San Diego City Council Rejects Motion For New SDG&E Franchise Deal
Thursday, August 6, 2020
Photo by Andrew Bowen
The San Diego City Council twice rejected a motion to move forward with terms of a multi-billion dollar energy franchise deal.
The motion would have provided advice to the Mayor on how the city would begin an auction for a utility to bid for the chance to serve the city's electricity and gas needs. The negotiation opens as San Diego Gas & Electric's 50-year contract expires in January.
The City Council's Environment Committee voted on July 16 to move forward with a JVJ Pacific Consulting LLC report to the city. The report says the city should ask for a minimum bid of $62 million for the right to service the city for decades. Community advocates say that's too little of an amount. The city said it's setting that bid to be "reasonable" and encourage competition.
On Thursday, an initial proposal by Council President Georgette Gomez was rejected 6-3. The proposal asked for a 10-year deal with an automatic renewal if the franchisee could be considered a good partner.
A second motion was made by Councilmember Jennifer Campbell. She proposed accepting all of JVJ report's recommendations. It failed in a 5-4 vote.
Several councilmembers who voted no said they wanted to see numerous amendments like the inclusion of a climate equity fund and a higher minimum bid than the $62 million recommended by the city’s consultant. Several councilmembers, like Monica Montgomery of District 4, said they would like to see a bid to closer to $300 million.
"We tend to not realize that we have the assets, and the assets belong to the people ... I’m hoping we find a better way to value what we have," Montgomery said.
On the 5-4 vote, Montgomery voted no, along with councilmembers Barbara Bry, Scott Sherman, Vivian Moreno, and Georgette Gomez.
Sherman said he voted no because he wanted the winning utility to be able to pay the bid in cash, goods and services. Attorneys for the city said that suggestion, as well as the inclusion of a climate equity fund, would need legal review before it can be voted on.
Councilmember Campbell proposed adding an option to "explore" the creation of a climate equity fund in her motion, but Moreno said she didn't want to wait.
"We’ve already been through the environment committee meeting, where I asked staff to work with me on this. And that was not done," Moreno said. "So based on that, I cannot vote yes on this motion."
Councilmembers Jennifer Campbell, who introduced the motion, Mark Kersey, Chris Cate, and Chris Ward voted yes in the 5-4 vote.
Campbell supported moving forward with much of the consultant's report. But, she also pushed for the winning utility to have to retain employees within SDG&E. She also pushed for a comprehensive utility performance audit every two years.
Approximately 80 members of the public called in to speak on the motion. Around two dozen called in support of the proposed franchise terms. More than four dozen called to reject the motion and ask for shorter franchise terms, or for the city of form its own public utility instead.
The council will not have to consider the terms again, but will have to approve a final awardee by two-thirds vote after a month-long recess.
Currently, three utilities have tossed their names into the bidding process. They include the current franchise holder SDG&E, under 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 of around $1 million to $2 million.
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