Utilities Franchise Agreement

“As a city, we should think about what a twenty-first century franchise agreement is compared to a contract written 50 years ago,” Siegele said. “This is a unique opportunity for the City of San Diego to make some changes to the franchise agreement,” said Tyson Siegele, an energy analyst with the Protect Our Communities Foundation, an environmental group. Based on a dataset of more than 3500 franchise agreements, the authors conclude that cities in 30 countries have the option of following franchise agreements, while in 20 states municipalities may be prohibited or prevented from following this option. Here in San Diego, a number of local groups are closely following the evolution of the franchise agreement. Some cities have included other energy targets in franchise agreements – or have signed parallel agreements – that require the city and the distribution company to cooperate to achieve common energy goals. If franchise and related agreements are implemented, the city can achieve a large number of outcomes, including additional revenues for urban services, new renewable energy projects, and more collaborative working relationships between the parties. NREL`s research on municipal franchise agreements shows which municipalities are entitled to conclude franchise agreements, how many have pursued clean energy objectives through these agreements and to what effect these objectives have been pursued. In exchange for transmission and distribution privileges within the city limits, SDG&E pays a franchise of approximately 3% from the company`s gross revenue from electricity and natural gas sales to customers paid to the city. About half of the money is billed directly to customers on their monthly SDG&E bill. The other half comes from a royalty which is indicated as operating costs for the distribution undertaking.

The disagreement can stop in court. In the meantime, the city has paid $36 million to design the relocation of its procurement infrastructure for the project. Payments were made in protest, with the city reserving the right to appeal at a later date. Instead of starting its own utility company, the city decided to sign a new franchise agreement, creating a new clean energy partnership with its established utilities, which founded a common commitment to achieving the city`s climate and energy goals. The partnership includes two representatives from each unit (two city councillors and two employees from each utility). In 2017, the city increased its existing franchises by 0.5 percent for supply customers and directed royalty revenues toward initiatives to reduce energy bills and greenhouse gas emissions for city residents and businesses. . .

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