On Thursday, December 17, the San Diego City Council and Mayor Gloria opened the bids for the right to provide gas and electric services within the city limits and discovered that San Diego Gas & Electric was the only entity that placed a bid.
This does not mean that SDG&E will be able to continue with its century-long monopoly on the city’s power. Neither the Council nor the Mayor took any action.
Jessica Lawrence, Gloria’s director of policy, informed the Council the mayor’s staff would review the bids along with the City Attorney’s Office to determine whether the SDG&E bid has met all the requirements laid out by the city. His office will then consider what steps should be taken next. Lawrence said, “The mayor may reject (the bids), he may cancel the process entirely, he may make recommendations for award of any responsive bid.”
Todd Gloria has the power – under the “strong mayor” system of city government – to call for a vote on the franchise agreement by the city council, but it is the council who has the final say on accepting any new franchise agreement. It will take a supermajority of at least six of the council’s nine members to approve a deal. During the virtual meeting, councilmembers urged Gloria to continue to work on securing an extension to the current agreement – which runs out on Jan. 17, 2021.
Groups and organizations that have been working for a publicly-owned entity to run the city’s utilities had good and bad things to say about the process and the state of the deal. They see a potential opening for the city to at long last use the opportunity to begin the process to create an utility that is owned by the public, by the city.
Public Power San Diego urged the Council “to move quickly to secure a professional valuation of the franchise and continue the essential studies needed to form a public utility.” They believe it has become evident that there’s a need for a new approach as former Faulconer’s plan just produced one bid.
“The former mayor’s proposal for competition has failed,” said Craig Rose, a member of the Citizens Franchise Alliance, which belongs to the Public Power San Diego coalition.
“The only real competition is between San Diego Gas & Electric – which earns $1 million a day and charges us the highest rates in California – and forming a public utility, which charges far lower rates in scores of cities around the state.”
The group fears that the city will be forced to accept a single bidder for a business whose value exceeds $15 billion.
“San Diego must put public power on the table as a competitive option to the status quo,” said Bill Powers of Protect Our Communities Foundation.
“Otherwise, we’re bound to lose billions of dollars while we’re struggling with the pandemic, with climate change and the need to address environmental injustice. San Diego can’t afford that kind of a loss.”
The coalition maintains that the City’s hired consultant failed to accurately assess the franchise value, setting the stage for an absurdly low bid of $80 million for a franchise valued in billions of dollars. While the consultant miscalculated the franchise value at roughly $6 billion, evidence suggests the value of a franchise to provide utility service over the next two decades exceeds $15 billion.
The group Public Power, obviously advocates for the creation of a public non-profit utility. The PPSD coalition includes Protect Our Communities Foundation, San Diego Democrats for Environmental Action, the Sierra Club, Democratic Socialists of America – San Diego, Citizen’s Franchise Alliance, as well as representatives of other groups and individuals. (For more information, please visit our website: publicpowersd.org )
The organization, SanDiego350, also released a statement and said it was “pleased that an overwhelming majority of the City Council called for more time on the city’s electric and gas Franchise Agreements to secure a better deal.”
They said that after 56 public speakers urged for an extension and the Council affirmed their support for this, they “call on Mayor Todd Gloria to reject the current bids, secure an extension, and forge a new path forward.” They listed a number of community and council priorities in securing any new agreement:
- a right to purchase clause,
- strong worker protections,
- cooperation on city climate and clean energy goals, and
- a climate equity fund.
- robust public process that includes a more thorough analysis and valuation of our energy system, and
- further exploration of the city’s options, including public power.
Joyce Lane, board member with SanDiego350, said:
“What I heard clearly today is that a majority of the Councilmembers want an extension so that they can do their due diligence, consult with their constituents and stakeholders, reevaluate the worth of the franchise, and explore all of the options to get the best deal for the city. The councilmembers want to ensure the deal includes a climate equity fund, accountability on the part of the franchisee, and worker and ratepayer protections.”
Sonja Robinson, Chair of the Public Power coalition, stated:
“We are looking to our Mayor and Councilmembers for their due diligence in assuring the best options for San Diego in addressing our need for rate relief. The current bid offer does not protect the City and residents of San Diego by including a right to purchase, and offramp for better options that includes Public Power. We the people are paying the current Franchise fee that has locked us into the highest electricity rates in California. So in essence, SDG&E is living “rent free” on San Diego’s property.”
Mathew Vasilakis, Co-Policy Director of Climate Action Campaign, said:
“Our community has been devastated by the COVID-19 pandemic and economic crisis, but we have an opportunity to secure a win for residents through a better Franchise Deal that leaves no money off the table in our path to economic recovery, ensures that we can meet our climate and equity goals, and that holds our utility accountable. We look forward to working with our Council and Mayor.”
This could be the opening for advocates of a public-owned utility to serve San Diego’s residents and businesses. And the city shouldn’t blow it.
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From the U-T: The San Diego City Council has called a special meeting for Wednesday to vote on granting an extension to the soon-to-expire SDG&E franchise agreement, which covers electric and gas services within the city limits.
However, Mayor Todd Gloria’s office would not disclose the length of the extension the mayor will put before the council. And by the close of business Monday, SDG&E officials declined comment to the Union-Tribune about any details or negotiations it has had with the city about a possible extension.
According to the San Diego City Attorney’s Office, any addition to the existing franchise agreement must be approved by both the city and SDG&E. https://www.sandiegouniontribune.com/business/story/2020-12-28/sd-city-council-to-vote-wednesday-on-temporary-extension-of-franchise-agreement-with-sdg-e