FRANCHISE NEGOTIATIONS TO START BETWEEN SDG&E, GLORIA

At least six City Council members needed to approve a new agreement

Mayor Todd Gloria said Thursday he will start negotiating with San Diego Gas & Electric officials “within days” to try to hammer out a new electric and gas franchise agreement with the city of San Diego.

“This is a rare opportunity to work on this and I feel fortunate to do this,” Gloria said. “It’s not going to be easy, I acknowledge that. This is a big transaction and the (San Diego City Council) is rightly going to establish a high bar for these negotiations but I intend to meet it.”

In a local government franchise agreement, a municipality grants a utility the exclusive use of public rights of way for transmission and distribution, as well as the right to install and maintain wires, poles, power lines and underground gas and electric lines.

The existing agreement between the city and SDG&E, in place since 1970, runs through June 1.

Last month, Gloria issued an Invitation To Bid, hoping more than one energy company would compete to win the franchise agreement. But in a repeat of what happened under former Mayor Kevin Faulconer, when the bids were unsealed last week, SDG&E turned in the only offer.

Among the terms laid out by Gloria, bidders must pay at least $80 million ($70 million for the electric franchise and $10 million for the gas franchise) to the city. Also, the agreement would run for 10 years, with an automatic 10-year renewal

if the city deems the franchisee has complied with all terms and conditions.

Plus, the terms allow for Gloria and representatives of the city to continue negotiating with the bidder, even after offers have been made.

SDG&E spokeswoman Helen Gao earlier this week 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.”

However, it takes a supermajority of at least six of the nine

members of the San Diego City Council to approve a franchise deal and three members — Joe LaCava, Monica Montgomery Steppe and Sean Elo-Rivera — have said they want an agreement with tougher terms for SDG&E.

The three spoke Monday at a rally organized by local environmental groups that have urged Gloria to reject SDG&E’s bid.

“First off, we have to have an energy provider,” Gloria said. “There have been issues raised ... that folks want to see, hear and know and we’ll take that to the bidder and see what they can live with. Ultimately, we’re looking out for the best interests of the city, our ratepayers and the needs” of the city’s Climate Action Plan.

Under the climate plan, the city is legally mandated to go to 100 percent

renewables and reduce greenhouse gas emissions by 50 percent by 2035.

City Councilwoman Marni von Wilpert said Thursday she needs to see what will be in a forthcoming cooperation agreement between the utility and the city.

“I’m waiting for the (cooperation agreement) to be put on paper to see, are they going to meet our Climate Action goals?” von Wilpert said. “Are they going to make sure they’re a good partner in terms of when they do construction work on our streets and right-ofways, do they fix it the way that they should? Are they responsive to customers in terms of rates and billing? And so once I see all those goals, then I’ll better evaluate what I think our deal should be.”

Some council members have called for a shorter agreement, such as a five-year deal, to give the city more f lexibility in a fast-changing energy landscape. SDG&E officials have said they prefer a term of about 20 years, citing the long-term nature of power projects and contracts.

The Gloria administration plans to bring a proposal to the City Council to vote on next month.

“The bid that was submitted is, I think, a great opening offer,” Gloria said. “We may have some requests for modifications, sort of back and forth, and I think that is extremely healthy and my goal is to present something to the city council that can gain their support.”