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San Diego Mayor Kevin Faulconer’s appointment has appear up with four key recommendations for negotiating a new acceding that allows one account the absolute appropriate to use the city’s accessible right-of-ways for manual and administration as able-bodied as installing wires, poles, ability lines, and underground gas and electric lines.
San Diego Gas & Electric currently holds what is alleged the authorization agreement, which has been in abode back 1970. But the accord expires in January and burghal admiral are counting on fielding aggressive bids from a cardinal of altered companies — not aloof SDG&E — afore arch who should win the new agreement.
With that in mind, Faulconer’s staff, alive with an activity consulting firm, proposes:
“San Diego is authoritative it bright — this is not your grandfather’s authorization agreement,” Faulconer said in a statement. “A lot has afflicted over the aftermost 50 years and this action ensures association get a authorization acceding that aligns with their needs for today and shapes a eyes for tomorrow.”
Faulconer said he’s attractive for ascribe from the San Diego Burghal Board in accession to comments from the public, stakeholders and abeyant bidders. The burghal council’s Environment Board is appointed to altercate some of the proposed acceding of a new acceding July 16.
“These are recommendations,” said Erik Caldwell, agent arch operating administrator for the burghal of San Diego. “We’re attractive to get acknowledgment from the public, attractive to get acknowledgment from the committee, so that we can address the best accessible (invitation to bid from absorbed companies) over the abutting few weeks.”
A 20-year acceding is absolutely beneath than the accepted 50-year arrangement but it is best than a five-year accord that some advancement groups such as the Protect Our Communities Foundation accept alleged for.
In 2016, Salt Lake Burghal adjourned its 25-year authorization acceding with its longtime utility, Rocky Mountain Power, and acclimatized on a five-year accord that included assurances from the ability aggregation that it would assignment with the burghal on assorted apple-pie activity projects.
San Diego Mayor Kevin Faulconer in 2017 in advanced of solar panels at Kearny Aerial School.
(K.C. Alfred / San Diego Union-Tribune)
Howard Golub, managing affiliate of the JVJ Pacific Consulting abutting that has been alive with burghal agents on the capacity of a new agreement, said the 20-year advocacy has been the industry barometer in contempo years and tries to ensure antagonism from abeyant contenders.
“One affair that we accept to do actuality … is to set the appellation at atomic continued abundant to animate parties to acknowledge to the bid,” Golub said. “If it’s too short, you accept finer absolutely beat anyone added than possibly SDG&E to bid on the matter.”
As a aegis for ratepayers, the Faulconer aggregation calls for a “periodic annual” address of the achievement of whichever aggregation wins the bid. The address would be fabricated accessible and aggregate with the Burghal Council.
“That’s article that’s actual important to us,” Caldwell said. “It absolutely sets the date for approaching administration accomplishments and authoritative abiding that whoever owns the authorization adheres to all of the acceding and conditions.”
The advancing ratepayer accumulation of $85 actor comes from two components:
Eliminating a customs of 0.35 percent that barter aural the burghal pay on the electricity allocation of their bills. It may assume like a baby bulk but over the advance of 20 years, eliminating the customs would construe into $110 actor in savings.
The added basic would access the authorization fee on accustomed gas from 3 percent to 3.5 percent. That would aftereffect in an access of $25 actor but account by the $110 actor abatement in ante on the electric side, it is projected to aftereffect in a net accumulation of $85 million.
Caldwell said the $25 actor on the gas ancillary would be acclimated as a acquirement antecedent to armamentarium projects angry to the city’s Climate Action Plan, a accurately bounden certificate that calls for San Diego to accomplish all electricity from renewable sources by 2035 and annihilate bisected of all greenhouse gas emissions.
When the old acceding with SDG&E was active 50 years ago, an upfront acquittal of $50,000 was required. Faulconer’s aggregation said accretion the bulk to $62 actor is a fair representation of the amount of the amalgamation and a absorption of the affecting changes apparent in the activity markets back 1970 when, for example, rooftop solar was exceptional of.
Golub said San Diego is the better electric authorization of any burghal in California and its gas authorization is the second-largest in the state.
“We did some computations actuality and the two franchises calm represent a abeyant net earning to whatever account wins it of $6.4 billion,” Golub said. “So then, ask yourself, what is the amount of the befalling to acquire $6.4 billion?”
City board has final say over approval of any new authorization agreement. Burghal staffers plan to accompany a final acceding afore a vote in the fall. Approval requires a two-thirds cool majority.
So far, the burghal has accustomed absorption from three companies, including longtime authorization holder SDG&E. A Native American-owned and operated aggregation out of Orange County alleged Indian Activity beatific a acquiescence letter beforehand this year.
So did the activity accessory of Warren Buffett’s massive Berkshire Hathaway Inc., which could approach as a accepted battling to SDG&E. However, aloof canicule ago, Berkshire Hathaway Activity appear a $9.7 billion accord to buy the accustomed gas manual and accumulator business of Virginia-based Dominion Energy.
The Union-Tribune larboard a voicemail bulletin with Berkshire Hathaway allurement if the aggregation is still absorbed in the San Diego authorization acceding but did not accept a acknowledgment by the abutting of business Wednesday.
Caldwell said added companies are still accessible to bid on the new agreement.
In accession to bids, cities adverse a authorization face-lifting accept addition option: They can board the account casework themselves, through what’s alleged “municipalization.”
The Los Angeles Department of Baptize and Power, for example, is the better borough account in the country.
Supporters say borough utilities tend to allegation lower ante and the abstraction has best up beef amid those on the political larboard but critics say the action would absorb affairs the poles, ability curve and added basement assets of the bounden utility, which accept developed cost-prohibitive over the decades. LADP, for example, started accouterment electricity in 1917.
Chicago’s authorization acceding with its bounded ability aggregation expires at the end of this year and Mayor Lori Lightfoot in February coiled off calls for municipalization, estimated to amount $5 billion to $10 billion.
In case San Diego did appetite to go bottomward that route, the Faulconer aggregation added a “right to purchase” article in its recommendations.
Negotiating the new authorization acceding comes at a bad-tempered time for the burghal and SDG&E. The two abandon accept been altercation over a brace of issues.
SDG&E has been replacing aerial ability curve with underground curve in assorted genitalia of San Diego and Burghal Attorney Mara Elliott says $22.1 actor in invoices from SDG&E are too aerial and the account has not appropriately accurate the costs. SDG&E admiral say the accuse accept been embodied and the bills adequately represent assignment that has been done.
In a abstracted dispute, the burghal in January filed a $35.6 actor accusation adjoin the utility, claiming SDG&E should aces up the tab for its accessories obstructing the city’s $1.4 billion Pure Baptize San Diego project, advised to abate ocean abuse and access the city’s baptize supply.
SDG&E says it’s arbitrary that the costs of the baptize activity should be advance beyond all barter in its account territory, which includes San Diego and genitalia of Orange County that would not account from it. SDG&E has additionally cited case law in California that holds utilities are not answerable to pay for relocations to board borough baptize projects.
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