Editor’s Note: An earlier version of this story incorrectly stated that the lawsuit was handled by former City Attorney Michael Aguirre and law partner Maria Severson. They are involved in a separate lawsuit alleging Brown Act violations during the city’s negotiation of the franchise agreement. That lawsuit is before an appellate court.
City Attorney Mara Elliott announced Wednesday that a lawsuit threatening to overturn the city’s estimated $3 billion franchise agreement with San Diego Gas & Electric has failed following a decision by Superior Court Judge Katherine Bacal.
The decision found the city followed appropriate competitive bidding processes and will not be required to re-bid the agreement.
Elliott said the judgment in the suit brought by The Protect Our Communities Foundation vindicates the city’s position that the agreement with SDG&E was lawfully negotiated and confirms the franchise fees are not taxes.
“This is an extremely positive outcome for San Diego taxpayers,” said Elliott. “This lawsuit threatened to create a massive hole in the city’s budget to the detriment of those who live in our city. Franchise revenue is essential to fixing streets and sidewalks, operating parks and libraries, and otherwise ensuring city operations.”
Under the terms of the franchise agreement approved by the San Diego City Council in June 2021, the city will receive approximately $130 million per year in franchise fees for the remaining term of the franchise, for an estimated $3 billion.
The city also receives $30 million to help advance its climate equity goals. In return, the city grants SDG&E exclusive use of public rights of way for transmission and distribution of electricity and gas, as well as the right to install and maintain wires, poles, power lines and underground gas and electric lines.
Judge Bacal’s decision gives the city greater flexibility if SDG&E fails to comply with the terms, according to city attorney’s office.
