Mayor, Roberts Spar Over SDG&E; Bonds

A proposed $400-million bond refinancing measure for San Diego Gas & Electric Co. encountered another hurdle at City Hall Tuesday and touched off a heated exchange between San Diego Mayor Maureen O’Connor and Councilman Ron Roberts over the mayor’s handling of related negotiations with the utility.

With SDG&E; officials complaining that any delay could reduce the refinancing’s projected $65-million savings, the City Council voted unanimously to postpone action on the proposal until today to give the two parties’ attorneys an opportunity to craft mutually agreeable language on one of its key provisions.

But that critical issue was overshadowed by the harsh words traded by O’Connor and Roberts, an exchange in which Roberts accused the mayor of keeping the council in the dark over her negotiations with SDG&E--prompting; O’Connor to issue a caustic invitation for him to take over the battle, if he thinks he can do any better.

The refinancing dispute, which had been confined largely to the mayor and SDG&E; before Tuesday, broadened and grew increasingly acrimonious during the hearing. Roberts bristled upon learning that O’Connor and city attorneys have had continuing negotiations with SDG&E;, seeking $6.3 million reimbursement for legal fees incurred in the city’s successful effort to block the utility’s proposed merger with Southern California Edison.

“You’re hiding the facts,” Roberts angrily told O’Connor, complaining that the council had not been kept apprised of those negotiations.

“I’m not hiding anything, Mr. Roberts,” O’Connor snapped back. “Frankly, I don’t give a damn any more. . . . But feel free, Mr. Roberts. If you think you can get $6.3 million out of them without selling the city’s soul, go right ahead. But I’m not selling the city out.”

Because the two sides remain “far apart” on the reimbursement issue and the negotiations are still in a preliminary stage, O’Connor explained, she saw no need to formally report back to the council. But O’Connor and city attorneys stressed that those details had been privately provided to some council members.

“I don’t ever recall giving you and (city attorneys) carte blanche to go out and negotiate on behalf of this council,” Roberts said.

“They (SDG&E;) didn’t give us what we wanted . . . and I wasn’t going to bring it back to you until we were close,” replied O’Connor, who led the successful 2 1/2-year battle to block SDG&E;’s proposed merger with Southern California Edison. “We’re not even close.”

After suspending the public portion of their verbal warfare, O’Connor and Roberts confronted each other behind the council dais, where they angrily gestured and pointed fingers at each other.

As a result of their contretemps, previously secret details about the negotiations between SDG&E; and the city were revealed Tuesday. Letters released by SDG&E; officials after the hearing showed that the utility has offered to donate $1 million over five years to O’Connor’s proposed new central library project or another public facility. As an alternative, SDG&E; would be willing to donate a former downtown power station to the city, as well as take other steps designed to mend its relationship with city leaders.

However, in a letter sent to city attorneys last December, SDG&E; general counsel Stephen Baum pointedly emphasized that the utility “would not reimburse the city for its expenses incurred in opposing the merger.” SDG&E; Chairman Tom Page also made that point clear in a lunch with O’Connor last summer, Baum said Tuesday.

“But we’ve negotiated in good faith, and what we’ve offered is substantial,” Baum said.

The O’Connor-Roberts dispute temporarily sidetracked the council’s debate over whether to approve the bond refinancing measure, a proposal that hinges largely on finding a compromise on a major provision on which the city and SDG&E; strongly differ.

In an effort to preclude future merger battles or at least strengthen the city’s legal hand should one occur, O’Connor would like the bond pact to acknowledge that the City Charter requires council approval of any transfer of the utility’s franchise agreement with the city. The mayor also favors placing a referendum on the November ballot stating that the council would have to approve any future merger or sale of the utility.

SDG&E; executives told the council Tuesday that they would go along with a “reference” to the charter provision in the bond agreement but stressed that they would be unwilling to accept any phrasing suggesting that the council holds veto power over any future merger.

“It would be disingenuous and cynical to agree to something we believe is wrong simply to get this (refinancing) request approved,” Baum said. Top SDG&E; executives also oppose any ballot initiative on the merger question, arguing that such a measure would simply “reopen old wounds,” Baum said.

Although the city contends that the charter requires council approval of merger proposals such as the failed one involving Southern California Edison, SDG&E; vigorously disputes that interpretation, arguing that the defeated merger was technically not a franchise transfer. The authority to approve such agreements rests with the state and federal governments, not the city, Baum argued.

The refinancing deal’s potential savings stem from lower interest rates for the city-issued, tax-exempt industrial development bonds that could reduce average residential bills by $3.30 annually over the next 25 years, as well as cut costs for some of SDG&E;’s major corporate and municipal users by tens of thousands of dollars a year.

“The savings for individuals seem small,” said SDG&E; spokesman Mark Nelson. “But every little bit helps.”