Multi-Billion Dollar Energy Franchise Deal Could Be Delayed Another Year

Speaker 1: 00:00 San Diego city council may have an extra year to make a key decision about who will get the contract to distribute electricity to city residents for the next 20 years, SDG has held the franchise for the last 50 years and would like to keep it. Council president Georgette Gomez has written a memo to mayor Faulkner calling for more time and maximum transparency in finalizing a contract that will be worth billions for whoever wins the bid KBB, a science and technology reporter. Shalina Chitlin. He is covering this and she joins us now. Shelina welcome. Hey, glad to be here. Remind us why is this contract so significant? What's at stake here. Speaker 2: 00:39 So 50 years ago, the city of San Diego signed a agreement, a franchise agreement for San Diego, gas and electric to basically have the right to tear up street property and put it put in their wires and poles to give the residents of San Diego gas and electricity in January, that contract expires. And so what's at stake. Here is a multi-decade, you know, two decades or more multi-billion dollar deal for another utility, potentially San Diego, gas and electric. Again, to enter in the same contract with the city of San Diego. Some people really want there to be another contract with a utility, specifically San Diego, gas and electric. So that's a lot of people who are, you know, within the union. For example, that's connected to SDG who just want to keep their jobs. So a lot of labor interests, um, but they're also environmental advocates who say, this is a big opportunity for us to completely change your energy future. We could completely break away from having a private utility, have control over our gas and electricity service. And instead the city for the first time could form its own utility and provide public power to residents and potentially give lower electricity rates to resonance could really be a huge redefinition of San Diego's energy future. Speaker 1: 02:02 So now the city council has bids in hand, but those bids are sealed. What does she say exactly about why she thinks the city council should postpone making a decision from next year? Speaker 2: 02:12 She is the one who can actually put a vote on the docket to move forward with opening. The bids and council then decides whether they actually want to go forward with that and, um, set up an agreement with a utility. So Gomez has decided, as she said in her memo that she thinks the city needs more time to figure out its best options. Given the amount of disagreement that was among city council members and how this, you know, franchise agreement, which will last for decades, um, will affect, um, residents of San Diego. Speaker 1: 02:48 And the mayor cannot go ahead without the city council, right? Speaker 2: 02:51 No, the mayor's office doesn't have any authority to docket a vote on the franchise agreement. Speaker 1: 02:57 So how was the mayor and other city council members reacted to Gomez? Speaker 2: 03:02 Well, I received a statement from Amy faucet. She's the interim chief operating officer for the city. And she wrote that it is quote, irresponsible to San Diego runs for city council to disregard a potential agreement, um, that has received so much interest from the energy industry and that's worth billions of dollars in potential revenue for Denado's climate and equity goals. Speaker 1: 03:23 And how about SDG and E have they expressed any reaction? Speaker 2: 03:27 So SEG and another statement said that they are quote surprised about this decision from council president Gomez, because they were, you know, basically under the impression that the bids would be opened and a winning utility would have a contract by the end of the year. Speaker 1: 03:44 Do we know how many companies have submitted bids? Speaker 2: 03:46 So the mayor's office says that they are not aware of how many utilities have submitted bids. Those are sealed, um, in envelopes at the city clerk's office, they haven't been opened yet. The only way that they can be open is if the opening of these bids is put on the docket by council, president Georgette Gomez. Speaker 1: 04:04 So if the deal is delayed, is it possible that the newly elected city council that's just been elected, could scrap the existing agreements and start over. Speaker 2: 04:14 It's sort of unclear at this point, I'm still waiting on some clarification from the mayor's office about this, but they could potentially reopen the auction. It's, it's unclear that would probably have to go through the city attorney's office, but for now they are legally allowed to extend a contract with San Diego gas and electric. Speaker 1: 04:36 So this delay in finalizing an agreement would not jeopardize the reliability of San Diego's power supply. Speaker 2: 04:42 No, it would not under a California public utility commission code. The utility cannot just cut off the power. Even if the contract expires, they have an obligation to serve. And so they have to continue serving residents of San Diego. Speaker 1: 05:00 If Gomez gets her way, a lot more options will be before the city council. Speaker 2: 05:07 That's right. There are a lot of options, um, that are at stake right now. There's the option of the city potentially forming its own utility. Um, there's another option of, you know, engaging more with the community choice aggregation program. The city of San Diego voted up to have, that's a program where, um, you know, this entity can decide where to buy power and sell that to the city of San Diego as a public utility. Um, and then there's also the potential of, uh, the city of San Diego engaging in a contract with another utility, or perhaps there's the future of having a contract extension with San Diego gas and electric. Speaker 1: 05:48 We've been speaking with Shelina chatline, who is KPBS science and technology reporter. Thanks so much for filling, essentially, Lena, thanks for having me. Speaker 3: 06:04 [inaudible].