SDG&E crew working on a power pole
An SDG&E crew works on a power pole. Photo courtesy of the company

Mayor Todd Gloria announced Friday a tentative agreement with San Diego Gas & Electric to provide electricity and natural gas service in San Diego for another 10 years.

The agreement comes after Gloria rejected the utility’s initial bid for 20 years, and the City Council extended the current 50-year-old agreement for another six months until June 1. There were no other bidders.

“The agreements I’ve reached with SDG&E reflect our renewed partnership to address the existential threat of climate change, while providing financial benefits to the city,” Gloria said.

“If approved by the council, these agreements put us on a path toward environmental sustainability, community equity and financial certainty, while providing an easy off ramp for the city. This is a better deal for the city and for ratepayers,” he said.

SDG&E, whose parent company is San Diego-based Sempra Energy, has held the exclusive franchise to provide gas and electric service since 1920. The franchise agreements allow use of the public right-of-way for pipes, poles and wires to provide energy to residents and businesses.

Key elements of the tentative franchise extension are:

  • An initial term of 10 years, with the potential for a 10-year renewal
  • The City Council may terminate after 10 years for any reason
  • An initial bid payment from utility shareholders of $80 million
  • $3 billion in revenue to the city over 20 years
  • An accelerated program of placing electric lines underground
  • Biannual, independent audits of SDG&E’s performance under the agreement

Gloria said the agreement will reset the relationship between the city and the utility and ensure “unprecedented transparency about customer rates, environmental commitments and equity.”

Critics of the utility and its rates have called on the city to create a municipal utility, but buying out SDG&E would cost taxpayers as much as $9 billion.

Chris Jennewein

Chris Jennewein is Editor & Publisher of Times of San Diego.