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Multi-Billion Dollar Energy Franchise Terms Up For Vote, But Community Advocates Say They’ve Been Left Out

The Sempra Energy building appears in this undated photo.

Credit: Sempra Energy

Above: The Sempra Energy building appears in this undated photo.

The San Diego City Council could vote Thursday on the next steps for what could be a decades-long and multi-billion dollar energy franchise. This comes after the council’s Environment Committee voted July 16 to move forward with recommendations from a JVJ Pacific Consulting report on how to negotiate a bidding process among utilities that are vying for the chance to serve the city’s gas and electricity needs.

But community advocates say that the process has been rushed and that they have been left out of the process of deciding the terms of this deal, which could be a major source of revenue for the city.

Listen to this story by Shalina Chatlani.

In fact, the city is currently being sued by a San Diego law firm for allegedly violating open meeting laws regarding the terms of this deal. The law firm has asked the city to stop moving forward with recommendations from the report because of a lack of public participation.

But, the agenda item for the Aug. 6 council meeting reads, “resolution of intent approving certain terms for gas and electric franchises.”

The negotiation opens as San Diego Gas & Electric's 50-year contract with the city expires in January. And many in the community say city officials are giving away the energy opportunity for too little money. The city is currently considering the consultant’s recommendation to offer the franchise at a $62 million for a minimum bid. The potentially 20-year contract is estimated to be worth at least $6.4 billion. Though the city said these terms are set to be “reasonable” and encourage competition.

Included in the Aug. 6 agenda item is an amendment that would allow the winning utility to pay its bid in the form of “cash and services during the life of the agreement.” Those services could include “undergrounding, street lights, energy efficiency…” Community advocates have already spoken out against such an amendment, saying “services” is arbitrary and a utility could simply overcharge for basic services to pay off the minimum bid.

But some city volunteers, who are supposed to advise the Environment Committee, say they weren’t given the chance to present an opinion on the consultant’s report. Those volunteers include members of the Sustainable Energy Advisory Board, a group that includes representatives from different interests concerned with energy — from SDG&E to environmental advocates. One of the major goals of the board is to “advise the mayor and City Council on energy policy and be responsible for recommending future energy guidelines,” to help the city meet its 100% renewable energy goals by 2035.

Jay Powell, who has been an environmental advocate on the board since 2013, said the board received a basic presentation about the franchise bidding process in March. But, he said the board was not shown a copy of the JVJ Pacific Consulting report before the Environment Committee voted on July 16. Powell is a plaintiff in the lawsuit against the city.

“All we had was kind of an introduction,” said Powell. “And then it wasn't until the week before the July 16 Environment Committee meeting that the public, anybody else, got to actually see the reports and the recommendations of the consultants and the staff.” He added that some of the reports were dated as far back as April.

During the July 16 meeting, Councilmember Barbara Bry, who is running for mayor, asked Chief Operating Officer Erik Caldwell whether the committee had consulted with the advisory board on the report, as they had done when the city considered community choice energy.

Caldwell said, “We did not take this item to the advisory board as the franchise agreement is not listed as under their scope.”

Powell said that’s not correct. “It’s in our work plan,” Powell said. “It has been in there for well over two years to look at this issue and to make recommendations in that respect.”

A 2019 work plan document from the Sustainable Energy Advisory Board lists energy franchise agreements.

KPBS sent multiple emails and voicemails seeking comment to representatives Councilmember Jennifer Campbell, who chairs the Environment Committee, but didn’t receive a response. The Environment Committee oversees the board and would have referred the reports to members.

Powell said the advisory board ought to be receiving the consultant’s recommendations about the franchise process because the winning utility would need to abide by the city’s climate action and renewable energy goals. The board is tasked with helping the city meet those goals.

Currently, three utilities have tossed their names into the bidding process. They include the current franchise holder San Diego Gas & Electric under the parent company Sempra Energy. The other two are Berkshire Hathaway Energy and a smaller utility, Indian Energy of Orange County. SDG&E has said it is bidding, but it wants to pay a smaller minimum bid. KPBS reached out to Berkshire Hathaway but did not get a response.

Powell said both Sempra Energy and Berkshire Hathaway have investments in fossil fuels. And SDG&E’s sister company, Southern California Gas Co. is taking California officials to court over the state's climate change policy. Powell said he wants the chance to discuss these issues as the city considers which utility to conduct business with, since the winning utility must help the city meet its renewable energy goals.

“They talk about having an audit, you know, of the utility's performance. But the audits are too far between,” Powell said. “You better be a cooperating partner and we better be able to advance solar and these storage technologies of the future to everyone, no matter where they live, no matter what their income is. This is what we all need in order to achieve locally local clean power here for San Diego.”

Powell said the board wasn’t even able to reach a quorum to send a formal letter of recommendation to the City Council and mayor because for years the board has been at half capacity. The 11-member board only has six members.

KPBS reached out to the city about this issue. A spokeswoman wrote in an email that the Environment Committee voted last July to eliminate three boards, including the energy board, and create “a more streamlined Environment Advisory Board,” and that the item “awaits docketing for a full council vote.”

Powell said it’s the City Council and mayor’s job to fill those positions, but he said it’s been more than a year since the council has taken any action on these boards. Powell said the public deserves more of a say on a decades-long energy deal.

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Photo of Shalina Chatlani

Shalina Chatlani
Science and Technology Reporter

opening quote marksclosing quote marksI cover all things science and technology — from the biotech industry in San Diego to rooftop solar energy on new homes. I'm interested in covering the human side of science and technology, like barriers to entry for people of color or gender equity issues on biotech boards.

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