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Mayor To Move Forward On Energy Franchise Deal, Though Council Lacks Agreement

The Sempra Energy building appears in this undated photo.

Credit: Sempra Energy

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

San Diego Mayor Kevin Faulconer plans to finalize terms and begin an auction for utilities to bid on a multi-billion dollar energy franchise deal with the city in the coming weeks.

Members of the San Diego City Council met Aug. 6 to discuss the terms of the franchise deal, but could not come to a consensus after two motions failed.

Listen to this story by Shalina Chatlani.

A spokeswoman for Faulconer’s office said the purpose of the city council’s meetings over the terms of a new energy franchise deal were only to provide advice to the mayor, who can still move forward without a direct resolution from the council.

“The purpose of this meeting was to gather input on the council's priorities in defining the terms of the franchise agreements. Keeping with the transparent process, Mayor Faulconer has sought input from the public, stakeholders, potential bidders and now the city council to help shape these terms,” wrote Rebecca Rybczyk, press secretary for the mayor’s office, in an email to KPBS.

The negotiation opens as San Diego Gas & Electric's 50-year contract expires in January. The City Council's Environment Committee voted July 16 to move a consultant’s report to the city forward to full city council.

RELATED: San Diego City Council Rejects Motion For New SDG&E Franchise Deal

The report, by JVJ Pacific Consulting, says the city should ask for a minimum bid of $62 million for the right to serve the city for decades. Community advocates say that's not enough money. The city said it's setting that bid to be "reasonable" and encourage competition.

An initial proposal by Council President Georgette Gomez was rejected 6-3 on Aug. 6 . 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 of around $300 million. Some said they wanted the winning utility to be able to pay the bid in cash, goods and services. The city’s attorneys said some of these measures would have to go through legal review.

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

Councilmember Barbara Bry has voted no from the environmental committee to the full City Council motions. She says the lack of consensus shows how “rushed” the process has been.

“It’s just to me that the council was all over the place. And part of it’s just not understanding what we were allowed to do, what we couldn't do, and not having enough good information,” she said.

Around 80 members of the public called in during the Aug. 6 meeting.

“There were sort of two different groups. There was sort of the environmental group that asked us to go slower. Many of them recommended municipalization. Then there was a group supportive of San Diego Gas & Electric, although we weren't voting on a specific company to get it,” Bry said.

Rybczyk says Mayor Faulconer will still proceed.

“The City will move forward with a bid that considers all the input received to date,” Rybczyk wrote. “The Mayor plans to bring the franchise agreement to City Council this fall.”

The final agreement will go to the full City Council, but the council will likely not get a chance to reconsider the terms of the franchise deal.

“A final two-thirds vote of the Council will be necessary to confirm the final agreement with the awarded utility following the bidding process,” Rybczyk wrote.

“The City-hired consultant advised that the current amount for the minimum bid is the best way to encourage competition. The goal is to get the best deal for San Diego ratepayers and this requires setting a minimum bid that not only encourages competition but provides the City with enough leverage to have its interests met.”

Though Bry says that move seems premature.

“It was a bad look for the council because we couldn't reach a consensus,” she said. “But I think it shows that more time was needed.”

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