VIA ELECTRONIC MAIL
August 8, 2023
Councilmember David Cohen, Chair
Councilmember Rosemary Kamai, Vice Chair
Councilmembers Dev Davis, Pam Foley and Sergio Jimenez
San Jose City Council Rules and Open Government Committee 200 E. Santa Clara Street
San Jose, California 95113
RE: San Jose City Proposal to Launch a Municipal Electric Utility – Council Agenda Item 6.1
On behalf of the more than 27 ,000 members of International Brotherhood of Electrical Workers, Local Union 1245 (IBEW 1245) , including those working in San Jose , I write to express our profound concern with the proposal for the City of San Jose to begin municipal retail electric service.
Such a step would eventually displace some IBEW 1245 members working for Pacific Gas and Elect ric Company in and around the City of San Jose. IBEW 1245 and numerous other stakeholders have not been made aware of this significant action in advance of the item being calendared. In fact, the very obscure manner in which this is being brought forward appears designed to stifle public debate on the subject.
When this issue was brought forward by Staff last September, concerns were expressed by Council members as to the feasibility and cost of this step. Staff assured the Council then that it would endeavor to analyze the impacts of starting a SJC Municipal Electric Utility. Yet the Staff Memo does no such thing.
There is no analysis of the size or scale of this proposal. There is no estimate of costs, especially the need to build a new substation to accept SJC MEU power. There is no estimate of customer rates or load forecasts. Finally, there is no clear delineation of how this new MEU would operate in conjunction with or separate from the existing SJC CCA. These are all critical questions that should be reviewed before taking any action, much less significantly amending the Municipal Code.
On behalf of the members of IBEW 1245, particularly those working in San Jose, I respectfully urge you to delay consideration of this item on SJC providing retail electric service until real outreach to stakeholders has been completed and the IBEW can provide input on this issue.
Sincerely,
s/ Hunter Stern
Assistant Business Manager
cc: Committee on Rules and Open Government
IBEW Local Union 1245
30 Orange Tree Circle
Vacaville, CA 95687
Telephone: (707) 452-2700
Fax: (707) 452-2701
www.ibew1245.com BOB DEAN, BUSINESS MANAGER
CECELIA DE LA TORRE, PRESIDENT
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FW: San Jose Power – Item 6.1 23-1032 on August 15th Agenda City Clerk <[email protected]>
Mon 8/14/2023 7:42 AM
To:Agendadesk <[email protected]>
1 attachments (21 KB)
SJ Utility Question 081323 Agenda Input.docx;
From: Richard Zahner
Sent: Sunday, August 13, 2023 1:33 PM
To: City Clerk <[email protected]>
Subject: San Jose Power – Item 6.1 23-1032 on August 15th Agenda
Good A ernoon
Kindly provide the a ached memo to the Mayor and City Council Members concerning the crea on of San Jose Power.
Agenda Item 6.1 23-1032 on the August 15th agenda.
Thank You
Richard Zahner
Richard and Barbara Zahner
Richard Zahner Page 1 8/14/23
SJ Utility Question 081323 Agenda Input
To: The Honorable Mayor Matt Mahan
City Council Members
From: Richard Zahner, Commissioner CECAC
Re: San Jose Power – Item 6.1 23-1032 on August 15th Agenda I recommend a vote against creating San Jose Power as a new power utility for the city.
I have served as a Commissioner on the San Jose Clean Energy Advisory Commission since its creation in 2019 and was absent at the July CECAC meeting and would have vigorously objected to the wording of the Commissions resolution concerning San Jose Power.
The Commission has had brief presentations and little discussion on creating a municipal utility.
Any tentative support for this initiative from the Commission is based on little or no analysis or deliberation. Few on the Commission have any experience in the utility industry or power systems operation.
Several issue for your consideration:
• PG&E will always be essential to supply and reliability. The company owns and operates the transmission and distribution system in Northern California. San Jose Power will always be dependent on PG&E and have no impact on outages or interconnects. • The idea of creating a municipal utility to serve only new installations will create confusion and a two-tiered customer base.
• The consultant’s report on creation of San Jose Power is flawed. It focusses on the process of creating the organization, not the reasons why or the consequences of doing so.
• San Jose cannot duplicate the benefits of other local municipal utilities (Santa Clara and Palo Alto both with 100 yr. experience) without purchasing all PG&E’s hardware. Our distribution system is more complicated than either City. Santa Clara’s Silicon Valley Power also has a high load factor that leads to lower prices. • The potential new loads for San Jose Power will have low load factors. This means no economy of scale and low payback on the investment. These will lead to higher power prices.
• Skilled labor will be hard to attract and retain. PG&E employees have a vested interest in staying with the company. Training skilled crafts takes years and the infrastructure to train on.
• This major effort will detract from focusing on the critical issue only the City can address – Safety, blight, and crime.
My recommendation is a regional study of energy infrastructure and reliability, with a focus on all the goals and commitments made by the State, County and City, agencies such as BART, Caltrain, and VTA and PG&E. The City of San Jose is the wrong level of government to deliver reliable low-cost power – It is an expensive mistake to try.
Regards
Richard Zahner , Commissioner CECAC
8/14/23, 4:21 PM Mail - Agendadesk - Outlook
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Council Agenda 8/15/23 Item 6.1
Ramos, Christina < >
Mon 8/14/2023 3:47 PM
To:Agendadesk <[email protected]>
Cc:The Office of Mayor Matt Mahan <[email protected]>;Kamei, Rosemary <[email protected]>;Jimenez, Sergio <[email protected]>;Torres, Omar <[email protected]>;Cohen, David <[email protected]>;Ortiz, Peter <[email protected]>;Davis, Dev <[email protected]>;Doan, Bien <[email protected]>;Candelas, Domingo <[email protected]>;Foley, Pam <[email protected]>;Batra, Arjun <[email protected]>;District1 <[email protected]>;District2 <[email protected]>;District3 <[email protected]>;District4 <[email protected]>;District5 <[email protected]>;District 6 <[email protected]>;District7 <[email protected]>;District8 <[email protected]>;District9 <[email protected]>
1 attachments (123 KB)
CSJ Letter_2023.08.13 Council Item 6.1_Final.pdf;
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Classifica on: Public
Dear City of San Jose,
On behalf of PG&E, please see a ached le er in reference to tomorrow's City Council mee ng for Item 6.1 Ordinance Amending Titles 2,3, and 26 Adding to the San José Municipal Code to Establish a Municipal U lity for Electric Service.
Thank you!
Chris na Ramos | Local Government Affairs
Santa Clara County
Pacific Gas and Electric Company
mobile
You can read about PG&E’s data privacy practices here or at PGE.com/privacy.
Christina Ramos
Sr. Local Government Relations
Representative
Local Government Affairs
August 14, 2023
RE: Agenda Item 6.1 Ordinance Amending Titles 2,3, and 26 Adding to the San José Municipal Code to Establish a Municipal Utility for Electric Service
Dear Mayor and City Councilmembers of the City of San José,
We appreciate the opportunity to be heard at the Rules Committee on August 9, 2023, and, by direction of Council, City Staff’s agreement to meet with our PG&E team to discuss the proposed ordinance for the first time. We are honored to serve the customers of San José and are committed to meeting their energy needs. The City’s feedback and partnership is critical in our continued effort to be the hometown utility that you and our communities deserve. Unfortunately, our August 10th meeting with City Staff did not result in meaningful progress. In the spirit of partnership, PG&E’s one time meeting regarding this item proved insufficient to discuss relevant information that would help inform City Council’s decision making.
There is no real urgency to move as quickly as City Staff has indicated, particularly – and most importantly – because the memorandum raises more questions than it answers and falls far short of justifying a vote on the proposed ordinance. In the spirit of promoting transparency in government decision making, a complete and accurate information package should form the basis of determining the merits of the proposed ordinance, not a carefully curated memo that ignores many of the thornier questions, provides no cost/benefit analysis, and glosses over the complicated nature of operating an electric utility.1 The proposed ordinance contemplates very significant changes that merit further study, information, and discussion. The purported sense of urgency in voting on the proposed ordinance is artificial. Moreover, even a brief review of the limited information that does appear in the memo reveals that it contains several omissions and mischaracterizations. I’ve included brief comments on a number of these below, but this list is not meant to be exhaustive.
Cost
Aside from passing over the potential costs associated with simply standing up a new utility, which would provide a helpful data point in making decisions associated with the proposed ordinance, the staff memorandum assumes that a government-run utility would be able to provide lower rates to its customers, without impacting the level of service, while also maintaining the same level of support for the city’s General Fund.
1 For example, San José will require a new substation to provide service, which will be extremely expensive. The memo nowhere mentions who would pay those significant anticipated costs of interconnection to the planned HVDC lines. Nor does the memo acknowledge the reasonable likelihood that operation of a new electric utility and the inherent need to build and install facilities may trigger expensive and time-consuming CEQA obligations.
Creating a government run utility could result in legal obstacles if the new entity wanted to make payments in lieu of taxes (PILOT) to make government entities whole (to cover lost income from taxes and franchise fees), as is discussed in the city’s memo. Generally, these entities will not be authorized to pay or replace lost revenue to governmental agencies (such as fire departments or school districts) without obtaining 2/3 voter approval. This would essentially amount to new taxes paid by San José residents and does not appear to be thoroughly analyzed by the city.
A government run utility wouldn’t likely be able to provide as many public benefit programs as PG&E provides without raising rates. PG&E takes pride in being a part of and supporting the communities we serve, and we’re dedicated to serving our customers' needs. Many communities face challenges attracting the resources needed to support economic development and job creation. PG&E helps alleviate those challenges by creating career pathways, collaborating with local organizations through charitable grants, expanding opportunities for diverse and local suppliers, and offering incentives to make homes and businesses more energy efficient, which saves customers money.
PG&E also offers a variety of financial assistance programs to help its low-income customers, including: the California Alternate Rates for Energy (CARE) Program and the Family Electric Rate Assistance (FERA) Program. A new government-run utility would likely have to raise rates on its customers to continue administering these and other Public Purpose Programs already offered by PG&E.
Expertise and Labor
PG&E has more than 100 years of experience providing gas and electric service to the communities it serves. Its workforce is made up of men and women who have strong training and expertise in providing energy. City government has little to no experience running an energy company and this lack of expertise could result in a lower level of service, higher taxes or bills, or other consequences.
Voters in San José have routinely identified topics such as homelessness, housing affordability and public safety as their top priorities. Exploring an unnecessary, and potentially risky, creation of a government run utility diverts precious city resources away from these more pressing issues.
It’s unclear whether the city would have the ability to recruit a qualified workforce to serve a new, small-scale government run utility. In the face of climate change and more frequent extreme weather, PG&E leverages a systemwide resource pool to hasten emergency response. A newly formed government-run utility with an inability to recruit qualified talent would lack those resources and stand alone in its response, ultimately reducing reliability and impacting customers.
New Business
The city’s memorandum notes that PG&E has experienced challenges in delivering timely service in new-service connections, which is true, but this view is badly outdated and does not capture the significant process improvements that have since been implemented.
The challenges around new-service connections were amplified following January and February’s historic winter storms, which delayed nearly 1,500 new-service connections scheduled in the first quarter.
However, by the end of June, through its New Business Recovery Unit, PG&E’s Service Planning & Design team, Gas and Electric Operations and Operations Support teams had completed essentially all
gas and electric new-service connections to projects affected by the 15-storm series, for which the company marshaled 7,200 personnel to restore electric service to a record 7 million customers.
To improve new-service connections moving forward, PG&E has dedicated a full-time team to creating a more streamlined process. The team is finding new efficiencies to reduce the time from customer application to connection by almost half, and to reduce the time to estimate a project from six months to one month.
The new-business connections team has also made it easier for customers to complete an application for a new-service connection. Online applications now include text prompts and checklists of the information PG&E needs to begin the connection process. The goal is to educate customers upfront to reduce the number of incomplete applications and to ensure a project is ready to go as soon as customers file their applications.
The Service Planning & Design team’s improvements are already paying off in results for customers.
Schedule attainment — a measure of how many planned construction projects are completed — reached roughly 80 percent in May and June, after falling as low as 10 percent in January and February. The company has also reduced its design backlog by more than 18 percent since March. PG&E is now clearing 100,000 hours of new business work each month.
PG&E is now collaborating with key stakeholders, including the California Building Industry Association, through new technical and advisory committees staffed by builders, developers, and industry leaders. The city may be better served by joining in this effort, rather than embarking on the costly and risky endeavor of forming a new government-run utility.
Microgrid
The city’s previous analysis of this issue was limited to the creation of a “microgrid.” Establishing an operating a microgrid is vastly different than operating a full-service electric utility.
To clarify, PG&E considers microgrids to be a standalone local electrical grid with defined electrical boundaries, acting as a single and controllable entity. To be a true microgrid, and obtain their benefits, these sections must have significant onsite generation to meet the load demands of a given area.
PG&E does not support the creation of a distribution system or model that does not rely upon PG&E’s existing distribution infrastructure and services. Maintaining PG&E as the distribution provider allows customers in San José to continue benefitting from PG&E’s ability to leverage resources from nearby parts of the service area during storms or other natural disasters, while taking part in PG&E’s ambitious efforts to decarbonize our energy system while becoming more resilient to the impacts of climate change.
Additionally, PG&E would be concerned about the potential for negative financial impacts on our existing customers including San José’s taxpayers, should a third-party owned distribution system be designed in such a way that the associated costs of the distribution system could be socialized to customers not being serviced by this new development.
However, the company is fully supportive of microgrids where PG&E maintains its role as the distribution service provider regardless of who is generating the power. Microgrids, as we have defined them above, provide resiliency for our customers by adding the ability to island the grid if a reliability issue/outage occurs on the broader PG&E system. We have several successful microgrid partnerships in
our service territory and have a program that specifically supports the development of microgrids – the Community Microgrid Enablement Program (CMEP).
As previously noted at the Rules Committee, we believe this item should be postponed until the appropriate level of analysis takes place. We would welcome the opportunity to participate in a working group with other critical partners like LS Power and labor to discuss the proposal. We can provide our infrastructure investment plans for the city, share plans to further California’s clean energy future, discuss current reliability data and opportunities to develop microgrids in the region.
PG&E remains ready to engage with city staff and leadership about how to better deliver on our shared goal of serving the City of San José and its residents.
Sincerely,
Christina Ramos
Sr. Local Government Affairs Representative
2 A microgrid utilizes internal energy generation and storage, and thus can maintain service to critical loads within the microgrid during a regional grid outage. Advanced microgrids in new developments and City facilities could accommodate more onsite clean distributed energy resources and yield lower GHG emissions than would be possible under the PG&E standard, while also improving reliability and resiliency for San Jose businesses and residents in the new developments.
Using San José Power to provide electrical service in new developments will also be cheaper as it will not provide returns to shareholders and will be tax-exempt. This would result in decreasing customer rates by 15-25% and would be an important factor in retaining and attracting businesses in many fields.
In conclusion, please support this ordinance to give San José more options to ensure timely interconnection to the new transmission lines and cheaper and more reliable power (with advanced microgrids) to attract and retain businesses, as well as to facilitate the City of San Jose’s renewable energy, climate, and resiliency goals.
Sincerely,
Ruth Merino, Chair, San Jose Community Energy Advocates, a volunteer community group [email protected]
Adam Sweeney (Co-Chair), Karen Nelson (Executive Team), Glen Garfunkel (Co-Chair), Climate Reality Project: Silicon Valley Chapter www.climaterealitysiliconvalley.org Linda Hutchins-Knowles, Co-Founder and Team Coordinator, Mothers Out Front Silicon Valley www.mothersoutfront.org/team/california/siliconvalley/
cc Jennifer Maguire
Lori Mitchell