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Lawsuit seeks to overturn San Diego’s new electric and gas franchise agreement with SDG&E

Power lines
The city of San Diego and San Diego Gas & Electric recently signed a new electric and gas franchise agreement that can last up to 20 years.
(Rob Nikolewski / The San Diego Union-Tribune)

The city and the utility company finalized a deal for up to 20 years earlier this month.

A petition filed in San Diego County Superior Court seeks to upend the new electric and gas franchise agreement between the city of San Diego and San Diego Gas & Electric.

The Aguirre & Severson law firm said the new deal, which passed on a pair of 6-3 votes by the City Council, violated sections of the city charter and the state’s open meetings law, specifically the Brown Act that deals with public access to government meetings.

The electric and gas agreements “deal the people of San Diego a losing hand,” said attorney Michael Aguirre, who with partner Maria Severson filed a lawsuit June 16 on behalf of San Diego resident Kathryn Burton.

“This lawsuit seeks to void the franchise agreement that was negotiated behind closed doors,” said Burton, who worked in the San Diego city attorney’s office when Aguirre held that position from 2004 to 2008.

The suit names as defendants the six members of the City Council who voted for the agreement — Jennifer Campbell (whose District 2 includes Point Loma and Ocean Beach), Stephen Whitburn, Marni von Wilpert, Chris Cate, Raul Campillo and Sean Elo-Rivera.

In an email, Elo-Rivera said he would not comment on the litigation but said “our office solicited community feedback, held several public forums and conducted extensive research and stakeholder engagement, all of which informed my decision-making. I am proud of the way our office worked diligently to bring transparency to the process of determining the city’s gas and electric franchisee.”

No other council members, nor the city attorney’s office, offered comments on the lawsuit when contacted by The San Diego Union-Tribune.

Dave Rolland, spokesman for Mayor Todd Gloria, said: “The franchise agreements that Mayor Gloria proposed and the City Council approved represent a better deal for San Diegans. The mayor will not comment on the specifics of pending litigation.”

In a local government franchise agreement, a municipality grants a utility the exclusive use of public rights of way for transmission and distribution, as well as the right to install and maintain wires, poles, power lines and underground gas and electric lines within its city limits.

Among the lawsuit’s complaints, it claims that Section 103 of the city charter was violated on several counts and that city officials “tailored and manipulated the bid in favor of SDG&E.” It also alleges that decision-making “was done in a series of secret meetings from which the public was excluded.”

Gloria led the city’s initiative to sign a new agreement and issued a formal invitation to bid earlier this year. When the bids were opened in April, SDG&E was the only energy company that made offers on the electric and gas franchises.

The terms of the invitation included a stipulation that allowed the city to continue negotiating with bidders, even after offers had been made. Gloria and city representatives met with SDG&E officials to hammer out details on a deal that Gloria could take before the City Council.

Gloria met with individual council members before the vote to discuss the proposed agreement — meetings the lawsuit says violate government code, including the Brown Act and the California Constitution because they were not conducted in a public forum.

“The city of San Diego certainly has been doing nothing right when it comes to this franchise agreement,” Severson said. “Let [the franchise agreement] be negotiated in good faith, before the public, with public input.”

After Aguirre and Severson first made their complaints, Gloria’s office said the mayor “did not discuss [council members’] votes or any other member’s votes or opinions in the briefings,” and the city attorney’s office said, “Based on the information provided, there is no evidence of a Brown Act violation.”

The new franchise agreement supplants an earlier agreement between the city and SDG&E that had been place since 1970.

Under the new pact, SDG&E agrees to pay the city:

• $80 million — $70 million for the electric franchise and $10 million for the gas franchise

• $20 million to help advance the city’s climate equity goals, which include a recently created Climate Equity Fund to build parks, plant trees and improve public transit in lower-income areas

The money will come from shareholder funds, not ratepayer funds.

The utility also will put up $10 million for various programs aimed at increasing access to solar power and rebates for residents living in historically underserved communities.

The agreement runs for 10 years and has an automatic renewal for another 10 years — what Gloria has called a “10-plus-10" agreement.

However, if for any reason the city is unhappy with SDG&E, it has a window to void the 10-year renewal, provided that two-thirds of the City Council votes against extending the deal.

Aguirre said that provision violates Section 103 of the city charter because instead of requiring two-thirds of the council to vote “yes” to extend the deal, it calls for two-thirds to vote “no” to terminate it.

“They turned that on its head,” Aguirre said. “Now the renewal after the first initial term of 10 years is automatic and it requires a two-thirds vote against it. So it completely contradicts charter Section 103.”

The 10-year extension also can be nullified if the city decides to pursue creating its own municipally run power company or it determines a breach of the agreement has occurred.


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