The Morning Report
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The city of San Diego says San Diego Gas and Electric is charging millions more than expected to bury electricity lines underground, and that the utility refuses to provide enough documentation justifying why.
So the city stopped paying SDG&E, to the tune of $22.1 million, in a backlog of invoices.
Deputy City Attorney Ryan Gerrity wrote in a memo to the City Council last week that SDG&E isn’t providing enough details about the rising cost of the work.
In the fall of 2019, SDG&E and the city announced an effort to accelerate the burying of power lines. That agreement isn’t in writing, though, Gerrity notes, and the mounting costs of the program may exhaust reserves the city set up to pay for it.
The city manages its own undergrounding program by picking which projects get done when. But the city has to work with SDG&E and local telecommunications companies to fund the projects and coordinate the actual work. SDG&E takes the lead on that, since it covers the whole city and because its electrical needs have priority.
The work to underground power lines is partly aesthetic. Notice that most high-trafficked areas and business districts don’t have overhead lines anymore. There are also health, safety and reliability issues. Overheard power lines have started some of the state’s most devastating wildfires.
In San Diego, most of the money for all this work comes from SDG&E. The company collects money from ratepayers, gives the money to the city, then the city then sends money back to SDG&E, which hires contractors to do the actual work.
SDG&E undergrounding projects historically cost around $4.5 million per mile of power line, Gerrity wrote.
“We have learned some SDG&E projects are currently at or exceeding $10 million per mile with some projects potentially approaching $20 million per mile,” Gerrity wrote.
The utility isn’t providing “sufficient documentation” to justify the increase, he wrote.
SDG&E “looks forward to resolving this matter as quickly as possible and continuing the undergrounding work at the city’s direction,” Helen Gao, a spokeswoman for the company, wrote in an email Friday.
The utility is supposed to give the city an update on its undergrounding projects and costs twice a year, which city staff then report to the Council in January and again in June under a Council policy. But the Council hasn’t heard one since January 2019, Gerrity wrote in the memo.
The memo said the utility’s refusal to provide details about the increasing costs of projects violates a separate memorandum of understanding between the two entities.
The utility’s overhead costs and invoicing practices have been flagged by the city many times in the past decade, Gerrity’s memo noted.
The attorney’s office directed city staff to wrangle all the information they could about money it owes SDG&E for these projects and report it to the Council before it finalizes the fiscal 2021 budget.
The Council is slated to approve the budget on Monday.
At the very least, the city attorney’s office hopes the Council will ask the city’s independent budget analyst to take a look at the dispute to estimate how much money the city will need to continue burying power lines in the soil.
Disclosure: Mitch Mitchell, SDG&E’s vice president of state governmental affairs and external affairs, sits on Voice of San Diego’s board of directors
Correction: An earlier version of this most misquoted an email from Helen Gao. Gao wrote that SDG&E “looks forward to resolving this matter as quickly as possible and continuing the undergrounding work at the city’s direction.”