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Revisiting The City’s Contract With SDG&E

Cover image for podcast episode

PHOTO BY ANDREW BOWEN

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

The city of San Diego will soon negotiate a multi-billion dollar deal with a utility to provide gas and electricity to residents for years to come. Community advocates say this potentially lucrative agreement could be a significant source of revenue for the city. But, as KPBS science and technology reporter Shalina Chatlani finds, some are concerned that city leaders may be giving away too much. Plus: Your guide to Comic-Con’s offerings that are still available online, a new high in hospitalizations in the county and more local news you need.

San Diego News Matters is KPBS’ daily news podcast. Support the show: https://www.kpbs.org/donate

San Diego County public health officials Monday reported 529 coronavirus-related hospitalizations — a high for the month of July.
Officials also expressed concern about a weekend outdoor church service that attracted thousands of unmasked worshippers.
San Diego County Public Health Officer Dr. Wilma Wooten said the church service held Sunday evening on Cardiff State Beach drew more than 1,000 worshipers.

"It really was a massive group of people gathering together without social distancing and without wearing facial coverings," Wooten said. "We will continue to address this egregious violation as we have the others that have been brought to our attention."
News reports say the service was a planned protest against health orders that closed churches across the county to prevent the spread of the virus.
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More money is on the way to the Central Valley to help slow the spread of COVID-19.

Governor Gavin Newsom says California is seeing significant spread among essential workers in the Valley's eight counties...and that those infected are disproportionately Latino, agricultural workers, and come from lower-income households.

Newsom announced yesterday that the state is setting aside 52 million dollars for the Central Valley.

To improve our isolation protocols, our quarantine protocols, our testing protocols, and to enhance our health care workers by providing more support as well as more personnel."

Last week Newsom announced the state will develop a public awareness campaign targeting those essential workers and their families.

Newsom says some of the eight counties are seeing COVID-19 positivity rates as high as 17 percent.

The statewide average for California right now, by the way, is seven-point-five percent over the last two weeks.

***
San Diego County Supervisor Nathan Fletcher, in partnership with minority business leaders, launched a public information campaign Monday to encourage Black, Asian and Hispanic small business owners to apply for grants from A County Relief Program.
In Fletcher's district, $3.4 million in funds is available for small businesses, stemming from a $34 million COVID-19 humanitarian stimulus package passed by the Board of Supervisors in May.
Each of the five San Diego County supervisors was given $3.4 million from the stimulus package to distribute to businesses in their districts.
Small businesses can apply at sandiegocounty DOT gov SLASH stimulusgrant.
***
From KPBS, I’m Kinsee Morlan and you’re listening to San Diego News Matters, a podcast powered by our reporters, producers and editors.

It’s Tuesday, July 28.

Stay with me for more of the local news you need.

The number of San Diegans who died from the coronavirus is now more than 500.

KPBS Health Reporter Tarryn Mento says a local hospital executive fears the public is becoming desensitized to what this means.

Four COVID patients recently died in one night at Scripps hospitals. CEO Chris Van Gorder says on any other day that would've been big news. But he worries as the pandemic claims more lives, people are forgetting what's at stake.

(:19) "I'm a little afraid that people are looking at these numbers are now so big and so profound and they're now numbers and they're forgetting that they're people. That my nurses and my doctors have to call their family members and tell them that their loved one just died from something that maybe they wouldn't have had to die from if someone wore a god damn mask."

Scripps has treated a large portion of the region's COVID patients.

The first woman to lead a Marine combat battalion is the subject of an Inspector General's investigation.

At least four people have filed complaints about the climate in the Camp Pendleton unit she commanded.

Steve Walsh reports.

Lt. Col. Michelle Macander made history in 2018 when she took command at Camp Pendleton -- making her the first woman to lead a Marine ground combat unit. Despite the historic achievement, some in her unit are raising issues about their treatment during her tenure. Lisa Slusher was a civilian hired to coordinate with families in 2019.

MARINECOL 2A
"She told me I needed to be tougher about things. And I wasn't allowed to say the word pretty and we didn't like the world pink, because I needed to be Marine Corps tough. But I wasn't a Marine, I was me."

Macander is the subject of an Inspector General's investigation. At least four people have filed complaints about the climate at the unit she commanded. The Lt. Colonel left in June, as part of a normal change of command. The Marines did not comment for this story.

***
The city of San Diego will soon negotiate a multi-billion dollar deal with a utility to provide gas and electricity to residents for years to come.

Community advocates say this potentially lucrative agreement could be a significant source of revenue for the city.

But, as KPBS science and technology reporter Shalina Chatlani finds, some are concerned that city leaders may be giving away too much.

PART 1: STAKES AMBIENT SOUND: OUTSIDE
Matthew Vaslikas points toward a green canyon at a roadway intersection in South Park.
~ 3:16
VASILAKAS: through the canyons are a number of SDG&E’s infrastructure….the gas lines underneath, the power lines underneath :08

Vasilakis is an environmental advocate.

VASILAKAS: the city leases the land for them to put that infrastructure on land. :05

In the 1970s the city of San Diego and utility San Diego Gas & Electric brokered a deal. For a 50,000 dollar fee, San Diego gave SDG&E right of way to build wires and poles to provide service. In return, SDG&E pays the city a yearly tax, known as a franchise fee.

But the contract expires next year, and Vasilakas says the city needs to make a better deal this time. Otherwise the community potentially loses money that could pay for building parks, addressing pollution…

VASILAKAS: And this deal, again, as being one of the most valuable assets for the city is a huge opportunity for us. :and right now the mayor and the council are squandering that opportunity. :04

But the city’s Chief Operating Officer Erik Caldwell, counters that they are supporting a bidding process for the franchise that’s competitive and in the city’s best interests. He says any agreement would include provisions, like regular audits, to make sure the utility’s actions align with city’s needs, like climate action goals.

CALDWELL: 50 years ago, we didn't have a competitive process. So our goal is maximize competition, thereby ensuring the city gets the best possible terms. :10

City leaders voted in mid July to move forward with a recommendation from JVJ Pacific Consulting to ask for bids for A 20-year franchise -- estimated to be worth about 6.4 billion dollars --- at a minimum price tag of about 62 million dollars. The utility that wins the bid for this deal will also pay a franchise tax of around 3 to 3.5% on its revenue to the city. For some context, that tax generated around 65 million for San Diego last year.

The city says the proposal would be a tremendous improvement over the contract 50 years ago, But critics like Vasilakas disagree.

Vasilaskas: we think it is a sweetheart deal for SDG&E. :03

Not so, says SDG&E . In fact, they’re balking at the 62 million dollar price tag and say it’s quote “unjustified” and “an unprecedented demand.”

The consultant’s recommendation could soon go to the full city council for a vote.
Part 2: What’s the franchise deal? /City perspective

So let’s back up.. What is this deal and how important is it in the first place? Steven Weissman lays out how these kinds of franchise agreements work ----

WEISSMAN: Franchise agreements allow the utility to rip up city streets, putting equipment on city property. In exchange, cities and counties can charge a fee, like a tax :12

Weissman is a lecturer at U-C Berkeley and a former energy lawyer at the California Public Utilities Commission. A charter city like San Diego can negotiate a fair amount with the utility.

WEISSMAN: and it’s supposed to reflect the level that’s both acceptable to the city and an adequate form of compensation and that the utility is willing to agree with.. :11

San Diego COO Caldwell says that’s what they are trying to do in this bidding process, and says this proposal for the deal could save ratepayers around 80 million over 20 years.

CALDWELL: We set that number too high. It discourages competition. If we set it too low, it potentially sets the city to receive far less revenue in an upfront payment than we believe is reasonable. :13

In fact, SDG&E is currently not the only utility bidding for the chance to service the city of San Diego Berkshire (burk-sure) Hathaway has also said it’s interested, as well as another smaller group, Indian Energy of Orange County.. KPBS reached out to Berkshire but didn’t get a response.

Part 3: HISTORICAL PERSPECTIVE

There’s another take on these franchise agreements. Loretta Lynch, is the former president of the CPUC. She says cities shouldn’t lowball their worth.

LYNCH: That is not what happens in the 21st century anymore. Many cities are taking another look at their once in a lifetime franchise agreements. :09

Lynch, now on the board of the environmental advocacy group Protect our Communities Foundation, says San Diego has the right to set whatever terms it wants, simply because the city is offering a deal that yields an incredible profit. [Shalina chatlani, kpbs news. ]

[HOST OUT: In tomorrow’s second part of the feature... ]

LYNCH: and that profiting of San Diego, historically for SD&E has been incredibly lucrative. :08

--End: Section 1--- 4:30

San Diegans currently pay the highest energy rates in the state, and those rates continue to rise. Meanwhile, between 2010 and 2019, The utility’s profits have nearly doubled according to SEC filings.

---AMBI: greetings over phone call
So, I asked SDG&E executive Mitch Mitchell about how much the utility is prepared to pay?

MITCHELL: we are not opposed to paying a reasonable franchise bid. a reasonable fee is somewhere in the million and half to 2 million dollar range. And we think that’s appropriate. :22

Mitchell says SDG&E has a good track record in San Diego. He says it’s helped with climate action goals, by bringing on more renewables and invested heavily in wildfire mitigation.

SDG&E plans to bid, but it wants better terms: an ability to pay the bid in cash, goods and services, and a smaller franchise fee. Community advocates want a 5 year contract, but SDG&E says it wants a longer one.

SHALINA: Why is it so important to have a 20 year agreement instead of a five year agreement?

MITCHELL: in order for us to be a partner in this region and with the city in particular, we need to make long term planning objectives and start to carry those out.

But former California Public Utilities Commission president Loretta Lynch says other cities are negotiating for shorter terms with more accountability.

LYNCH: Salt Lake city has a 5 year agreement. Why? Because they want to keep their utility on their toes. :16

Lynch says franchise deals happening once a generation leave new city leaders uneducated and vulnerable to utility lobbyists. In the past utilities have been able to get great deals. But, she says, cities don’t have to follow the past.

LYNCH: “Basing what is a good deal on what happened in 1970 shortchanges every single resident of san diego and every single business. If you got a penny for your golden goose 50 years ago, getting 2 pennies TODAY is not a good deal if your goose is worth 2 billion dollars. :12

Lynch says - what’s at stake are high energy bills and a lack of utility accountability.

Part 4: The Tension among interested parties/ fast time frame

AMBIENT: Montage of city council meeting phone calls

At an environmental committee meeting mid-July, held remotely, the consultant’s report was open for public comment, and discord over the agreement was palpable from about 70 callers from… 8:00

Union workers connected to SDG&E

“please don’t gamble with my union job and renew a franchise agreement with SDGE for at least 30 years” :06

Members of the community

“We need those millions of dollars diverted into the community not into rich shareholders pockets.” :06

And environmental advocates

“I support municipalization, it is highly likely to save ratepayers money.”

But according to this city council, this LAST option - known as municipalization, where a city runs its own utility - is not on the table right now.

Instead, the environmental committee voted 3-1 to move forward with JVJ’s proposal. City Councilmember Jen Campbell, the committee chair, said they’ve been reviewing the report for weeks.

CAMPBELL:And let's move forward. You know, you could speculate all day, but why? The good thing is to get it moving. Get the bids in. See what they offer and see what happens.

Councilmember Barbara Bry, the one committee member who voted no on the report, says not so fast.

BRY: This is a very rushed process on what is one of the most important decisions facing the city :11

Bry, who is running for mayor, and community activists say more time is needed to determine what a fair deal will be for San Diego ratepayers. And if the council doesn’t reach an agreement by 2021…

BRY: Can SDGE just stop providing gas and electric service to us? And no, of course, they can't. :08

In the meantime, The city and the incumbent utility seem stuck, unable to agree on the terms for a deal that could wed them together again for decades.

KPBS science and technology reporter Shalina Chatlani.

***

Coming up…

Comic-Con’s virtual event is over, but most of the offerings are still online. We’ve got a guide for some of the stuff you shouldn’t miss.

That story after a quick break.

The first ever Comic-Con online came to an official close Sunday night. But KPBS arts reporter Beth Accomando says you can keep the Comic-Con at Home experience going for as long as you'd like.

KPBS’ Deb Welsh talked to Beth about how she navigated the online experience.

Beth, Comic-Con was forced to move online this year because of coronavirus so what was the virtual experience like?...

BETH: It definitely was not the same. I was getting photos from my cosplay friends in the Sci-Fi Coalition of them dressed as Captain America or a biker scout and sitting sadly at the empty convention center. It was very strange not having the pop culture convention in person. But on the plus side I got to enjoy 70 hours of programming without waiting in a single line or having my view blocked by someone's crazy anime hair. Plus, this marks the first time that you can continue to enjoy much of the 350 hours of programming after Comic-Con has officially ended.

And that is because these panels are available on the Comic-Con YouTube channel. What were these virtual panels like?

BETH: They were zoom meetings but some had high end production values and some were just casually slapped together. Overall it proved to be a much more intimate experience, which is good and bad. There's not the buzz of being in a crowd of 6500 people as you see footage for a new film revealed but you got a front row seat to everything. On the other hand, some of the panels were like conversations between friends that felt very personal and thoughtful, more so than might have occurred in a large room with hundreds or thousands of strangers. On the HBO Lovecraft Country panel a scene of a Black man in 1950s America being pulled over by a cop was discussed in the context of what's going on today and how we have not come as far as we'd like, and actor Courtney B. Vance recalled a recent incident where cops were responding to a call in his mostly white neighborhood at night and when he came out his front door they demanded he put his hands up.

01_Comic_Con.wav

COURTNEY B. VANCE: But I'm a Black person and I have seen enough Law and Order episodes to know, don't say a word Courtney, come out the house with your hands up in the air… my children are asleep, they're three. (:28)

BETH: I'm not sure if the discussion would have taken that turn in Hall H and you definitely would not have been able to see how this story resonated for the other Black panelists some of whom were visibly choked up. There were a number of powerful moments like that on panels.

So you think these Zoom panels were successful?

BETH: They were a mix. I started a few panels where the moderator was so bad or the video or audio were so bad that I turned them off. But I think a majority of the panel took advantage of what this year had to offer. There was a panel on Lucha Libre that was all in Spanish but because it was a video it could be subtitled. A live panel would not be as easy to translate. And the Ray Harryhausen panel had his daughter Vanessa and because she was in her home she could just run and get a movie prop to share.

02-Comic_Con.wav

VANESSA HARRYHAUSEN: I have Perseus' shield, do you want me to go and get it?... Yes please… and now you are getting to see it.

BETH: I think that might have been my favorite panel because she had all the models her dad used for his stop motion animation laid out in front of her and she was just petting the saber-toothed cat from Sinbad like it was a real cat. It was just a delightful panel.

Comic-Con at home also hosted the annual Eisner Awards, what are these?

BETH: These are considered the Oscars of the comics industry and usually they are a lengthy affair on Friday night but this one was a mere hour with no presenter banter or acceptance speeches. You can go online and scan through it to get a great reading list. Some winners that I am looking to pickup are Bitter Root, Way of the House Husband and EC Comics Race, Shock and Social Protest. Top winners were Laura Dean Is Breaking Up with Me and Invisible Kingdom. The publisher with the most wins was Dark Horse but local IDW Publishing won for George Takei's They Called Us Enemy and for an artist edition of Stan Sakai's Usagi Yojimbo.

And that was KPBS arts reporter Beth Accomando talking with KPBS’ Deb Welsh. You can go to Beth's Cinema Junkie Blog at KPBS-dot-ORG for her panel recommendations that you can still watch online now.

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That’s the show. Thanks for listening. And if you’re not already a KPBS member, consider becoming one today at kpbs dot org slash donate.

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