Lawsuit Alleges Mayor Gloria’s Bid Invite for City’s Utility Franchises Favors SDG&E and Violates City Charter

A lawsuit filed by a long-time City Heights resident alleges that the recent invitation to bid on San Diego’s utility franchises by Mayor Todd Gloria favors SDG&E and actually violates the city charter.

Resident John Stump, an attorney, has initiated the lawsuit in which it’s alleged that Gloria’s bid process violates Section 103 of the charter, which requires a two-thirds vote of the City Council to approve a franchise agreement. Stump is represented by the prestigious law firm Aguirre & Severson (that’s Mike Aguirre – the former City Attorney for San Diego); the firm’s Maria Severson told the press that the invitation favors SDG&E.

If the invitation is “designed for SDG&E to be the only responsive bidder, then that is usurping the city council’s power because it’s really preventing free and open competition,” Severson said, quoted by the San Diego Union-Tribune.

City Attorney Mara Elliott’s office stated it “will review the complaint and respond through the courts” to the lawsuit, recently amended.

Stump is not the only one concerned that SDG&E may again turn in the only bid. A number of environmental and political groups have criticized the terms of the bid invite as too lenient toward San Diego Gas & Electric, the currrent utility. Craig Rose of the Citizens Franchise Alliance called the proposal “a stunning giveaway of billions of dollars.”

San Diego’s current extended agreement with SDG&E ends on June 1. They’ve had a monopoly on the city’s franchises for a century. And SDG&E was the only bidder when former Mayor Faulconer opened up the bid process late last year. Critics then contended Faulconer favored SDG&E. Now, the same complaints are bubbling up about Mayor Gloria.

From San Diego Union-Tribune:

In a franchise agreement, a utility is granted 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 within the city limits of a given municipality. ……

The invitation’s items included a proposed agreement lasting 10 years, with an automatic 10-year renewal if the city deems the partner has complied with all terms and conditions. It also called for a minimum bid of $80 million — $70 million for the electric franchise agreement and $10 million for the gas franchise agreement. In a change from Faulconer’s plan, once the bids are unsealed, the city and the Gloria administration will continue negotiating with the energy company that turns in the best offer. …

As for the lawsuit, it is part of a larger complaint against the city and SDG&E on behalf of San Diego resident John Stump regarding the Pure Water San Diego Project. The project is designed to reduce ocean pollution and increase the city’s water supply. The dispute centers on existing SDG&E equipment that is obstructing a portion of the project.

The city says SDG&E should pick up the tab for moving the infrastructure but the utility has refused, saying it is unfair that some of the costs of the project should be shouldered by customers living in communities outside of San Diego who would not benefit from the program.

To move the project along, the city — under protest — paid SDG&E $35.6 million under what is called a “Reservation of Rights Agreement” to have the utility design and relocate existing gas and electric utilities along the project’s right of way. In January 2020, City Attorney Mara Elliott filed a 94-page lawsuit in Superior Court to compel SDG&E to reimburse the $35.6 million.

The Stump lawsuit — a separate legal action — says the money the city paid to the utility violates the California Code of Civil Procedure. The suit cites a specific section of a franchise agreement that states SDG&E is required to pay the city for any and all relocation costs. Severson said the the city should have barred SDG&E from taking part in the invitation to bid because the utility has not paid the relocation costs in the Pure Water project.