San Diego’s Fifty Year Utility Franchise Agreement to be Renewed

In early 2021, San Diego’s fifty year franchise agreement with monopoly utility provider San Diego Gas and Electric (SDG&E) will be up for renewal. The franchise agreement grants SDG&E authority to be the region’s energy supplier, and has given this entity exclusive reign over San Diego ratepayers for five decades.

Many SDG&E customers are unaware that the utility’s ability to do business in San Diego is actually paid in part by ratepayers. The franchise fee in the City of San Diego is referred to as the “City of San Diego Franchise Fee Differential” on most ratepayer’s electricity bills. Each municipality or county in SDG&E territory with a different franchise agreement has its own differential. The total franchise fee in the City of San Diego is 6.53 percent. The City of San Diego Franchise Fees on Electricity breakdown is as follows:

• 3.53 percent undergrounding surcharge = fee that the City asked SDG&E to collect to pay for the undergrounding program
• 2.25 percent differential surcharge = fee to make up the difference between the franchise fee charged in City versus other areas of the SDG&E service territory
• 0.75 percent standard franchise fee charged throughout SDG&E's service territory

As the moment for renewal approaches, many local advocates are calling on the City to embed the new franchise agreement with protections for San Diego ratepayers, and include measures that hold the utility accountable as a fair and honest partner. To date, SDG&E has time and again proven to be a monopoly over, and not a partner with, the community. Its continued attacks on rooftop solar, including the introduction of a network use charge in 2011 as well as negligence that resulted in the 2006 fires to its most recent 2019 proposal for a $39 minimum bill for all customers, have shown its disservice to the community.

“The fifty-year franchise agreement expires in one year, and that allows our elected officials a once-in-a-generation opportunity to make a change” said Tyson Siegele with Protect Our Communities Foundation. “The expiration of the franchise agreement provides us the opportunity to finally demand clean, reliable energy at a reasonable price.”

Sullivan Solar Power, along with key local community groups, is advocating for a franchisee that works in concert with the City to achieve its energy goals. The local coalition is advocating for a better franchise agreement that includes provisions to position the city to secure its energy future in a fair and cooperative way. The community seeks for the new agreement to uphold terms that include facilitating accessible and equitable solar for all City residents and businesses; limit the term to no more than five years to allow for regular performance evaluation; and require shareholders, not customers, to pay for the use of the public right of way.