The City of San Diego

Staff Report

DATE ISSUED: 8/5/2019

TO: City Council

FROM: Sustainability Department

SUBJECT: Approvals of the (a) Award of Contract #10089559-19-K to NewGen Strategies and
Solutions, LLC for Electric and Gas Franchise Agreement Consultant Services and of the (b)
Award of Contract #10089572-19-K to JVJ Pacific Consulting, LLC for Strategic Pathway
Consultant Services

Primary Aaron Lu Phone: (858) 573-1291

Contact:
Secondary Contact: Erik Caldwell Phone: (619) 235-5880

Council District(s): Citywide

OVERVIEW:
This item approves both (a) the award of contract #10089559-19-K to NewGen Strategies & Solutions, LLP
for electric and gas franchise agreement consultant services and (b) the award of contract #10089572-19-
K to JVJ Pacific Consulting, LLC for strategic pathway consultant services.

PROPOSED ACTIONS:
A resolution authorizing:
1. The Mayor or designee to approve the award of contract #10089559-19-K and execute an agreement,
not to exceed five years, with NewGen Strategies & Solutions, LLP to provide electric and gas
franchise agreement consultant services in an amount not to exceed $331,735.
2. The Chief Financial Officer to expend an amount not to exceed $331,735 over the five years with the
expenditures to be made as a Citywide expense, for the purpose of executing this agreement
contingent upon the adoption of the Annual Appropriations Ordinance for the applicable fiscal years,
and contingent upon the Chief Financial Officer furnishing one or more certificates certifying that the
funds necessary for expenditure under the established contract funding phases are, or will be, on
deposit with the City Treasurer.
3. The Mayor or designee to approve the award of contract #10089572-19-K and execute an agreement,
not to exceed five years, with JVJ Pacific Consulting, LLC to provide strategic pathway consultant
services in an amount not to exceed $593,000.
4. The Chief Financial Officer to expend an amount not to exceed $593,000 over the five years with the
expenditures to be made as a Citywide expense, for the purpose of executing this agreement
contingent upon the adoption of the Annual Appropriations Ordinance for the applicable fiscal years,

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 and contingent upon the Chief Financial Officer furnishing one or more certificates certifying that the
funds necessary for expenditure under the established contract funding phases are, or will be, on
deposit with the City Treasurer.

DISCUSSION OF ITEM:

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In 1970, the City granted San Diego Gas and Electric (SDG&E) a 50-year exclusive franchise to provide
electric and gas utility services within the City of San Diego, per the City Charter. Through the agreement,
the City and its residents gained many benefits. SDG&E agreed to pay a franchise fee to the City
equivalent to 3% of its gross receipts from energy sales within the City and complete $88 million in
undergrounding projects. In addition, SDG&E and the City partnered to create an undergrounding
program, maximizing the value of the undergrounding surcharge.

The City of San Diego’s existing electric and gas franchise agreement is set to expire on January 17, 2021,
and the City Charter requires putting the electric and gas franchises out for bid when the existing
franchise agreements expire. A new agreement may result in improvements to the transmission and
distribution system to ensure safe, cost-effective, and resilient movement of energy.

The energy environment has dramatically changed since 1970. In 1970, solar power plants did not exist;
today, 100% renewable energy goals are common. In just the last 20 years, California’s energy markets
were deregulated and then reregulated. Community Choice Aggregation (CCA) programs are slated to
serve 80% of the State’s energy load over the next few years, leading to some Investor Owned Utilities
(IOUs) looking to exit the business of purchasing power. Additionally, an increasing number of cities are
launching municipal utilities, or city-operated agencies that provide energy alongside water service and
trash collection such as the Los Angeles Department of Water and Power (LADWP) and Sacramento
Municipal Utilities District (SMUD).

Moreover, according to the United States Energy Information Administration (EIA), the electrical grid is
made up of over 7,300 power plants, nearly 160,000 miles of transmission power lines, and millions of
miles of distribution power lines. The City’s franchise agreement governs San Diego’s portion of a very
complex national infrastructure. This complex infrastructure is mirrored by an equally complex regulatory
environment.

IOUs like SDG&E procure energy, operate and maintain transmission and distribution networks, provide
billing services, and implement energy programs. The state government grants IOUs a monopoly over
power distribution. Local franchise agreements grant access to the right of way in a specified service
territory. Independent power producers develop and operate independent energy facilities in the state
and participate in transactions with utilities, the independent system operator, and consumers. All
ratepayers – including CCA customers, utility customers, direct access customers, and homeowners with
their own distributed solar system – will utilize the IOU-operated and maintained transmission and
distribution infrastructure.

When the City places its electric and gas franchise out for bid, as required by the Charter, the solicitation
will create an opportunity to secure additional benefits for the City and the residents of San Diego.
Potential partnerships may promote additional energy efficiency improvements, advance the
underground program, and reduce the greenhouse gas emissions associated with the generation mix
provided to municipal facilities. The franchise awardee may also supply a higher percentage of renewable
power content, improve data sharing, accessibility, transparency, and coordination, and provide additional
transparency on the status of infrastructure additions.

Proposed Franchise Agreement Solicitation Project Timeline

2019
Jul. Select from bidder pool for valuation consultant and strategic advisor consultant
Aug. Award notice sent to consultants
Sep. Bring forward to Committee & Council for approvals for consultants
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 Start to engage utility and stakeholders
Oct. Start drafting franchise valuation study
Nov. Start to develop new franchise Request for Proposal (RFP)
Hold public listening sessions
Bring forward RFP to Council for informational session

2020
Feb. RFP released to the public
May Review and evaluate responses
Jun. Discuss with respondents
Jul. Rebid RFP if necessary
Bring forward to Committee for vote
Aug. Bring forward to Council for vote
Sep. Start CPUC approval process

2021 Jan. New Franchise Agreement in place

To properly resource the preparation and execution of a competitive bidding process for new electric and
gas franchise agreements, the City will engage two teams of outside professional consultants. The first
consulting team will support the City efforts to establish a valuation of existing electric and gas
infrastructure and provide an analysis and an audit of the City’s existing electric and gas franchise
agreements. A competitive bid process was initiated as Request for Proposal #10089559-19-K, on April
12, 2019 for these professional services.

Three proposals were received and deemed responsive. Upon conclusion of its review and evaluation, the
source/evaluation committee concluded that NewGen Strategies and Solutions, LLC (NewGen) should be
selected, representing the best overall value for the City, till the completion of the project, for a period not
to exceed five years.

NewGen, which includes MRW & Associates, LLC (MRW) and Advisian-Worley as subconsultants, is
comprised of industry professionals that have served municipalities and the electric and gas utility
industry throughout their extensive careers. The team working on this project has earned the trust of
municipalities of all sizes and locations to provide expertise in electric and gas utility valuation and
appraisals, financial feasibility analyses, utility franchise agreements, electric and gas infrastructure
engineering services, and an in-depth knowledge and experience with California regulations and energy
policy. NewGen, MRW, and Advisian-Worley have proven experience with cities and utilities in California
and MRW has served as the City’s technical consultant on energy matters for 30 years. Key personnel’s
biographies are included as attachments.

The second consulting team will serve as the City’s principal strategic advisor on franchise related energy
issues. In this capacity, the team will serve as the City’s lead in the development of the City’s approach for
the next electric and gas franchise agreement. These consultants will work closely with a cross-functional
team represented by City staff designated by the City’s Chief Operating Officer under the direction of the
Mayor. A competitive bid process was initiated as Request for Proposal #10089559-19-K, on June 10, 2019
for these professional services.

Five proposals were received and deemed responsive. Upon conclusion of its review and evaluation, the
source/evaluation committee concluded that JVJ Pacific Consulting, LLC should be selected, representing
the best overall value for the City, till the completion of the project, for a period not to exceed five years.

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JVJ Pacific Consulting, LLC will assign Mr. Howard V. Golub (former General Counsel of Pacific Gas and
Electric Company) to serve at the City’s lead in the development of the City’s strategic pathway to the next
generation of gas and electric franchises. Mr. Golub has decades of experience with electric and gas
utilities, a strategic understanding of utility objectives and vulnerabilities, knowledge of California energy
law, extensive experience with California public agencies, in-depth experience as a project manager, and a
proven track record of success in achieving clients’ objectives. Mr. James Kelly (former Senior Vice
President of Transmission and Distribution for Southern California Edison) will also be available to assist,
as needed. Mr. Kelly provides over 40 years of experience with the design, engineering, construction,
operation and maintenance of the electric utility transmission and distribution system. Key personnel’s
biographies are included as attachments.

City Strategic Plan Goal(s)/Objective(s):

Goal 1: Provide high quality public service
 Ensure equipment and technology are in place so that employees can achieve high quality public
service

Goal 2: Work in partnership with all of our communities to achieve safe and livable neighborhoods
 Invest in quality infrastructure

Goal 3: Create and sustain a resilient and economically prosperous City with opportunity in every
community
 Create dynamic neighborhoods that incorporate mobility, connectivity, and sustainability
 Prepare and respond to climate change
 Enhance San Diego’s global standing

Fiscal Considerations:
This action will authorize both (a) an agreement between the City and NewGen Strategies & Solutions, LLP
for electric and gas franchise agreement consultant services in an amount not to exceed $331,735 for a
period not to exceed five years and (b) an agreement between the City and JVJ Pacific Consulting, LLC for
strategic pathway consultant services in an amount not to exceed $593,000 for a period not to exceed five
years, with the expenditures to be made as a Citywide expense and is contingent upon the adoption of
the Annual Appropriations Ordinance for the applicable fiscal years, and contingent upon the Chief
Financial Officer furnishing one or more certificates certifying that the funds necessary for expenditure
under the established contract funding phases are, or will be, on deposit with the City Treasurer.

Charter Section 225 Disclosure of Business Interests:

(a) NewGen Strategies & Solutions, LLP
1. Joseph Mancinelli, General Manager: 225 Union Street, Ste 305, Lakewood CO 80228
2. Anthony Georgis, President Energy Practice: 224 Union Street, Ste 305, Lakewood, CO 80228
3. Chris Ekrut, CFO: 275 W Campbell Road, Ste 440, Richardson, TX 75080
4. Nancy Heller Hughes, Director: 20014 SE 19th Street, Sammamish, WA 98075
5. Mike Lane, Director: 112 Westwood Place, Ste 165, Brentwood, TN 37027
6. David Yanke, President Environment Practice, 3420 Executive Center Drive, Ste 165, Austin, TX
78731

(b) JVJ Pacific Consulting, LLC

1. Howard V. Golub, Alamo, CA

Environmental Impact:

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This activity is not a project as defined by the California Environmental Quality Act Section 21065 and
State CEQA Guidelines Section 15378(b)(5), as it is an organizational or administrative activity of
government that will not result in direct or indirect physical changes in the environment. Therefore, this
activity is not subject to CEQA pursuant to CEQA Guidelines Section 15060(c)(3).

Equal Opportunity Contracting Information (if applicable):

This agreement is subject to the City’s Equal Employment Opportunity Outreach Program (San Diego
Ordinance No. 18173, Municipal Code Sections 22.2701 through 22.2708) and Non-Discrimination in
Contracting Ordinance (San Diego Municipal Code Sections 22.3501 through 22.3517).

Previous Council and/or Committee Actions:

This item will be heard at Environment Committee prior to Council.

On July 17, 2019, an informational only item, City of San Diego Electricity Franchise Agreement, was
presented at the Budget and Government Efficiency Committee.

Key Stakeholders and Community Outreach Efforts:

Key stakeholders and community outreach efforts will be included in this franchise agreement solicitation
process. City staff will engage key stakeholders and/or the community when consultant services get
underway as well as when draft and final deliverables are completed. The franchise agreement
solicitations will also be released to key stakeholders and the community for discussion.

Cody Hooven Erik Caldwell

Sustainability Department Director Deputy Chief Operating Officer, Smart and

Sustainable Communities

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