Mayor Todd Gloria Rejects SDG&E's Utility Franchise Bid, Will Seek Extension
Taking swift action after Thursday's San Diego City Council meeting in which a lone franchise utility bid was revealed, Mayor Todd Gloria Friday announced he was rejecting San Diego Gas & Electric's bid for the city's gas and electric utilities.
The lone bid revealed Thursday was for $80 million — the minimum amount set by former Mayor Kevin Faulconer in September for the 20-year contracts — and many callers into the meeting asked for the council to ask for a one-year extension for the new mayor and councilmembers get up to speed.
The Thursday meeting was informational only, but the information was enough for Gloria.
"After reviewing the bid submitted by SDG&E and consulting with the City Attorney's office, we have determined their bid is unresponsive to the city's invitation to bid. Therefore, I am rejecting the bid and canceling the current ITB process," Gloria said. "I will be pursuing an extension of the existing agreement between the city and SDG&E to allow enough time for the new City Council to get up to speed and more opportunities for public engagement to occur."
The council must take action at its next meeting on Jan. 12; the existing franchise agreement with SDG&E expires Jan. 17. It was originally signed as a 50-year agreement starting in 1970.
SDG&E, whose parent company is San Diego-based Sempra Energy, has been the sole electric and gas utility for San Diego since 1920.
Gloria and five of the nine city council members were sworn in this month, leaving them just four weeks to decide whether to approve SDG&E's minimum bid for 20 years, ask for an extension to allow newly elected officials to get up to speed, cancel the process altogether and start over or pursue municipalization — purchasing and putting the city's utilities under public control.
Councilman Chris Cate, one of the four incumbent members, expressed frustration at the delay on Thursday.
"This is a process which has been undertaken for well over two years," he said. "We knew the deadlines years ago."
He said an extension wouldn't be a good use of the city's time or resources, and shot down the municipalization idea as a costly endeavor already looked at by analysts, which the city could ill-afford as it grapples with budgetary fallout from the COVID-19 pandemic.
"It would not be coming from a fiscally prudent or service prudent standpoint as a city," he said.
Other councilmembers urged patience.
"We cannot commit to a bad deal because we are in an economic downturn at the moment," said Councilman Sean Elo-Rivera. "This will affect us for years after the crisis has passed."
The lone bid came as somewhat of a surprise. Berkshire Hathaway and Indian Energy had both expressed interest previously but failed to submit bids.
Gloria said he would look at all the options ahead of the city.
"At the end of the day, my objective will be to make sure an agreement meets the needs of residents, makes financial sense for the city, is fair to ratepayers, is consistent with the goals of our Climate Action Plan and includes equitable access to environmental benefits for all our communities," Gloria said. "I will be working with the City Attorney and City Council to fully evaluate all options and next steps to achieve this goal."