In his first major political decision as the new mayor of San Diego, Todd Gloria announced on Friday that he has rejected offers recently submitted by San Diego Gas & Electric to retain the rights to supply electricity and gas within the city limits of San Diego.
After reviewing the offers from SDG & E, Gloria said that her office and the City Attorney’s Office have considered that the offers of the utility company were “not responding”, that is, the offers did not meet the requirements that the city stipulated when requested an Invitation to tender to seek a new agreement.
Gloria said she is rejecting SDG & E’s offer that included paying the city $ 80 million upfront for the combined gas and power franchises and canceling the current bidding process.
Instead, Gloria said in a press release that she will continue to negotiate an extension of the current franchise agreement that the city has with SDG & E “to give the new City Council enough time to catch up and to allow more opportunities for public participation. ”.
The existing agreement, signed in 1970, expires on January 17.
Gloria’s announcement comes just one day after the bids that had been presented to the city during a special council meeting were opened.
Despite a bidding process formulated by former Mayor Kevin Faulconer designed to attract multiple bids, SDG & E proved to be the only energy company to bid.
SDG & E accepted the city’s terms to sign a 20-year agreement and offered $ 70 million for the electric franchise and $ 10 million for the gas franchise.
However, in the documents submitted by SDG & E, their offers included the text – highlighted in red – that the utility company wanted to add or subtract from the deal. SDG & E said Thursday that it had “adjusted certain provisions of the contract form so that any final agreement would comply with federal, state and local laws and best utility practices.”
Written in technical and legalistic language, the proposed changes included provisions should the city terminate its agreement with SDG & E to form a municipal utility company.
In a letter to SDG & E CEO Caroline Winn, Gloria said that “the extensive exceptions” made in SDG & E’s presentation led him to declare that the offer was unresponsive.
Gloria’s decision does not mean that SDG & E will not win the bid. In fact, SDG & E issued a statement late Friday indicating that it is willing to work with the city on a new agreement.
“We are encouraged by the swift and transparent actions of Mayor Todd Gloria,” the utility company said on its website. “We are committed to being part of a constructive path forward and we are willing to work in collaboration with the Mayor and the Cabildo.”
A major sticking point is negotiating an extension of the current deal.
Numerous city council members said Thursday they wanted a one-year extension with SDG & E. City Attorney Mara Elliott told council members that the city could extend the contract but would “need the cooperation of SDG & E to do so.”
The utility said last month that it was not open to a one-year extension but on Friday night, SDG & E left the door somewhat open, saying, “SDG & E has not been formally asked for an extension of existing agreements. , and cannot comment on such a request until it is received.
Under a franchise agreement, a municipality gives a utility company exclusive use of public rights of way for transmission and distribution, as well as the right to install and maintain cables, poles, power lines, and lines gas and electricity underground.
One option available to the city is to consider creating and managing its own utility company that would provide electric and gas services, such as the Sacramento Municipal Public Service District and the Los Angeles Department of Water and Power.
That’s what Tyson Siegele, an energy analyst for the Protect Our Communities Foundation, and several environmental groups have called for.
“At this time, the city must move forward in forming a utility company,” Siegele said in an email to the Union-Tribune. “The alternative would be to reject the recommendations of his consultants, repeat the mistakes of 101 Ash Street, and betray the trust of the public.”
–
