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As the city of San Diego struggles to figure out what led to the multimillion-dollar 101 Ash St. debacle, it is stumbling toward another, even greater failure with its multibillion-dollar energy franchise agreements for gas and electricity.
With so much at stake — green jobs, climate and equity goals, millions in city revenue — one might expect the mayor to learn from history, listen to expert consultants and leverage these lucrative contracts to hold corporate utilities accountable. Unfortunately, the mayor has decided to hand off a sweetheart deal to the next Wall Street utility provider and leave vulnerable communities of concern behind.
For the last 50 years, SDG&E has had the privilege to use our public streets for profit, while charging us the highest rates in the state, nearly the highest rates in the nation. It has also consistently undermined San Diego families and our city’s ambitious clean energy goals, with greatest harm to working families struggling to make ends meet. SDG&E’s attempts to squash local rooftop solar, pass on its wildfire liabilities to ratepayers and force taxpayers to pay their rent and contractual obligations, stems from the weak and one-sided 1970 franchise agreements that limits the city’s ability to hold our electric and gas utility accountable.
Last year, the city hired expert energy consultants to explore how San Diego could get a better deal, including ways to rein in monopoly utilities beholden only to shareholders. The consultants found that the city could leverage its multibillion-dollar electric and gas contracts by including a right to purchase clause in the new agreements. This clause would allow the city to quickly exit the deal if the utility failed to be a good partner, and use it as an accountability tool. Given the city of San Diego’s troubled history with SDG&E, the consultant’s recommendation was universally applauded by elected officials, community leaders and advocates.
Wall Street, however, disagreed. SDG&E, Berkshire Hathaway and other prospective bidders pressured the mayor to remove the clause, and he capitulated. Akin to the indemnification clause in the 101 Ash deal that let the seller off the hook for any problems with the building, this is a poison pill the city cannot afford to swallow. And yet, the energy franchise agreement bids are on the market, and the sharks are circling. Who will nab another ripoff for taxpayers?
Worse, the mayor’s proposal will leave communities of concern at risk to further rate hikes during an economic recession. Low-income, senior and communities of color already experience higher energy cost burdens, with Black households spending 43 percent more of their income on energy. Allowing a corporate utility to reign over our energy system with no accountability or opportunity to protect our most vulnerable is not acceptable.
The good news is that, unlike 101 Ash, we can quickly avert disaster. The Council president can withhold the bids from the docket. The Council can make a clear demand that the recommended right to purchase clause be in any final agreement. The city can take the time to craft a deal that works for San Diegans, not Wall Street.
But to stop another mess, we need our elected officials and civil servants to step up to stop another bad deal from passing through City Hall. Trapping San Diegans for another 20 years with an unaccountable, monopoly utility is unfair and unjust, and we deserve better. The Council must act, now.
Brian Pollard is CEO of the Urban Collaborative Project, and has served on numerous boards for the city of San Diego.