Mayor Sends Gas and Energy Franchise Agreement Terms to Council Committee

San Diego ratepayers estimated to save $85M under new franchise agreement that includes protections & greater transparency

Continuing the City’s transparent process for a new proposed franchise agreement for gas and electric services, Mayor Kevin L. Faulconer today announced City Council input will be added to the public, stakeholder and bidder commentary to define the terms of a once-in-a-generation agreement that meets the City’s future energy needs and offers ratepayer relief of $85 million.

The City Council’s Environment Committee is set to review and offer input on a host of proposed franchise terms developed by expert consultants, including term length, franchise fee rates, transparency, and ratepayer relief on Thursday, July 16.

“San Diego is making it clear – this is not your grandfather’s franchise agreement. A lot has changed over the last 50 years and this process ensures residents get a franchise agreement that aligns with their needs for today and shapes a vision for tomorrow,” Mayor Faulconer said. “The input from this Committee, and ultimately the full Council, will undoubtedly make this a more open, fair process so all San Diegans can have their voices heard.”

Two of the proposals from the consultant report, would if included in the final franchise agreement together, decrease the cost of utility service within the City of San Diego. The consultant report estimated this could save San Diego ratepayers as much as $85 million over the recommended 20-year term.

Beginning in October, the City organized a Franchise Fee team of comprised of members of City staff, the City Attorney’s Office and two expert consulting groups – NewGen Strategies & Solutions (NewGen) and JVJ Pacific Consulting, LLC (JVJ). Simultaneously, the City’s Smart and Sustainable Communities branch gathered input from local stakeholders and potential bidders. The City received many thoughtful and well-researched questions.

“The City of San Diego is the largest California city to franchise its gas and electric services, which make them extremely valuable,” said Erik Caldwell, the City’ s Deputy Chief Operating Officer. “Our consultant has crafted a series of proposed recommendations that, together, offer a holistic package that addresses current City needs, aligns with our policy goals, reduces the burden on our ratepayers, and still offers a compelling opportunity for any prospective bidders.”

In January, the City issued a Request for Expressions of Interest, seeking public comment on priorities that should be included in the franchise as well as identify potential bidders. The City received numerous responses from the public that helped shape the recommendations put forward by the expert consultants. Additional input was gathered through three public workshops, several presentations to local boards and an online survey.

After input from Committee and Council, the Mayor will advertise the gas and electric franchises as an Invitation to Bid and the franchises will be awarded to the highest responsive and responsible bidder(s).

The existing franchise agreement from 1970 between the City and SDG&E is set to expire in January 2021.