1 March 4, 2025
To: Honorable Mayor Matt Mahan and City Council
Re: City Council 3.4.25 Agenda Item 3.4 Cooperation Agreement Between Pacific Gas and Electric Company and the City of San José for Electric Infrastructure Development - San Jose Continues to Support the Formation of a Municipal Utility We are San José Community Energy Advocates, a volunteer community group that together with our partners successfully advocated for the establishment of San Jose Clean Energy, and which continues to advocate for renewable energy and reducing GHGs. We write to you today regarding concerns about the direction of the establishment of a San Jose Municipal Utility. A San Jose Municipal Utility could be used to distribute the electricity in the geographical areas served by the new transmission connection that LS Power is in the process of building, and that will allow the City of San Jose to directly receive power.
We agree with the City’s long-term goals of improving the reliability and affordability of clean energy infrastructure that is critical to attracting businesses, supporting economic development, and fostering innovation, as described on page 2 in the Deputy City Manager’s memorandum dated 2.20.2025. We believe that the best way to achieve the City’s goal of affordability is the establishment of the municipal utility, San Jose Power, which would distribute the electricity from the new transmission lines to areas that would be only a small part of San Jose’s electrical load. That said, we acknowledge the City Manager’s path to have PG&E distribute the electricity from the new transmission lines as outlined in Manager’s memorandum dated 2.20.2025.
We agree with the recommendations in the 2.28.2025 memorandum from Mayor Mahan, Vice-Mayor Foley, and Councilmembers Candelas, Cohen, and Kamei regarding today’s agenda item 3.4, Cooperation Agreement between PG&E and the City of San Jose for Electric Infrastructure Development. We especially agree with Recommendation 3 in their memo which states:
3. In the March 21 study session, provide additional information about the risks and benefits of retaining the option of a Municipal Utility in case the PG&E agreement doesn’t result in expected outcomes and how the LS Power timeline of completion in 2028 affects San Jose’s flexibility.
In addition, we agree with this statement in the Mayor’s memo:
2 Maintaining access to an independent delivery source would provide the city with contingency option should PG&E’s reliability and cost structure become unsustainable. By maintaining an open pathway with LS Power, San Jose ensures it is not solely dependent on PG&E for energy delivery. This flexibility strengthens the city’s ability to secure competitive energy prices, ensure delivery reliability for large scale customers, and advance clean energy initiatives and objectives.
We believe that establishing a San Jose Municipal Utility would benefit San Jose, and will better serve the energy transmission interests of San Jose than PG&E. We also believe that efficient formation and support of the municipal utility will result in significant revenue gains for the City of San Jose and avoid excessive rate increases for the load served in the areas by the municipal utility.
While we prefer the municipal utility to include the new downtown and North San Jose service areas, we accept the city manager’s proposed approach to first allow PG&E to attempt to meet San Jose’s goals. We reluctantly accept this approach, provided that PG&E meets the milestones and performance obligations outlined in the subsequent implementation agreement(s), and quality service is maintained in the long- term even after the initial buildout is completed. Should PG&E not meet the milestones and performance obligations, the agreements must allow for SJ to assume municipal control. We also assume that San Jose will not forfeit its allocation of power from LS Power in a way that might hinder our serving North San Jose and downtown areas, should PG&E not meet its milestones and obligations.
To support our opinion about lowered energy rates, please see the chart below which shows residential electricity rates comparisons from the 9.16.25 City Council Study Session Benefits and Risks of Providing San José Electric Service to New Developments - A Case Study of the Downtown West Mixed-Use Development[1]. It shows significantly lower rates for four California local public electric utilities:[2]
A San Jose Municipal Utility could offer rates 20-30% lower than PG&E’s rates, according to technical sources.
The high rates charged by PG & E have resulted in their excessive profits. Below is a link to a Mercury News article from last month regarding PG&E’s outrageous profits of more than $2 billion paid by ratepayers in 2024 with higher profits expected in 2025. If San Jose were to establish a Municipal Utility
3 in the areas served by one or both of the new transmission lines, there would not be a profit for stockholders nor corporate level compensation for employees, such as at PG&E. https://www.mercurynews.com/2025/02/13/pge-profit-electric-gas-utility-fire-economy-bay-area- oakland-san-jose/?share=tkynapo2ollosfimclep
And here is a link to another recent article regarding PG&E’s high prices: Here’s how California lets PG&E give you a raw deal
Thank you to both the San Jose Mayor and City Council, as well as the City Manager, Energy and other departments staff for working to ensure that our San Jose residents and businesses receive reliable, affordable and clean electricity.
Sincerely,
Ruth Merino, Chair
San Jose Community Energy Advocates
[email protected]
[1]
[2] 22-1329 - Attachment - Page 7 and City of San José - File #: 22-1329