The Franchise Agreement Ending Offers San Diego a Chance for a Fresh Start
Just beyond this calendar year, a longtime San Diego institution is coming to an end. On Jan. 17, 2021, the franchise agreements for electricity and gas that have quietly governed the flow of energy into San Diego households and businesses will expire. The city and San Diego Gas & Electric signed these agreements nearly 50 years ago – it’s time for a fresh start.
Investor-owned energy utilities like SDG&E have an odd history. While it’s not unusual to hear people making the claim that we should hand over public services to private companies – because they allegedly know how to run things more efficiently – many cities never got the chance to establish public energy utilities in the first place. In the early 20th century, investor-owned utilities across the country built transmission infrastructure connected to their own power plants and were rewarded handsomely by state utility commissions with a guaranteed return on their investment from ratepayers. If private companies are inherently better, wouldn’t it follow that cities like San Diego have better service?
That simply has not been the case. At the same time as investor-owned utilities got their foothold, many municipal utilities developed their own urban grid, providing steady service and low rates with no need to factor shareholder profits into their revenue model. In California today, the areas where electricity customers pay the highest rates are those where service is provided by one of three investor-owned utilities. These three service areas happen to be in the largest metropolitan areas of the state, where population density creates the most opportunity for profit. And where are the most expensive rates of all? San Diego.
In a year marked by the previously unimaginable – and with the end of the franchise agreement – San Diego has the opportunity to stretch the horizons of our imagination. When a bid for our energy franchises are presented to City Council for approval, members can decline to sign new franchise agreements and begin the process of purchasing SDG&E’s infrastructure. By rejecting the outdated model of private utility ownership and establishing a public energy utility, San Diego has the power to provide fairer rates, make equitable investments and transition to a 100 percent renewable grid.
Our city has already begun the process of exerting greater control over its energy with the launch of San Diego Community Power, a new agency created by the passage of community choice energy legislation. While this is a strong start that has given us greater public control and accountability over energy purchasing decisions, we need full public control over our grid. If the status quo prevails, San Diego Community Power will use the grid infrastructure of SDG&E, whose corporate owner, Sempra Energy, is committed to international investments in liquid natural gas.
We anticipate that SDG&E will use its control of this infrastructure to hurl obstacles at San Diego Community Power at every opportunity and deter our progress toward 100 percent renewable energy. By acquiring SDG&E’s infrastructure and instituting full public control of our energy service, San Diego can more easily and efficiently disentangle from fossil fuels and provide energy at a significantly lower monetary and environmental cost. A publicly owned utility is what we need for San Diego’s working-class families and for all living inhabitants of our planet.
We are each members of chapters of national organizations dedicated to fighting the ruthless capitalist drive to rob people and planet of the resources we need to live better, healthier and happier. Our organizations have joined several other groups in San Diego to create the Public Power San Diego Coalition, urging San Diego City Council to choose a new direction for our city. While our memberships and those of the rest of the coalition represent a range of constituencies and interests, we are united in our commitment to demand a better deal for the working-class families of San Diego.
The process for determining our energy future couldn’t be more important, yet it has been mostly obscured from public view. The City Council has alternated between complete inactivity and rushed, barely deliberated decisions. After the Council refused to accept the bid terms proposed by Mayor Kevin Faulconer in a special meeting convened on Aug. 6, the mayor decided to put the agreement out to bid anyway, unilaterally setting the terms.
Ultimately, we feel the best choice for San Diego is clear: We should reject a privately owned utility operator and instead pursue a publicly operated, accountable utility. There is no need for us to account for shareholder profits in the revenues collected for energy service. There is no need for our renewable energy transition to be subject to the constraints imposed by a fossil fuel behemoth. There is no need for our working-class families to pay exorbitant rates for energy, a basic necessity, because of the choices made by executives and board members they have no voice in selecting.
We are asking the City Council to vote no on any new franchise agreement with an investor-owned utility — and with that decision, to say yes to a greater power service and greater power generally for the people of San Diego.
Amanda Moser is a member of the San Diego chapter of the Sunrise Movement, and Shauna McKenna is a member of the San Diego chapter of Democratic Socialists of America.