FOR IMMEDIATE RELEASE
Tuesday, June 8, 2021
SAN DIEGO – Mayor Todd Gloria issued the following statement on the City Council’s final approval today of new energy franchise agreements with San Diego Gas & Electric (SDG&E):
“In giving its final approval to the gas and electric franchise agreements I negotiated with SDG&E, the City Council has made a responsible decision in favor of a better deal for all of us. These financially sound, short-term pacts will ensure continued reliable delivery of energy to San Diego residents and businesses and give the City the flexibility to change course when and if it makes sense to do so. I want to thank the City Councilmembers who recognized this deal creates certainty, accountability and a pathway to achieving climate equity in all our neighborhoods.”
Highlights of the agreements include:
- An initial term of 10 years, with the potential for a 10-year renewal. The City Council may terminate after 10 years for any reason.
- Provides nearly $3 billion in revenue over 20 years, including:
- A bid payment from utility shareholders of $80 million – the highest any city in the U.S. has ever received;
- Certainty in franchise fee and undergrounding revenue, estimated at roughly $130 million annually, providing the City with ongoing funding for essential resident services;
- $20 million, paid by SDG&E shareholders, to advance the City’s climate equity goals; and
- $10 million, paid by SDG&E shareholders, in solar-energy rebates in historically underserved neighborhoods.
- An “Energy Cooperation Agreement” that focuses on environmental and greenhouse gas reduction benefits, safety, equity and reliability – all while centering on the needs of historically underserved communities.
- A reset relationship between the City and SDG&E that identifies pathways for resolving disputes and creates unprecedented transparency about customer rates, environmental commitments and equity.
- Accountability and financial transparency measures that include biannual audits by an independent auditor, a performance bond, options for liquidated damages and increased insurance requirements.
- Creates a citizen-focused Franchise Compliance Review Committee, which ensures public engagement on energy matters.
- The continuation of and improvements to the accelerated undergrounding program, which provides hundreds of good-paying union jobs.
SDG&E has held exclusive franchises with the City to provide gas and electric service since 1920. The agreements allow the franchisee to use the public right-of-way to install and maintain the infrastructure – such as pipes, poles and wires – necessary to provide energy to San Diego’s residents and businesses.
The previous franchise agreements, signed in 1970, were set to expire on Jan. 17, 2021. Under a process created by the previous administration, SDG&E was the lone bidder for new franchises. Mayor Gloria cancelled the Invitations to Bid (ITB) process and reached an agreement with SDG&E to extend the agreements through June 1, 2021.
In January, Mayor Gloria initiated a robust public outreach effort to educate city residents about the franchise agreements and solicit opinions about San Diego’s energy future. The process included partnering with the City Council to hold 13 virtual community forums, which hundreds of people attended, and an online survey that drew nearly 1,400 responses.
In March, the Mayor released new ITBs. SDG&E was the lone bidder. The City Council gave its initial approval of the agreements in a vote on May 25.