By Ryan Murray | City News Service
Just one bid was received for San Diego’s next utility franchise agreement — a minimum $80 million offer from San Diego Gas & Electric to provide the city’s gas and electric utilities for the next 20 years, it was revealed Thursday at a special meeting of the City Council.
After months of public comment, debate and concern over the franchise agreements, the lone bid — actually split into a $10 million bid for natural gas and $70 million for electric — was a surprise for many who believed multiple energy companies had expressed interest.
The utility franchise agreement bid was unsealed and presented as an informational item. The council must take action at its next meeting on Jan. 12; the existing franchise agreement with SDG&E expires Jan. 17. It was originally signed as a 50-year agreement starting in 1970.
SDG&E, whose parent company is San Diego-based Sempra Energy, has been the sole electric and gas utility for San Diego since 1920.
Mayor Todd Gloria and five of the nine city council members were sworn in this month, leaving them just four weeks to decide whether to approve SDG&E’s minimum bid for 20 years, ask for an extension to allow new elected officials to get up to speed, cancel the process altogether and start over or pursue municipalization — purchasing and putting the city’s utilities under public control.
Many of the callers who weighed in Thursday urged the council to ask Gloria and SDG&E for a one-year extension rather than forcing a bad decision during an economic crisis. That route would be accessible with two-thirds council approval and would continue the service under the previously signed franchise agreement, City Attorney Mara Elliott said.
Councilman Chris Cate, one of the four incumbent members, expressed frustration at the delay.
“This is a process which has been undertaken for well over two years,” he said. “We knew the deadlines years ago.”
He said an extension wouldn’t be a good use of the city’s time or resources, and shot down the municipalization idea as a costly endeavor already looked at by analysts, which the city could ill afford as it grapples with budgetary fallout from the COVID-19 pandemic.
“It would not be coming from a fiscally prudent or service prudent standpoint as a city,” he said.
However, the majority of the council seemed to tilt toward taking more time and asking for an extension.
“We cannot commit to a bad deal because we are in an economic downturn at the moment,” said Councilman Sean Elo-Rivera. “This will affect us for years after the crisis has passed.”
Councilman Stephen Whitburn agreed.
“We must have the opportunity to do our due diligence,” he said. “We need to make sure that out city’s full menu of options have been thoroughly vetted.”
Councilwoman Marni von Wilpert said she didn’t see, in her experience as an attorney, how the current council would be able to make an informed decision in such a short time on a contract which will be worth billions to whichever company or institution takes it over. Councilman Raul Campillo said he was “in no rush” to sign a deal which wasn’t best for San Diego.
Gloria, who called for the special council meeting this week, seemed to agree.
“I am committed to a deliberate and thorough review of this complex issue that will affect every San Diego household and business in the city for the years to come,” Gloria said on Tuesday. “The public deserves to know what bids have been submitted. We must ensure that we do not squander this once-in-a- generation opportunity to help meet the city’s climate goals and protect ratepayers.”
The lone bid, for the minimum $80 million that former Mayor Kevin Faulconer set when he opened the bidding period Sept. 23, came as somewhat of a surprise. Berkshire Hathaway and Indian Energy had both expressed interest previously but failed to submit bids.
Callers, many of whom represented environmental and progressive organizations, urged the council and Gloria to make sure any agreement was in compliance with the city’s Climate Action Plan and included a Climate Equity Fund, two-year audits, a right-to-purchase clause if the franchise holder failed to meet standards, and an evaluation of public power.
Councilwoman Monica Montgomery Steppe said she had major issues with the bid standards as they stood, but would not approve a plan which did not offer protections for union workers.
Also reacting was a new coalition called Public Power San Diego, made up of Protect Our Communities Foundation, San Diego Democrats for Environmental Action, the Sierra Club, Democratic Socialists of America – San Diego, Citizen’s Franchise Alliance and other groups and individuals.
The group Thursday urged the City Council to move quickly to secure a professional valuation of the franchise and continue the studies needed to form a public utility.
“The former mayor’s proposal for competition has failed,” said Craig Rose, a member of the Citizens Franchise Alliance, which belongs to the 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 said that unless public power is pursued, San Diego faces the prospect of 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.”
Updated at 4:40 p.m. Dec. 17, 2020
— Ken Stone contributed to this report.