profits from San Diegans, SDG&E owes the city of San Diego $36 million for breach of contract,” EloRivera said. “That should tell us all we need to know about how they will behave if they are guaranteed a 20year agreement.”
In the lawsuit, the city says the franchise agreement requires SDG&E to pay to move the equipment and wants to be reimbursed. The utility says it’s unfair that SDG&E customers who live outside of the city and do not benefit from the project should share in the move’s expense.
Monday’s rally featured speakers from the Climate Action Campaign, SanDiego350, the Citizens Franchise Alliance and other environmental groups. They called on Gloria to reject SDG&E’s bids and have the city explore creating its own municipal utility, such as the Los Angeles Department of Water and Power and the Sacramento Municipal Utility District.