The city of San Jose on Tuesday could take a big step towards setting up its own electric utility to provide the necessary power for new developments and infrastructure.
City leaders believe PG&E is backlogged with too many other projects and doesn’t have the money to electrify future development in a timely manner. They are slated to vote on a proposal to amend the municipal code to allow the city to establish San Jose Power.
The city would build and operate power lines off two new high-voltage transmission lines that are scheduled to be complete in 2028. One line would run from the Metcalf area of South San Jose up to a substation in the southern part of downtown. The other one would run through Alviso.
City officials estimate San Jose Power could lower the cost of electricity for customers by 15% to 25% because the city would be exempt from state and federal taxes and wouldn’t have to worry about shareholder returns. Also, the city’s cost of borrowing would be lower since municipalities are tax exempt.
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PG&E opposes the proposal, questioning the city's ability to provide lower rates given the costs of starting up a new utility. In a letter to the city, PG&E also wonders if the city can recruit a qualified workforce to run the new grid.
The utility acknowledges it has experienced challenges in delivering new service, in part because of the historic winter storms. But it noted that by end of June, all those connections delayed by the rains were complete.
The IBEW Local 1245, which represents 27,000 electrical workers also is against the proposal. The union sent a letter to the city expressing concern that forming San Jose Power would displace members working for PG&E.
