TITLE 28: ELECTRIC
TRANSMISSION AND
DISTRIBUTION IN
SAN JOSE
October 3, 2023
Kip Harkness, Deputy City Manager
Nanci Klein, Director of Economic Development
and Cultural Affairs
Lori Mitchell, Director of Community Energy
Jim Caldwell, Deputy Director of Energy Resiliency
If the City were to provide Municipal Utility for Electric Service in limited areas of the city could that be done in a way that would…
1. Reduce electricity energy costs for the consumer?
2. Allow the development of more innovative and energy efficient buildings such as that envisioned in the planned Downtown West development.
3. Increase the electrical resilience of the City of San José and our critical infrastructure for both climate change and emergency response?
4. Enable us to attract and retain the Skilled and Trained talent required to perform this work effectively and reliably?
EXPLORATORY PHASE – KEY QUESTIONS
EXISTING SYSTEM
2 Electricity
Generation
San José Clean Energy
or
PG&E
Electrical
Distribution
PG&E
CustomerHigh Voltage
Transmission
Owned by PG&E
New Segments Built and
Owned by LS Power
Planned/Operated by CAISO
POTENTIAL CITY ROLE
3 Electricity
Generation
San José Clean Energy
or
PG&E
High Voltage
Transmission
Owned by PG&E
New Segments Built and
Owned by LS Power
Planned/Operated by CAISO
Electrical
Distribution
PG&E
and
Customer
San José Power
For limited new
development &
key City Facilities
or
San José Power
NEW TRANSMISSION IN SAN JOSE
• California Independent System Operator (CAISO)
approved two new lines
• LS Power selected as the developer/owner
• Multi-department coordination team lead by the City
Manager’s Office
• Benefits
• Supports new development
• Improves reliability
• Paid for by all ratepayers
• Significant construction begins Q1 2026; expected
to come online in June 2028
• Opportunity for the City to have direct access to the transmission grid
• Low cost and minimal land use only if
designed/constructed in parallel with LS Power 4
Newark to North SJ
Metcalf to Downtown SJ
INTERCONNECTION DELAYS
100s of projects are months/years behind on
processing applications for connecting new
development to the grid
• Affordable housing
• Hospitals
• Transit
• EV charging
• Solar (utility scale and rooftop)
35+ cities and organizations are advocating for
solutions
• SB410 (Becker) Passed Legislature
• PG&E established Task Force to reduce interconnection delays • No quick fix, PG&E expects 80% on time compliance by end of 20241 5 1 Assembly Oversite Committee May 24, 2023
CHALLENGES
Funding
• PG&E requested a $7 Billion loan from the
Department of Energy to finance currently approved
projects 1
• Received CPUC authority to max out short-term
financing ($1 Billion) 2
• Asset sales to raise equity (legacy hydro and
headquarters building) 3
• Requesting CPUC authority to borrow from future
budgets to fill short term need
4 • Above measures designed to last through 2026
6 1 San Francisco Chronicle, Wall Street Journal, June 29/2023 2 CPUC Decision 23-08-006, August 10, 2023, Decision Approving the Application of Pacific Gas and Electric Company for Increased Authority to Finance Short-Term Borrowing
3 CPUC, A-22-09-018 S851 Transfer of Non-Nuclear Generation Portfolio and Sale of Minority Interest, Prepared Testimony, p.1-2, September 28, 2022 4 Application 21-06-021, Establish a New Balancing Account for Electric Distribution Capacity Additions and New Electric Distribution Extension Work Activities, Opening Testimony, PG&E, September 15, 2023
CHALLENGES (CONT.)
Wildfire mitigation
• Priority given to safety related wildfire mitigation at the expense of new distribution interconnections5
• >60% of capital budget is spent on
wildfire mitigation
Future planning
• 2023 General Rate Case distribution capacity proposal represents only ~50% of known projects
6 • Next planning cycle is expected to approve several billion dollars of new projects
7 5 High Distributed Resources Future proceeding, April 2023 PG&E filing 6 CAISO, 2023-2024 Transmission Plan (caiso.com/InitiativeDocuments/CAISOPresntation-2023-2024TransmissionPlanningProcess-Sept27-2023), Need Assessment posted September 27, 2023; Proposed Projects to be posted November 16, 2023 Lori Mitchell, P.E.
25+ years of electric utility experience
concentrated in renewables, hydropower,
transmission, and operations.
EXPLORATORY TEAM QUALIFICATIONS
8 Jim Caldwell
43+ years electric utility experience
concentrated in transmission policy and
renewable generation.
Principal Investigator: Doug Boccignone 37 years utility experience. Former Mgr. Supply Resources, City of Palo Alto Utilities
Consulting arm of Worley Group, one of
world’s largest Engineering/
Construction companies.
CA based Consultant for many Municipal
and Public Utilities specializing in
transmission planning, regulatory policy
and market intelligence & analysis.
Principal Investigator: Kenneth
Barrentine 30 years CA utility
experience. Former Lead Resource
Mgmt. Engineer, CAISO; Project Mgr.
PG&E
Former Asst. General Manager LADWP
Deputy Asst. Secretary for Electricity Policy, US DOE
10 years at SFPUC (municipal utility)
10 years at SunPower – focused on engineering
Licensed engineer
TITLE 28 OPPORTUNITIES
9 Connect directly to
new $1.4B
transmission lines
in San José
Improve reliability
and resiliency of
critical infrastructure
(Airport, Diridon,
North SJ)
Support economic
development,
electrification, and
climate goals
Reduce costs for
ratepayers
(15-25% less)
Cost-effective opportunity to provide electricity distribution to limited areas of San José
PUBLIC UTILITIES IN THE UNITED STATES
• Over 2000 US Publicly Owned
Utilities
• 1 in 7 Americans served by
public utilities
• Proven model provides higher
reliability
• Reinvest revenues back into
their communities
10 Source: www.publicpower.org/public-power/stats-and-facts
PUBLIC UTILITIES IN
CALIFORNIA
• 46 publicly owned utilities in
California
• Serve 25% of Californians
• Largest: SMUD (Sacramento
region) & LADWP
• Medium: Santa Clara, Palo Alto, SF,
Pasadena, Anaheim, Roseville
• Small: Healdsburg, Shasta Lake,
Lompoc
11 Source: California Energy Commission
PUBLIC UTILITIES ARE MORE RELIABLE
12 • Public utility outages are 67% shorter than
private utility outages1
• PG&E ranks in the bottom 25% of the
nation for frequency and duration of
distribution outages2
• 350,000+ San José customers,
including 3 hospitals, suffered from heat-
related power outages in 2020 and 2022
1 California Municipal Utilities Association
2 PG&E Independent Safety Monitor Status Update Report Q1 2023
1.5 hours of
outages/
year
3.8 hours of
outages
/year
Public
Utilities
Private
Utilities
PUBLIC UTILITIES COST LESS
13 • Public utility rates are 15% lower on average than private utilities in CA1 • Northern CA public utility rates are 32-67% lower than PG&E (online rate comparisons)
-50%
-40%
-30%
-20%
-10%
0%
Silicon Valley Power
(City of Santa Clara)
Sacramento Municipal
Utility District Alameda Municipal Power
Los Angeles Department of
Water and Power
Average Residential Rates Compared to IOU Average Non-Residential Rates Compared to IOU 1 California Municipal Utilities Association
AIRPORTS OPERATED BY MUNICIPAL UTILITIES
• San Francisco International
Airport (SF Public Utilities
Commission)
• Los Angeles International Airport
(LA Department of Water &
Power)
• Oakland International Airport
(Port of Oakland Port Public
Power)
14 PROPOSED STRUCTURE
15 Community Energy Department Energy Department
Administers
San José Clean Energy
(CCA)
CCA Electric Utility
Administers
San José Clean
Energy
Administers
San José
Power (POU)
Public
Works
Current Structure Proposed Structure
Department Programs
New Entity
Allows for resource sharing (i.e., power supply staff, regulatory staff, customer service staff, etc.), while establishing the necessary separated financials accounts.
SUMMARY OF MUNI CODE CHANGES
• New Title 28: Authorize the formation of a City owned utility called San José Power to provide electric service for selected new load in the City • Revisions to Title 2: Defines duties of Director of Public Works to provide design and construction oversight to San José Power as the City Engineer
• Revisions to Title 4: Establishes San José Power Operating Fund to segregate utility funds
• Revisions to Title 26: Renames Community Energy Department to Energy Department
16 THE GRID OF THE FUTURE
Electrification will increase electricity consumption
by 50-70% over the next 20 years1
• Impact already being felt in San José:
• Heavy Duty Fleet Electrification
• Data Centers
Title 28 is required for staff to gather the
data needed to continue our exploratory phase
• Mitigate PG&E Resource Issues
• More Local Control
• Faster/Less Expensive Interconnections
17 1 California Energy Commission
SERVICE AREAS UNDER CONSIDERATION
• New development (RWF Area, Diridon Station)
• City facilities near the new transmission lines (SJC Airport, RWF Area)
18 PG&E - STAKEHOLDER ENGAGEMENT
19 • Staff has engaged in extensive constructive cooperation with a particular emphasis on Emergency Preparedness and Response with PG&E.
• In the last few weeks, the City met with PG&E twice to work to broaden this collaboration and better understand their concerns and perspective. • The City will continue to strengthen our regular collaboration with PG&E even though there will inevitably be areas of conflict and disagreement.
Emergency
Response &
Preparedness
Electrical
Connection to
Development/
Permitting
PG&E
Distribution
Infrastructure
PG&E Load
Forecasting/
Future
Planning
Resilience
and
Innovation
Partnership/City Supporting PG&E Success
Energy
Generation
(limited)
Municipal
Utility for
Electrical
Service
Potential
CompetitorsCity Lead
IBEW – STAKEHOLDER ENGAGEMENT
• Staff met with IBEW twice over the last
month to understand issues and ensure the
City is better prepared to work
collaboratively with our labor partners to
guarantee the success of this potential new
line of service.
• Staff discussed three key areas of potential
partnership with IBEW:
• Improved permitting
• Workforce development
• Small business development to enable the
creation of electrical small businesses
20 If the City were to provide Municipal Utility for Electric Service in limited areas of the city could that be done in a way that would…
1. Reduce electricity energy costs for the consumer?
2. Allow the development of more innovative and energy efficient buildings such as that envisioned in the planned Downtown West development.
3. Increase the electrical resilience of the City of San José and our critical infrastructure for both climate change and emergency response?
4. Enable us to attract and retain the Skilled and Trained talent required to perform this work effectively and reliably?
FOUR KEY QUESTIONS
POTENTIAL NEXT STEPS
22 Submit interconnection
application to get cost
data
Gather information on costs
and update financial models
Complete business plan
2023 2024 2025 2026 2027 2028-2029
(1) Council Direction
- Accept business plan
- Define service areas
(Go/No-Go)
(2) Council Direction:
- Approve staffing model
- Create new job classifications
(Go/No-Go)
(3) Council Direction
- Approve Budget
- Set rates
- Initiate hiring
(Final Go/No-Go)
Serve
selected load
Engagement with community and stakeholders
EXPLORATORY PHASE MOVING TOWARD
IMPLEMENTATION
IMPLEMENTATION
& SCALING
QUESTIONS?
Recommendations:
(a) Approve an ordinance amending Titles 2, 4, and 26 of, and adding Title 28 to the San José Municipal Code to establish a municipal utility called “San José Power” with the ability to provide retail electric service in selected areas of the city.
(b) Authorize the City Manager to submit an Interconnection Application(s) to LS Power as a Participating Transmission Owner of the California Independent System Operator for wholesale access to the California Independent System Operator Transmission grid at new LS Power-owned facilities to potentially allow retail service at Substation B at Guadalupe Parkway and Coleman Avenue to serve new load in a swath of territory along the rail right of way between Diridon Station and the San José Mineta International Airport; and in North San José Alviso region to serve load for planned development and future City or Valley Water facilities.
Staff:
Kip Harkness, Deputy City Manager
Nanci Klein, Director Economic Development &
Cultural Affairs
Lori Mitchell, Director of Community Energy
Jim Caldwell, Deputy Director of Energy
Resiliency
23