The following is a transcript of the October 6, 2025, episode of Public Power Now. Learn more about subscribing to Public Power Now at Publicpower.org/Podcasts. Some quotes may have been edited for clarity.
Paul Ciampoli
Welcome to the latest episode of Public Power Now. I'm Paul Ciampoli, APPA's news director. Our guest on this episode is Nico Procos, director of Silicon Valley Power, the public power utility for Santa Clara, California. Prior to being named director of the public power utility in July, Nico had been serving in the acting role of director. Nico, thanks for joining us on the podcast.
Nico Procos
It's my pleasure, Paul.
Paul Ciampoli
So Nico, as I was preparing for this interview, one of the things that jumped out at me is the fact that you have more than 25 years of experience in the electric utility industry. So could you offer an overview of that experience and how your prior roles lay the foundation for your being successful in your current role?
Nico Procos
Sure, happy to. So I started my career actually in the regulatory world around 2000. I was at the California Public Utilities Commission from 2000 to 2005. Some of you may remember those are what I refer to as the fun years. That's when we had our first energy crisis and Gray Davis was the governor and then ended up exiting due to everything that was going on. So it was a really interesting time as a young analyst. Got to work on a host of different issues that the CPUC regulates -- telecom, electric, water. So it was a fulfilling experience starting out one's career.
At one point, I remember thinking to myself this is 20 plus years ago that here we are regulating utilities, but a lot of us have never actually worked for utilities and I have a lot of friends that work in investor-owned utilities at PG&E and Southern California Edison. But I never really wanted to go into the investor-owned utility world.
I always was intrigued by the muni world and an opportunity presented itself at Alameda. So I've been in Alameda twice, but this was the first occasion and I got to work over in Alameda Power in the Bay Area for about two years and really that was kind of my inauguration in terms of the public power world and it really opened my eyes and Alameda is part of the Northern California Power Agency, a joint power agency in California.
We have a lot of joint projects with other entities in the Bay Area and elsewhere. It's kind of throughout Northern California, so that was a great experience there. I got to learn more about the details and the nuts and bolts of running a utility. I had a great boss at the time, so I've been fortunate to have several great mentors throughout my career and one of them was Val Fong, who was the general manager at the time in Alameda, and she left shortly after that to go to Palo Alto Utilities, another NCPA member, a municipal utility in the Bay Area and I joined her and for the next seven years I worked in various capacities there. I mean they have actually five essentially business lines underneath their utilities department and I worked on electric issues, gas issues and water issues for several years, which I found really interesting -- it was great to kind of be at that level, at the municipal level, to see how things function not only in the electric world, but with water and fiber and gas.
And I learned a lot and I was the kind of person where I like to learn different things, so getting that kind of exposure was really critical and I'll talk a little bit more about this shortly. But I feel like all of this kind of fed into where I am right now -- all that background and getting into the details of everything and also having those mentors to help me throughout my career.
So after Palo Alto, I left and went to the Port of Oakland. Again, intrigued by the fact that it was a municipal utility and it was also a port. So I learned a lot about airport and seaports and that was the place where I had my other great mentor in my career, Chris Chan, and really got to see how he dealt with leadership issues, how he dealt with challenges and kind of learned from that and I was there for about a period of two years. And then I had the opportunity at Alameda to be the general manager, so to return to Alameda presented itself. I remember talking to Chris about this and I got the offer and he told me, he said, you know,
Nico, he says this is a good opportunity for you. I'm not going to try to convince you to stay at the port because you need to do this. So I left and I was at Alameda for about 7 years. And the nice thing about working for a smaller electric utility is you get to wear multiple hats and I got to learn all aspects of running an electric utility. I'm not an expert in all of them, but I got to be become familiar with them, really learn how things work and we're talking operations, the finance side of things, customer service, I mean, it runs the gamut and that gave me that foundation that has allowed me to make this next transition where I moved over to Santa Clara, which is a much bigger utility and I was the Chief Operating Officer here for a little while and then the director position opened up and I was appointed several months ago in this role.
Santa Clara is a much different entity than Alameda or the port. We have a lot of data centers and I think you're probably going to get to a question about that shortly, so I'll hold off for now. And of course, I'd be remiss if I didn't mention the fact that we have Levi's Stadium and we are going to be hosting a Super Bowl in February and six World Cup soccer games. So there's a lot going on at Santa Clara.
Paul Ciampoli
Yeah. OK, great. Well, thanks for that great overview, Nico. Speaking of data centers, that was my next question for you, which is I wanted to give you the opportunity to talk about the current landscape with respect to data centers in Santa Clara and also wanted to know if you could talk about the strategies that Silicon Valley Power has adopted to successfully meet the power demand needs of data centers today as well as in the future.
Nico Procos
We have approximately 55 data centers and we've been in the data center business for quite some time. They kind of run, there's different varietals, they run the gamut and because we have these businesses down here like NVIDIA and Intel, these high tech companies, it's no surprise that we've been kind of dealing with these issues for quite some time. The landscape is changing. AI is a game changer.
Now most of our data centers -- they're on the smaller size. And when I say smaller, I mean 50 to 100 megawatts. So we're not talking 500 to 1,000 and those larger ones present some challenges, but the smaller ones are also a bit of a handful.
Now we get asked this question a lot because we have so much experience and one of the things that kind of struck me about the whole data center conversation of late is that here in California and maybe elsewhere, we're just kind of embarking down this path.
A lot of entities are asking us about how do these guys operate? What's the best way to deal with them? How do you charge rates? These are all things and questions that we've dealt with in the past. We have a lot of data. I like to say we have a lot of data on data centers.
We know how they operate. We have agreements with them. We've gone through growing pains in terms of how do you set up agreements with them to ensure you're able to accommodate them within your service territory. And then also how do you make sure that they pay their fair share? I mean, that's one of my favorite terms -- the word fair -- we could get into a lot of discussion about that, but it comes up a lot. Our residents are concerned about data centers driving a lot of costs, transmission that needs to be built and also who's subsidizing whom.
So we have to deal with that a lot and I think other entities are also are also talking about that. So we have a lot to provide to the community, to the public power community, in that area.
Paul Ciampoli
We've covered data centers a lot lately, but one of the things that I'm noticing at least anecdotally in terms of as I track the topic is that to your point communities nationwide are actively engaged -- engaging on the development and proposals related to data centers. So that obviously goes without saying that the planning for community engagement is a key aspect if you're going to have a utility that's going to be working with data centers and proposals.
Nico Procos
Yeah, I think that's really critical, especially because I think this is uncharted territory, not only for us, we already have a lot of data centers, but we also have a lot of demand. I meet with the data centers a lot and one of the common themes that I hear from them is they want more power. And they're proposing to build more data centers in some of our neighboring communities.
And so engaging with them I think is really important, especially to get a sense of what's coming down the pipeline. I've been in this business for 25 years and I've never seen things move so fast, whether that be transmission or what's occurring within our service territory, we're spending $450 million to upgrade our substations and we're building a new transmission line and that's largely driven by data centers and I think engaging with the community is really important.
I think there's kind of some misperceptions regarding data centers and we've spent a lot of time trying to deal with those. One of those is what is the value that comes to the community and again this whole subsidy question and so I certainly think that there's a lot of value that comes to the community from data centers and it helps put downward pressure on rates. That's the bottom line.
It does bring up a whole host of other issues. We do hear a lot about backup generation. I think they've done a much better job in terms of how do they design things, how do they test their backup generators -- they used to look like kind of boxes. Now they look, the buildings look like office buildings.
So there's been a lot of improvement, but there certainly are those issues that come through the community and also in City Council as well. I mean, I think there's strong support for data centers, but there are some that still have some lingering questions in terms of how is this going to play out and what are the impacts on the community?
Paul Ciampoli
I just wanted to switch gears a little bit and talk about the utility’s current generation resource mix and specifically if you could describe in further detail what the current resource mix is, as well as talk about power planning strategies and also what role does energy storage play in terms of the utility’s power supply planning process?
Nico Procos
We have a diverse portfolio. I mentioned earlier that we are part of the Northern California Power Agency. We were one of the founding members and we participate with other members on hydro projects, the Lodi Energy Center, which is natural gas, a geothermal project. We have kind of a smattering of landfill gas projects and some wind projects.
We've done a really good job over time in collaborating with other NCPA members and members of public power to get resources, especially for us recognizing that our current peak is 745 megawatts. We're anticipating going to 1,300 within the next 5 to 10 years. So procuring resources to meet that need is very important to us. And also we're in California, so there's a focus on renewables and clean energy. We do have several power plants within the city. Donald Von Raesfeld Power plant is natural gas, about 150 megawatts. And then we've got a peaker. You asked about batteries.
We have a PPA for a 50 MW battery project within the city. And that's currently being built. And then we have a variety of contracts that we're working on, mostly solar plus battery, but we also have some that are standalone battery. And the value of that is it provides resource adequacy. Here in California, we have to make a showing that we have enough resources to be able to meet our peak plus a certain amount. So we have a group that spends a significant amount of time -- I would say at any given moment there's five to 10 of these contracts that are underway and it's challenging and one of the biggest challenges is more recent where we run into the supply chain issues and then also tariff issues and we're spending a lot of time in discussions with potential counterparties and trying to deal with some of that uncertainty.
It's hard enough, there's a lot of competition for resources and then you layer on those issues and it’s a very challenging environment for us. Kudos to the staff here that does a great job. We just took one to council a project and we've got a couple more coming down the pipeline, but you’ve got to keep at it.
Paul Ciampoli
With respect to supply chain issues, just curious, even if it's anecdotal, have you guys seen any kind of relief in terms of right after post COVID and even during COVID, there were some severe bottlenecks for various types of electrical equipment. Has there been any easing up on that at all that you guys have seen?
Nico Procos
You know, not really. And at this point it almost is the norm now. So in terms of long lead times, you have to make sure you get ahead of that. We changed the way we procure transformers so that we might have more inventory than we normally would have had five to 10 years, but it's just becoming more and more competitive and same with the tariff issue -- we're dealing with an issue right now we have $400 million worth of -- it's our system rebuild and we have about -- the total project is $400 million -- but we have about $160 million worth of -- specialized transformers coming from South Korea, and there's a potential tariff issue there.
You get into the weeds of the contract and you're trying to work that out. But who knows how the dust will settle in 6 to 12 months from now, but that could potentially add $50 to $60 million onto our projects and then we're dealing with this and then also our counterparties.
So you have maybe a power purchase agreement with a solar plus battery and they're struggling with those kinds of issues as well and that makes it very difficult.
Paul Ciampoli
I would imagine there's always some degree a level of unpredictability as it relates to load forecasting.
Nico Procos
Yeah, and that's particularly challenging for us. I'm used to you do the load forecast and then, yeah, maybe you're 3 to 5% a year or something like that. We're seeing dramatic increase in load. And I mentioned earlier about our peak. I was actually at a conference on a panel last week and we finished the slides I think on last Tuesday and our peak in the slides was 720 and then by the time I read it on Thursday, you know our peak was actually 745. So it's gotten to the point where it's like your slides are out of date two days later.
Paul Ciampoli
That's a great point and that's something I've been trying to touch upon with various public power officials as it relates to -- it'd be obviously nice if everybody had a crystal ball, but that seems like it's increasingly cloudy, even if you have it in terms of trying to do accurate load forecasting.
Nico Procos
Yeah and it's also tough because and this is a question we get, especially as it relates to data centers, like is it, you know, is it real, right? What are you going to see five years down the road? I mean, they're coming in now and they say, oh, I want 100 megawatts and it's like, OK, I mean our experience is the ones that we have operating, they don't get to what they said they were going to get to, so you have to kind of discount it a little bit.
But then also something could change in the future, right, whether that be an efficiency change or maybe they all move somewhere else. I mean they are fairly mobile. I mean these are big investments, but still and so how does that play into the conversation about stranded assets and costs that they maybe they don't? And we have some innovative ways of dealing with that.
Happy to talk about it. My sense is it's very unique in California, if not the country, the way that we've approached it. We have a couple of things that we do with our large customers. We have agreements, we call them substation agreements and there's different vintages.
So you know, we've gotten better over time and the more recent ones, they have what we call ramp rates. So they come in, they say, OK, I need 100 megawatts. Then we might say, OK, well, yeah, you'll get there, but we're going to give you 50, 60,70, 80 over the five year period or something like that. The other thing we do is we have something we call a load development fee and the load development fee right now is $500 a kilowatt. So if a 50 MW data center comes in the door, that's 50,000 KW.
They have to pay that fee. And that fee is really intended to fairly allocate the costs of us upgrading our system. So you know I mentioned that $400 million upgrade. Not all of that is driven by data centers. Some of that is we are upgrading -- We have three interconnection points to the bulk electric system. We are upgrading our substations, aging infrastructure and you know that cost really should be borne by everybody. But then some of it -- especially the capacity additions -- that cost flows into the load development fee and then we charge that to the data center.
Now in addition, we also charge them if they're big enough, they get a dedicated substation. They pay for that as well. So I like to think that up front there's a significant contribution that they're making that kind of mitigates some of the concern about, OK, well, what if they don't materialize? Because we do make them pay based on what their requests are.
Paul Ciampoli
And the load development fee -- just curious, is that a fairly unique thing specifically to Silicon Valley Power? I hadn't heard of that specifically before.
Nico Procos
Yeah, I've never heard of it elsewhere before. And we've talked to lots of entities that are dealing with data centers and that's been our recommendation that you really should develop something like that. And it's kind of this iterative process. So if you look at it over time, it's really gone up a lot. And now we're having additional conversations where it's OK, the $500 a KVA really is just for capital improvements. Is it prudent for us to put in things like contracts, power purchase agreements, resource adequacy, other things that are being driven by these large customers? And the thing that's interesting is up until about six months ago, this whole conversation about data centers all of a sudden just got supercharged.
And I think it's because of the interest that's coming out of DC and elsewhere and it's the big conversation and then everyone's talking about we have to win the race and a lot of these data centers, they don't really blink at the load development fee, especially in our service territory where our rates are half of PG&E.
So you can imagine where you've got a data center whose operating costs are $20, $30 million a year in the PG&E service territory, they'll pay $10 or $15,000,000 in electric costs here, so that's a significant savings for them.
Paul Ciampoli
Yeah, definitely. OK, well, I appreciate your discussing that because I find that very interesting. So thanks again for sharing details on that.
So Nico, I wanted to switch topics and talk about electric vehicles and we reported on this news recently in our newsletter.
Chargescape, an automotive joint venture focused on electric vehicle grid integration, and Nissan in early September announced the launch of a new vehicle to grid pilot in Silicon Valley Power's territory. So could you offer additional details on this pilot and what role will the utility play in the pilot?
Nico Procos
Nissan has an advanced technology center in Santa Clara and they already had a relationship with Fermata. That's the entity that provides a lot of the software to be able to do bidirectional delivery and they were actually doing vehicle to building applications.
So this is really an expansion of that program in partnership with the California Energy Commission and allows now vehicle to grid integration. So in theory participants, Nissan owners, can now inject into the grid and there would be some incentive to do so.
And so this is kind of a very novel program for us. Fermata provides AI enabled bidirectional chargers that manage how and when the energy is dispatched. So in theory if you've got an issue on the grid whether that be local or on a state level, you can rely on these electric vehicles to help. And for us that's really critical. We’re rebuilding our system out to 1,300 megawatts. It's a big jump.
We're seeing a lot of dynamic issues on our system. There have been occasions in the past where data centers -- we've asked them to go on backup generators to help with grid issues. So really having another tool in the toolbox is very helpful for us to be able to handle what's happening on the electric grid.
Now, we're not really the operator. Obviously, it's our distribution system, so we do have oversight over it. We want to make sure that whatever is happening there aligns with our standards for grid reliability and reporting. So in much the same way there was a conversation about solar 5 to 10 years ago and how does that work with your distribution system, well, this is something similar. So we want to ensure that we're doing things in a very safe manner. But this is something that our council is very interested in and we think that it has a lot of value in helping us manage not only our grid, but also the local area as well.
Paul Ciampoli
And I would imagine what obviously plays a key role in this too is customer engagement in terms of education on this specifically.
Nico Procos
Yeah and one of the things that we wanted to convey to customers is like look this is maybe an innovative non wires alternative to grid expansion. I mentioned earlier that we are working on a new 115 kV line that goes through -- mostly it's an industrial area but there is some residential area -- and there was a fair bit of concern about that. And so anything that can help us kind of mitigate the need to build new transmission both within our city and outside, I think is a good thing. It really aligns well with our mission -- reliable, affordable and sustainable power and a focus on DERs.
I think a lot of utilities and munis are in that area as well. So it can be helpful for them too. And then also grid stability. So as I mentioned earlier and these are the kind of things that we want to convey to our customers in terms of what's the value proposition of doing something like this.
Paul Ciampoli
Yeah, makes sense. So Nico, just a wrap up question for you. I wanted to give you the chance to talk about your long term goals for Silicon Valley Power.
Nico Procos
I'm really looking out the 6 to 12 month time frame and we've got a lot of work with data centers, both the ones we have currently generating and then a whole host that are underway. We are currently building 7 new substations, so we have about 20 to 25 substations and these are all dedicated to serve data centers and that's really a full time job.
And then I will say that we're very proud to be supporting the Super Bowl and the World Cup and that's kind of a once in a lifetime opportunity, but it's a lot of work. And so we've done a lot of assessments of our physical security and our cybersecurity.
We've identified some issues and we're working on taking care of that. Beyond that, I think like many utilities, we're really struggling in terms of staffing, especially here in Silicon Valley and so one of my focuses when I first started as the Chief Operating Officer and kind of continuing now is to really focus on getting that staffing level up and then also from a succession planning perspective moving forward there.
In Alameda, I recognized that technology is where the future is and so we installed 36,000 smart meters there. But also one of the things I did is I elevated -- I had an IT group -- but I elevated that function and I created a chief technology officer really to be able to allow us to take advantage of technology and everything that we do to be more efficient and it also helps in the area of staffing. So if we're not able to staff in certain areas is there something that technology can kind of be a substitute for?
And I've kind of continued that here. It's a little challenging, especially with the data centers and all the sports events coming up. But I'm trying to get more of a focus on technology, getting things out there that'll help us do our job better and then also bringing us a little bit more current, so those are the main areas I think that in the near term that we need to kind of deal with.
Paul Ciampoli
With respect to workforce issues, with respect to recruitment and staffing and succession planning, is there anything kind of just drilling down further in particular that kind of keeps you up at night in terms of those areas?
Nico Procos
In certain areas we're really having some trouble -- so this is kind of in our engineering group. We're not bad in our operations area, but this is a very competitive environment and I think a lot of people don't realize, especially in the last like year or so, you're seeing a lot of retirements in it and it's really difficult to retain people. I've never seen this before until I got here to Santa Clara, but I've got a whole host of employees that come from long distances away.
I'm talking they come and they get an Airbnb and stay for the week and then they go home. Yeah, I've got maybe a dozen or more of those. So that gives you an indication of just how difficult it is. They can't move here and there's lots of places where they can go and the cost of living is a lot cheaper.
So that's the main area and it's just really hard to get people and hold on to them. It's a great group here and I'm very fortunate and I also think that just the subject matter you know being on the cutting edge of data centers and then also with the sports events and everything else we have going on -- that keeps them engaged and that's why they stick around. So we're fortunate in that area, but we have to make sure that we maintain our competitiveness in order to have people stick around for awhile.
Paul Ciampoli
Well, thanks again so much for taking the time to speak with us today and I would love to have you back at some point in the future.
Nico Procos
Yeah, anytime. Happy to help.
Paul Ciampoli
OK, great. Well, thanks again, Nico.
Nico Procos
OK, take care. Bye.
Paul Ciampoli
Thanks for listening to this episode of Public Power Now, which is produced by Julio Guerrero, Graphic and Digital Designer at APPA.
I'm Paul Ciampoli and we'll be back next week with more from the world of public power.
