Lawsuit seeking to void San Diego’s new franchise agreement with SDG&E is tossed out in court

A controversial agreement signed last year between the city of San Diego and San Diego Gas & Electric survived a legal challenge Nov. 30 when a San Diego County Superior Court judge dismissed a lawsuit that sought to nullify the deal.

The petition filed by attorneys Michael Aguirre and Maria Severson on behalf of San Diego resident Kathryn Burton alleged that the franchise agreement between the city and SDG&E failed to comply with city rules and was negotiated behind closed doors in violation of the Brown Act, the state’s open-meetings law.

Attorneys from the utility and the city disputed the allegations.

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

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

The public “didn’t even get to see what their city officials did,” Aguirre said during two hours of debate before Judge Eddie Sturgeon on Nov. 18. “Where we want to go is to a trial.”

Sturgeon issued a final ruling Nov. 30 granting a motion for summary judgment in favor of the city and SDG&E.

The judge dismissed the claim of a Brown Act violation because the petition was filed before Burton was actually represented by Severson, thereby ruling that Burton lacked legal standing.

The lawsuit also alleged that the San Diego City Council erred when it removed an item from the council’s second reading — and approval — of the franchise agreement in June 2021.

Sturgeon ruled that Burton lacked a “direct beneficial interest” to justify receiving “public interest standing” in that complaint. He added there was no evidence that the vote “would have been any different had the City Council acted as petitioner argues it should have,” and he ruled there was no violation of the city charter.

“We are pleased the court dismissed the allegations in their entirety,” SDG&E spokesman Anthony Wagner said in an email. “SDG&E has always asserted the franchise agreements were awarded in a fair and transparent public process after careful evaluation by the city.”

In a franchise agreement, a local government 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, cables and underground gas and electric lines in its jurisdictions — in this case, within San Diego city limits.

Under the deal, passed on a pair of 6-3 City Council votes, SDG&E agreed to pay the city:

• $70 million for the electric franchise and $10 million for the gas franchise
• $20 million to help advance the city’s climate equity goals, including a recently created Climate Equity Fund intended to build parks, plant trees and improve public transit in lower-income areas

The money is to come from shareholder funds, not ratepayer funds.

The utility also will put up $10 million for 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 Mayor Todd Gloria 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.

Another legal challenge to the franchise agreement is on the docket, also in Superior Court.

The Protect Our Communities Foundation, a local environmental group, has filed a lawsuit that argues the city failed to conduct a necessary environmental review of the deal and favored SDG&E during negotiations, and that the agreement’s financial provisions constitute a tax that needs to be approved by voters.

Judge Katherine Bacal has scheduled a hearing in that case for Friday, Dec. 9.