Thursday, July 16, 2020, San Diego City Council’s Environment Committee will hold a public comment meeting regarding San Diego’s energy franchise agreement with utility grid operators. Below you can find background information and recommended comments for the event:
City Council, Environment Committee meeting
Thursday, July 16th at 1 pm
Viewing/dial-in instructions below
Public Comment Instructions
- View: To watch the meetings, go to this link and click “Watch CityTV Live Feed” on the right hand side of the page
- Dial-in: Public comment instructions (from the city)
- 1. Wait for the Clerk to introduce the item you wish to speak on and open the Public Comment line, then call in by following the steps below.
- 2. DIAL 619-541-6310 and enter the Access Code: 877861 then press ‘#’.
- 3. You will then hear “you are now being placed into the conference. You are now muted.’
- You will be able to hear the proceedings through the phone line and WAIT for your turn to speak.
- 4. You will hear a system prompt stating “Your phone has been unmuted” THIS IS YOUR OPPORTUNITY TO PROVIDE YOUR PUBLIC COMMENT (This is not a question-and-answer period, this is your time to provide a statement.)
- 5. When prompted by the Clerk, please state your name for the record and what item your comment is for.
- 6. You will have the allotted time given by the Chair to provide your comments. Once your time has ended, you will be moved out of the queue and the call will be ended.
- 7. Participants who wish to speak on other items on the Agenda or for other comment periods please call back when the Clerk introduces those items or comment periods to be placed back in the queue. Please monitor the meeting via City TV OR ONLINE and not through the phoneline.
- Written Comment: Prior written public comment instructions
- If you’re not able to call in to either meeting, you can submit a written comment prior to the meeting
- “Comments received by 1:45 p.m. will be distributed to the Committee and posted online with the meeting materials. All webform comments are limited to 200 words. Comments received after 1:45 p.m. the day of the meeting but before the item is called will be submitted into the written record for the relevant item.”
- Here’s the form to fill out
- You will need to specify whether you’re commenting on a non-agenda item or an agenda item
- If it’s the latter, you’ll need to supply the agenda item number
Talking point suggestions
- [Start here] I am in favor of pursuing municipalization, and I feel that the City’s consultants did not adequately explore pathways to public ownership. City Council needs an in-depth analysis of its options in order to make an informed decision.
- If the City Council is unwilling to pursue that strategy, the terms of the next franchise agreement must be much stronger. I am not satisfied with the recommended terms that the mayor’s office has put forward.
- [Pick some of the below]
- A 20-year term is far too long of a monopoly to grant given the rapidly changing energy environment; we need a 5-year agreement
- Given SDG&E’s disregard for the terms of the current franchise, the next agreement needs strong mechanisms for accountability that directly impact the utility’s shareholders; it should levy daily penalties on shareholders for violation of the agreement’s terms.
- The agreement must mandate that the utility work with the City to achieve the goals of its climate action plan.
- Provisions should be included that require local investments in renewable energy that benefit the local workforce.
- It should also guarantee all those employed by the utility a living wage, benefits, and the right to unionize.
More detailed arguments
- Public ownership means San Diego keeps the money that would otherwise go to a utility and its shareholders
- As has been made especially clear by COVID-19, the City needs revenue to fund vital services
- By signing another franchise agreement, the City is forfeiting ratepayer dollars and allowing them to be the profit of an investor owned utility
- If the City created a municipal utility, the proceeds from ratepayers would accrue to the City itself
- These funds could then be used to properly maintain energy infrastructure, fund local economic development, support the initiatives of the climate action plan, or boost public services
- Public ownership means operating the vital public utility of energy for the public benefit, not to enrich investors
- Investor-owned utilities have a duty to their shareholders to maximize profits
- They seek to generate as much profit as possible, given the constraints of California Public Utilities Commission regulations and the terms of their franchise agreements with various municipalities
- And as SDG&E has shown, it’s not afraid to violate the terms of its franchise agreement if it thinks it can get away with it
- This is why SDG&E has been a bad partner for the City – like all investor-owned utilities, it operates in the interest of investors by design
- Let’s reject that ownership model and instead design a public utility that operates in the public interest
- The MRW and Associates report on the feasibility of municipal acquisition of gas and electric assets finds a very high likelihood of substantially lower costs with a public utility than with SDG&E
- They find that ratepayers would pay less with a public utility than with SDG&E in all but a low probability, high-cost scenario for electricity and that they would pay lower rates in all scenarios for gas
- The report says quote ”It is important to note that the High- and Low Cost scenarios are extreme: it is very unlikely that all the key variables will align either positively or negatively.”
- It also notes that quote: “readers should view the results and conclusions of this report as draft and preliminary.”
- Given that this preliminary assessment suggests significantly lower costs to ratepayers with a public utility, the City Council has a responsibility to its constituents to commission a thorough, final analysis before making any further decisions regarding San Diego’s energy future
Quotes from the reports favorable to municipalization
- “Typically, community-owned utilities provide service at lower rates than investor-owned utilities.”
- “The NewGen/Advisian/MRW team concluded that in the “Base Case” (the most probable of the various scenarios examined) the City-owned electric distribution utility is economically feasible.”
- “They also concluded that in the “Base Case” the City-owned gas distribution utility would be economically feasible.”
- “The electric distribution utility…would obtain control of about $121 million per year in State-mandated electric public purpose program which it could deploy for projects directly benefiting City residents and businesses.”
- “In addition, the City would obtain control of approximately $17 million per year in natural gas public purpose program charges which it could deploy for projects directly benefiting City residents and businesses.”
- “[F]ocusing solely on community-owned utilities, they typically provide service at lower rates than investor-owned utilities.”
- “Typically, municipal energy enterprises:
- Provide local control to pursue local policy objectives such as economic development or renewable energy development
- Have rates lower than investor-owned utilities
- Achieve high levels of customer satisfaction”
- 1970 franchise agreement
- 2002 ammendment
- Mayor Faulconer’s 4-point plan for the new franchise agreement
- JVJ Pacific Consulting’s “Report to the City of San Diego concerning Electric and Gas Distribution Systems”
- NewGen/Advisian/MRW’s “Electric and Gas Franchise Agreements Consultant Report”
Information On (some of) SDG&E’s Antagonistic Behavior
- The City of San Diego has asked SDG&E to relocate infrastructure so that it can build a water recycling plant, SDG&E has refused
- The City is currently suing SDG&E for the $36M it has had to pay the utility to move its infrastructure, despite clear language in the franchise agreement that states the cost burden should fall on SDG&E
- Historically, undergrounding projects at SDG&E cost about $4.5 million per mile.
- But some of the work has exceeded $10 million per mile, with other sections “potentially approaching $20 million per mile, without sufficient documentation to justify such increases.”
- The current agreement, for example, required SDG&E to pay the city 3 percent of the gross revenue it earned from electricity and natural gas sales to residents. Yet SDG&E was successful in the 1970s in getting the California Public Utilities Commission to let it collect the franchise fee directly from customers and pass it through to the city.
- This sleight-of-hand has cost residents at least $1 billion to date.
- San Diego Gas & Electric has asked the California Public Utilities Commission to allow the power company to institute a fixed charge on monthly bills. It also wants to nearly quadruple the bare-bones minimum it charges customers each month.
- Opponents say it amounts to a one-two punch that will penalize customers who don’t use that much electricity and will especially hurt those who have installed — or are considering — rooftop solar.
- After publicly lobbying on CCA last week before the county Board of Supervisors, officials with the SDG&E marketing arm, Sempra Services Corporation, said they’ve been meeting with lawmakers countywide on this issue since September. Those include San Diego Mayor Kevin Faulconer and several council members.
- This lobbying caught the attention of the commission’s regulators, who said this week that SDG&E’s marketing division has never received approval to lobby on CCA. They also said they’re looking into the lobbying and that violations could be subject to fines as high as $50,000 for each offense.
- Direct CPUC intervention and pressure on SDG&E to purchase the (overly costly and unnecessary) Otay Mesa plant, conditioning its request to purchase the Palomar plant on the Otay Mesa purchase
- Done in an effort to provide much-needed capital to an energy company struggling in the wake of the energy crisis fueled by the manipulation of deregulated energy markets by Enron, energy generators, and energy utilities
- Utilities make money when they build power plants and transmission lines
- Witch, Guejito and Rice fires caused by improperly maintained SDG&E equipment resulted in $379M in damages that utility has tried to pass on to consumers through increased rates
- The 4th District Appellate Court and California Supreme Court have rejected SDG&E’s request
 JVJ, “Report to the City of San Diego Concerning Electric and Gas Distribution Systems” , page 5
 JVJ, page 6
 JVJ, page 7
 JVJ, pages 6-7
 JVJ, page 7
 JVJ page 13
 JVJ page 48