Community Engagement

San Jose, Calif., mayor wants to explore municipalization

The mayor of San Jose, Calif., issued a memo late last week in response to a recent power shutoff by Pacific Gas and Electric that calls for an exploration of creating a municipal utility, among other things.

The Oct. 17 memo from Mayor Sam Liccardo begins a process that will look at municipalization of San Jose’s electric power service, the creation of microgrids within the city, as well as measures to monitor PG&E.

The memo came about a week after PG&E shut off power to more than 700,000 customers in 34 counties, including 60,000 customers in San Jose, because of high winds that could set off wildfires.

The shut-offs, known as Public Safety Power Shutoffs (PSPS), are the state’s effort to deal with increasingly extreme wildfires. The PSPS plan was approved by the California Public Utilities Commission in May and includes all voltage levels from distribution to 500-kilovolt.

PG&E, facing billions of dollars in claims for its role in wildfires, filed for bankruptcy in January.

The recent power shutoff in San Jose was short in duration but “we may not be so fortunate the next time,” the memo stated.

The memo calls for the City Council “to identify the steps required for the creation of a municipal utility for the purposes of strategic development of microgrids in key locations throughout our city, with particular emphasis on critical infrastructure and areas requiring high levels of redevelopment and infrastructure investment.”

Expanding microgrids beyond a single home or block would require the creation of a public utility within the City of San Jose or modification of state legislation to lift geographic constraints in state law, the memo noted.

The memo also calls for the exploration of the role that San Jose Clean Energy and city partners can play in helping residents get off the grid during a blackout.

This would involve installing infrastructure necessary to create hybrid off-grid solar systems with backup utility power by assessing the feasibility of developing islands of energy resiliency within residential neighborhoods and supporting the purchase solar panels and energy storage by low-income residents through subsidies under the state’s Self-Generation Incentive Program (SGIP). San Jose Clean Energy is a community choice aggregator.

Before action can take place on any of those items, the memo has to be voted on in committee and then move to the city council. The next step would then be to poll the community to see if there is sufficient public support for the acquisition of all electrical distribution infrastructure currently owned by PG&E and for bond financing to develop renewable energy storage and generation facilities, such as microgrids.

After the polling data has been processed, the city could then move forward with a potential ballot measure. If polling shows substantial support for the acquisition of PG&E infrastructure, then the city council would draft a feasibility study and cost estimate on full municipalization.

“As it is, we’re currently just exploring every option we can to make San Jose ‘grid resilient’ to ensure we are protecting our residents from unpredictable and dangerous blackouts,” Rachel Davis Disbrow, a spokeswoman with the mayor’s office said.

Liccardo has been a critic of the PSPS plan since it was unveiled, publishing an op-ed in the San Francisco Chronicle in July urging greater government oversight and authority over PG&E’s decisions to implement each PSPS. San Jose also sponsored a bill carried by Senator Scott Wiener, SB 378, to better align the financial incentives and government oversight of the state’s investor-owned utilities with the public interest.

“A resilient future for California’s electricity is distributed and local. San Jose can provide solutions to avert a dystopian future of unpredictable blackouts,” Liccardo said in an email. “By reducing regulatory and bureaucratic obstacles to microgrid development in local communities, and by exploring options for local control over distribution, we can more efficiently, sustainably, and reliably provide electricity to our community.”

Other California entities are looking to purchase PG&E assets.

The board of Valley Clean Energy, a California community choice aggregator, recently submitted a $300 million bid to purchase PG&E’s lines, poles and other electricity distribution assets within Yolo County, Calif.

The City of San Francisco recently made a $2.5 billion offer to purchase substantially all of Pacific Gas & Electric’s distribution and transmission assets needed to provide retail electric service to all electricity customers in the city.

San Francisco Mayor London Breed and San Francisco City Attorney Dennis Herrera outlined the proposal in a Sept. 6 letter that was sent to Johnson and Andrew Vesey, CEO and President of PG&E.

PG&E earlier this month rejected the offer from the City of San Francisco. In an Oct. 7 letter to Breed and Herrera, Johnson wrote, “Although we appreciate the effort San Francisco undertook to prepare its offer, we must decline to accept it.”

“We aren’t surprised by PG&E’s response so far,” Breed and Herrera said. “We’re also not giving up. Now more than ever, it is clear that we must take back control of San Francisco’s electric service and achieve energy independence.”

Meanwhile, on Sept. 3, the South San Joaquin Irrigation District — a water agency in the heart of the state’s agricultural region that tried to buy PG&E distribution facilities in 2006 and 2016 — formally renewed its offer to purchase PG&E distribution system assets as part of the current bankruptcy proceeding.

Municipalization being pursued in other parts of the country

In Colorado, a report found that forming a municipal utility in Pueblo is feasible and could conservatively save Black Hills Energy electric customers 10 percent to 14 percent, partly because of lower estimated power costs.

Meanwhile, the Colorado Public Utilities Commission on Oct. 10 granted the City of Boulder, Colo., approval to transfer some assets necessary for Boulder to create a community-owned, city-run electric utility. The decision ends a multi-year process before the commission that began in 2015.

In the wake of recent back-to-back power outages over the summer, New York City Mayor Bill de Blasio raised the possibility of municipalizing Consolidated Edison, the investor-owned utility that serves the city’s five boroughs and Westchester County to the north.

Meanwhile, in the middle of the country, 22 aldermen of Chicago’s City Council introduced an order that would authorize the hiring of a consultant to determine the feasibility of the city taking over investor-owned Commonwealth Edison.