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San Diego Mayor Reopens Bidding Process For Right To Provide Electric, Gas Services

Power lines at an SDG&E facility in North Park are seen here on Sept. 26, 2017.
Andrew Bowen
Power lines at an SDG&E facility in North Park are seen here on Sept. 26, 2017.

San Diego Mayor Todd Gloria on Friday officially reopened bidding for the right to provide electricity and gas services to homes and businesses — and he’s pushing for more cooperation on the city’s climate goals.

Technically any qualified company can bid on the city's electric and gas franchises — agreements in which a private company pays the city fees in exchange for access to electrical wires and gas pipelines on public land. But it's likely San Diego Gas & Electric will be the only bidder, since no other companies submitted bids under the last process initiated by former Mayor Kevin Faulconer.

Gloria canceled that process shortly after taking office, saying SDG&E's offer did not meet the minimum qualifications. His new "invitation to bid" sets the minimum bids for the electric and gas franchises at $70 million and $10 million, respectively — the same amounts sought by Faulconer.

But Gloria said his demands were more favorable to city taxpayers because he is giving the city the chance to negotiate the details of the agreement after bids are received while Faulconer's offer was a "take it or leave it" deal.

Gloria added that he was seeking an agreement of 10 years, after which the city could exit the deal or renew it for another 10 years. Faulconer had offered a 20-year agreement. Gloria said he also inserted language to require the utility to cooperate on the city's climate action plan and other sustainability and equity goals.

"The invitation to bid that we are releasing today is the latest in our continuing efforts to create a greener San Diego," Gloria said at a press conference Friday. "It will help us to create a city where all communities have equitable access to environmental benefits."

SDG&E said in a statement: "We are reviewing the invitation to bid, and we look forward to responding when we have completed our analysis of the content."

RELATED: San Diego Kicks Off Public Outreach On Pending Utility Deals

For months, activists have been pushing Gloria to strike a harder bargain with SDG&E, which they say is earning massive profits while charging customers some of the highest energy rates in California. They also accuse the utility of not being a good faith partner with San Diego on efforts to reduce greenhouse gas emissions.

Matthew Vasilakis, co-director of policy for the nonprofit Climate Action Campaign, said the mayor's invitation to bid was still not strong enough to ensure SDG&E's cooperation on the city's climate goals. He added there was no meaningful difference between the 20-year deal sought by Faulconer and Gloria's proposal for a 10-year deal with a 10-year extension.

"This is a disappointing and one-sided proposal and we hope the City Council will see through this, demand more, and not make a deal with the devil," Vasilakis said.

Some activists want to see the city government take over electric and gas services and form a municipal utility like those that exist in Los Angeles and Sacramento. But that process is fraught with risks as SDG&E would likely battle the city in court.

Gloria's invitation to bid does not include a requirement that SDG&E sell its assets to the city based on an independent appraisal. This so-called "right to purchase" clause was recommended by an independent consultant hired by the city as another accountability measure.

"With no independent and accelerated right to purchase clause, the city will have no options over SDG&E or any realistic pathway to public power for decades," Vasilakis said.

Companies have until April 16 to submit bids on the franchise agreements. Gloria said he would seek City Council approval to enter negotiations with his preferred bidder in May with a goal of reaching a final agreement before the June 1 expiration of the current franchise agreements.