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Independent audit finds SDG&E largely compliant; committee urges fixes and ongoing oversight
Summary
An independent audit found SDG&E met core franchise obligations in the first compliance period, but auditors and the Franchise Compliance Review Committee flagged issues — inconsistent undergrounding cost estimates, limited collaboration on vendor evaluation, tardy project-portal sharing and delays implementing the Energy Cooperation Agreement — and recommended continued oversight and improvements.
City staff and Crowe LLP presented the independent franchise compliance audit covering the first two-year period of the SDG&E gas and electric franchises (07/08/2021–07/07/2023). Eric Nyland of Crowe told the council that auditors tested nearly 387 franchise commitments and concluded SDG&E “met the 4 audit objectives in all significant respects” for the audit period, while identifying four non‑significant findings.
Crowe’s written findings and management letter describe specific concerns: undergrounding project cost estimates that rose because overheads were omitted from initial estimates; limited SDG&E collaboration with the city on evaluation criteria for a construction master services agreement; the absence (during the audit period) of an effective work portal to share category‑1 right‑of‑way project information with the city; and a delayed implementation plan under the Energy Cooperation Agreement (ECA). Crowe recommended SDG&E improve cost‑estimating QA/QC, better integrate city input on vendor-evaluation criteria, and make the project portal reliably available.
Members of the inaugural Franchise Compliance Review Committee (FCRC) recapped their work and recommended the council reconstitute the committee for the next compliance period and push to begin phase‑2 audit work sooner and with larger samples. The committee urged a public undergrounding project master plan, improved public-facing project portals, closer SDG&E collaboration with the city and San Diego Community Power on ECA goals, and continuation of the Phase‑2 municipal power feasibility study.
SDG&E representatives acknowledged some recommendations and said they are working to improve collaboration and portal functionality; an SDG&E speaker emphasized pride in the overall audit result and said the company takes the recommendations seriously. After discussion and public comment, the council voted to dissolve the inaugural FCRC and adopt a new committee to oversee the next compliance period. Staff and the committee recommended monitoring compliance annually and reconvening ECA summit discussions to align climate and affordable-housing commitments.
