Utility Franchise Agreement

“The only real competition is San Diego Gas – Electric – which earns a million dollars a day and charges us the highest rates in California – and the creation of a utility company that charges much lower rates in many cities in the state.” “It is unusual and unexpected for a company looking to extend its additional franchise relationship so as not to comply with the terms of the current franchise agreement,” Caldwell said. In exchange for transportation and distribution privileges within the city limits, SDG-E pays a franchise fee of approximately 3 per cent, derived from the company`s gross revenues 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 listed as operating expenses for the distribution company. NewGen Strategies – Solutions, a Texas-based utility consultant, has signed a $331,735 agreement with two sub-consultants to study the value of the infrastructure that exists in the city`s priority. “I think, in terms of things, a very complex estimate of Zillow`s value of this infrastructure,” Caldwell said. The City of San Diego is spearheading a community choice aggregation, or CCA, program with four other cities in the region that will enter service in 2021. Under the model, the CCA will purchase the electricity source instead of SDG-E. In fact, if the franchise fee changes, the new rates would apply to both customers of the new CCA and customers who wish to stay at SDG-E. Among cities that renegotiate their franchise agreements, the trend is to sign short-term contracts. NREL`s research on municipal franchise agreements shows which municipalities are entitled to enter into franchise agreements, how many of these agreements have pursued clean energy targets, and to what extent these objectives have been pursued. How about adjusting the 3 per cent rate in existing deductible fees? Just like the By Minneapolis, Minn., a partnership developed for clean energy, Salt Lake City, Utah, has included clean energy goals in its franchise agreement.

Although the city did not assess the franchise fee, Salt Lake City Corporation and Rocky Mountain Power signed the city`s Joint Clean Energy Cooperation Statement in their franchise agreement. The joint venture establishes a cooperative relationship between the city and energy to achieve the city`s goal of achieving 100% renewable energy by 2032. The city and municipal services intend to cooperate in demand response, energy storage, renewable energy projects, energy efficiency and other initiatives to help the city meet its clean energy and energy efficiency goals. Cities have many opportunities to supply renewable energy to help them achieve their goals.

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