San Jose will switch its residents to a city-owned electricity provider by March 2019 in a push toward 100 percent renewable energy over the next decade.
Residents will begin receiving postcards announcing the switch to San Jose Clean Energy (SJCE) later this month with an option to opt out back to regular PG&E service. SJCE will become the city's official electricity provider in February.
"With SJCE, San Jose will initially see about an 18 percent reduction in greenhouse gas emissions from electricity generation, the same as taking about 35,000 cars off the road," the city said in a news release.
SJCE's GreenSource program will offer 45 percent renewable energy at a cost of about 1 percent less than PG&E per month, according to the city. The TotalGreen program will charge about $20 less per month for 100 percent renewable energy. The City Council in 2017 voted to enter the community choice aggregation program, moving away from investor-owned utilities.
Zachary Struyk, the city's spokesman for the program, said San Jose is able to provide electricity at a lower cost because SJCE is a nonprofit, meaning all profits are reinvested into the program.
He added that senior executives for the city are paid less than those at PG&E, and the renewable options are now the most inexpensive on the market.
The California Public Utilities Commission recently approved an increase to an exit fee known as a Power Charge Indifference Adjustment for providers who leave investor-owned companies like PG&E.
Though SJCE prices could increase as a result, Struyk said the city will maintain a 1 percent difference between local energy and PG&E regardless of CPUC's decision.
"Even taking [Power Charge Indifference Adjustment] into account, [residents] will still be saving money," Struyk said.
PG&E will still oversee power lines, repair and billing, but the city will buy a majority of its power through independent power producers.
The procurement process for residential use in 2019 is currently ongoing.
For municipal use beginning earlier this year, the city contracted with Terragen, Constellation, Powerex, NextEra and PG&E wholesale, according to Struyk.