Matthew Lickona 2:45 p.m., Dec. 10
Adjusting the SDG&E Franchise Fee & Solving Our Short-Term Deficit
We need to increase the annual SDG&E electricity franchise fee from 3% to 20% (Section 17, Ordinance 10466).
The fee was set after considerable negotiation in good faith in 1970. It has remained at 3% ever since then,, including after a "gross receipts" amendment not long after Sempra Energy became the owner of SDG&E.
If that fee were to be negotiated in good faith now, then we would have to consider that SDG&E is incapable of preventing power-line -caused wildfires (SDG&E WEBA and 2007 wildfire testimony to CPUC in 2009), is not willing to put all overhead power lines underground until at least 2063, and passes enough profits through to Sempra Energy that Sempra Energy can afford to pay out 38-40% of its retained earnings out as stockholder dividends, most of which leaves San Diego County as fast as it can be distributed.
Essentially, the payout of Sempra Energy dividends is a wealth distribution network that milks San Diego County residents out of roughly $30 million each quarter. This is a guess, as Sempra Energy is loath to divulge exactly where it spends its money, but it is a decent estimate based on the $107 million pumped out of SDG&E to Sempra Energy in the last reported quarter.
A change to a 20%-of-gross franchise fee would not be enough that Sempra Energy would be forced to discontinue its dividend payments, and with $105 million received in the same last quarter from its RBS Sempra Commodities LLC profits, Sempra Energy could still pay out a dividend in the 30-40% range while still having SDG&E meet its target year of 2063 to put the overhead power lines underground.
It should be remembered that Sempra Energy reported annual income of $11 billion in 2007 and nearly the same $11 billion a year later, despite the US economy going through its worst financial crisis since the Great Depression in the Crash of 2008.
As an incentive to put those lines underground faster, the proposal I am preparing for petition signatures will allow the annual franchise fee to return to 3% once the California Public Utilities Commission certifies that all SDG&E overhead power lines in the County are underground.
Increasing the electricity franchise fee to 20% ought to bring in enough revenue to the City of San Diego to cover the $77 million gap in the mayor's 18-month budget mentioned in the State of the City address. It may even mean a slight surplus.
Not increasing the franchise fee may mean that all of those civic needful things that the mayor wants us to pay for are just a bunch of pipe dreams.