San Jose Mayor Sam Liccardo Wants City to Explore Possibility of Breaking Up with PG&E

In the wake of PG&E’s sweeping power outages, San Jose Mayor Sam Liccardo wants to figure out how to wean the city off of the monopolistic utility giant.

The rolling blackouts left millions of Californians in the dark last week—all so PG&E could reduce the risk of its power lines from igniting wildfires. In San Jose, somewhere around 60,000 residents went without power for a couple days as the city scrambled to set up resources centers and relocate people with electricity-dependent medical devices.

Hoping to avoid similar outages in the future, Liccardo drafted a memo directing staff to study the feasibility of creating a municipal utility. That would potentially require the city to purchase power lines off of PG&E and to finance construction of microgrids and energy storage systems.

“A resilient future for California’s electricity is distributed and local,” Liccardo said at a press conference. “And San Jose and other cities can provide solutions to avert our dystopian future of unpredictable blackouts.”

Liccado’s proposal goes before the Rules and Open Government Committee next week.

San Jose already buys energy outside of PG&E through its own provider, San Jose Clean Energy. But PG&E controls energy transmission and, evidently, still gets to decide when to turn off power. The city also ranks third in the nation for solar power generation per capita. But Liccardo said “we simply need to get more folks to invest in inverters and storage.” After all, people’s solar panels are still grid-tied to PG&E’s power lines.

In an interview with the Mercury News, Liccardo said he’d like to explore ways to pay back ratepayers for losses incurred by the shutdown. PG&E officials told San Jose Inside that they will not be reimbursing customers for things like food that spoiled when the power went out. And the mayor said he wants to find out how San Jose Clean Energy can get residents off the grid in event of another power outage.

San Jose had been preparing for last week’s blackouts for four months—ever since the state gave PG&E the green light to turn off the switch during fire-prone weather. The utility behemoth, which has been blamed for multiple fatal wildfires in the past few years, exercised that option as a preemptive measure last week when hot temperatures and high winds sparked concerns about the company’s transmission lines coming into contact with flammable trees and vegetation.

Despite all those months of preparation, San Jose was taken off guard by disinformation from PG&E about the local impact of the outages.

For one, the company’s website went down, overwhelmed by the traffic from customers trying to find out whether they live and work in one of the planned blackout zones. The company also gave the city faulty data about how many San Jose schools would be affected by the shutdown.

The mayor lambasted PG&E for its poor communication with the city during the power outage last week. “As it was said by Sam Mussabini in Chariots of Fire: I’ve seen better organized riots,” Liccardo quipped. “What happened last week was a disaster. We were literally using our own crowd-sourcing app to understand what was happening on the ground in the city because PG&E couldn't tell us in time.”

In his memo to the rules committee, Liccardo wrote that PG&E identified 67 school sites in San Jose that would be affected by the power outage. “When city staff cleaned up the data manually,” he said, “it revealed only 39 school sites potentially affected, leaving 28 schools unnecessarily scrambling to prepare for blackouts.”

Liccardo’s proposal for an energy-independent city is nothing new.

San Francisco recently offered to buy infrastructure off of PG&E to the tune of $2.5 billion, but got a denial letter from CEO William Johnson. Closer to home, however, the city of Santa Clara has run its own electrical utility for more than a century, offering lower rates and higher ratios of clean energy than PG&E.

For San Jose to launch its own utility company, though, would be very expensive. “We may have to pay a few more bucks,” Liccardo noted. But he said he’s confident that the city could raise enough capital by issuing bonds.

Another challenge of a municipal utility: liability.

”It would not be in my interest to see taxpayers on the hook anytime drunk drivers hit the utilities poll,” Liccardo said. “We need to understand that public taxpayers are not saddled with strict liabilities in those events.” Going forward, he said state legislation may be introduced to ensure that the public won’t pay for those kinds of incidents.

San Jose officials plan to poll residents in the fall to gauge public interest in having the city acquire PG&E’s distribution lines and invest in microgrids. If voters say they don’t want San Jose to buy PG&E infrastructure, then Liccardo said the city would then “double down on the microgrid strategy.”

“I acknowledge taking over distribution lines doesn’t solve the problem of inadequate maintenance of infrastructure and transmission lines,” Liccardo conceded. “That’s why our first step and focus should be on microgrids. It’s an investment that PG&E won’t make because they are tens of billions of dollars in debt.”

In 2015, a federal judge sentence PG&E for crimes linked to the deadly San Bruno pipeline explosion, branding it as a corporate felon and imposing a $3 billion fine. Earlier this year, it filed for bankruptcy as it faced $30 billion in liability for the California fires in 2017. And just this September, PG&E reached an $11 billion settlement with insurance companies for claims from the wildfires that killed scores of people since 2017.

Gov. Gavin Newsom, for his part, encourages efforts to break up PG&E’s monopoly.

“I back more competition,” he said at a recent conference. “I am very specifically encouraging others to come into this space and to make some bids. We want to create a competitive space—and all of it with an eye on different approaches.”

Jennifer Wadsworth also contributed to this report.

Nicholas Chan is a journalist who covers politics, culture and current events in Silicon Valley. Follow him on Twitter at @nicholaschanhk.

14 Comments

  1. > San Jose Mayor Wants City to Break Up with PG&E, Establish Municipal Power Utilities

    Liccardo? Liccardo?

    The name rings a bell.

    Isn’t he the guy who can’t ride a bicycle on a residential street without crashing into a car and mangling himself?

    Also, isn’t he supposed to be doing something about the “homeless” problem and “affordable housing”?

    HE wants to run a utility company? You’re kidding!

    The people of San Jose would never be so stupid.

    They wouldn’t, would they? ?

    Speak to me. Say something.

    • He wants to run a utility company so he can put all his Bellarmine buddies in charge of it and let San Jose taxpayers provide their lavish salaries and benefits, so they can continue funding his political campaigns.

      Just like he did at Cristo Del Rey. He got his buddy a VP job there, which was funded by a SJ grant, which was funded by SJ taxpayers. Tip of the iceberg, no doubt.

      As always, follow the money….and you’ll find a corrupt politician, like Liccardo.

  2. Santa Clara has a great power company in Silicon Valley Power, we never have problems and have great utility rates. San Jose should replicate, but with many failures in SJ it makes me fear that they would fail in control. Santa Clara it works and never any blackouts or spiking rates.

  3. PG&E was broken up years ago, That’s why they can no longer afford to make repairs and maintain the distribution system. SJ taking over that system is a surefire way to drag the city into more debt and liability if a fire brakes out due to an aging system and no vegetation control. The city should do what cities are supposed to do, like clean up after an out of control homeless situation they helped create.

    • Amen! Can you imagine the problems we’d have if you put SJ politicians in charge of providing power? 1st thing they’d do is turn it into another entitlement program with “free” electricity for the poor, paid for by higher rates on everyone else.

      Next would be to turn it into another workfare program for the City’s union-based employees. Headcount would be on an automatic annual growth plan, regardless of need, just like every other City function.

      Next, maintenance budgets and preventive maintenance would fall to the bare minimum. Go see how well SJ takes care of its parks (or roads for that matter).

      And you are 100% correct in asserting SJ leaders have helped create the homeless problem by overly restrictive housing policies, which artificially depress housing supply.

  4. A. Becker – now that you bring up Silicon valley power – city of Santa Clara – theres a dirty little secret, several in fact. SVP has its power brought in on the same transmission lines, those owned by PGE – because our dumbass politiicians decided years ago to “de-regulate electric power” in the state – they made PGE sell off it’s generation – – Diablo Canyon and 25 hydro dams in the Sierras built nearly 100 years ago, paid for and only needed to open gates to spin/generate electric to send down the line. Now all that generation is owned by out of state companies that Sell the power to PGE through the state power exchange – the politicians put a “middleman” in there to skip some profits for themselves – – did that bring down electric costs? NO. did service improve? NO.

    Here’s a crooked political deal – muni owned electric co/s like SVP get to buy federal power that investor owned electrics like PGE can’t. It’s much cheaper – is that fair? Why aren’t the politcians like Sam looking into that scam. But Wait! there’s more.

    SVP has a “back room” where dealers 24/7 are buying federal power through the state operated power exchange – this could be power futures for next July, Aug, Sept 2020 – when demand is highest – and they buy lots of extra cheap federal power – and then next July — they can sell that excess, cheap federal power (through the power exchange) to PGE and make a nice profit for doing nothing. SVP is not some kind of wonderful utility- – they are scam artist taking advantage of cheap federal power NOT available to PGE customers – -so that’s a rip off right there and politicians (Sam)should be looking at scam in the interest of the public not served by SVP – – a good investigative reporter could have the story of the year for exposing this scam – – its a rip off to the benefit of a few, at the expense of many. So A. Becker – don’t be so smug – if we ever get an honest politician they will uncover this scam – and then you will have the same rates and service we all get – –

    • Its not smug….. its just saying I felt we had a good power company in Santa Clara not affected by PG&E issues minus things you states. Thats how i felt and my opinion on it. It’s not being smug. I’d love to see this story come out then with all of the proof and be interesting to hear. But I feel you misinterpreted my comment as an insult or an attack to San Jose maybe that’s where you are getting the smugness factor. It no way like that…..
      thats the problem I have noticed often comments are innocent but are taken offensive by a reader misinterpreting the emotions written.

      • Here’s some more “not smugness” for you. because Santa Clara’s muni owned electric – Silicon Valley Power – gets to buy cheap federal power that PGE cannot – they can sell power cheaper in bulk to large firms (Intel, etc) at greatly reduced rates. You cannot see what these rates are because the contracts are “confidential” – – -But Wait – – if SC/SVP is a public entity why can’t the public see those contracts and find out how cheap the large users electric costs really are? the excuse given is that the Large companies (Intel, et al) insist that their power purchase agreements be kept private for “competition sake” – – do you buy that?
        The city of Santa Clara – through its SVP keeps and entices large companies to operate in the city which — Viola – creates a huge tax base for the cities use – well paved roads, schools, etc, etc – – plus cheaper electric rates for its residents.
        because of this largely unknown political deal – everyone outside of SVP service area gets better/cheaper electric rates discriminating against those who get PGE service.
        so you see Becker – you don’t really have a good electric company, they and the city of SC are just playing with a crooked deck.
        I know you are not attacking San Jose – our politicians are just naive and think they can impress the public with bluster. But bluster does not keep the lights on – – shocking!

  5. Like all huge corporations, PG&E is all about the money. An example is the 20% profit they make on the electricity they sell. That 20% was clear in the figures that SVCE (Silcon Valley Clean Energy) presented in public forums here in Milpitas. Because SVCE sells electricity at a 1% discount from PG&E prices, a 19% profit margin is going to programs that serve the public rather than enrich the rich. I imagine that PG&E has a similar profit margin in their delivery service. If so, the people of San Jose and their government could be making a wise financial investment.

  6. If the City ever took over PG&E”s distribution system they’d soon rethink the placement and even the existence of thousands of their trees that have been costing rate payers millions of dollars in ongoing trimming costs.

    • I expect that John Galt is right. The City may rethink their urban forest plans, which might lead to more undergrounding of lines. Likewise, I expect we will see a lot of health-related changes when Medicare for All replaces the current private providers that really don’t care about your health or pocketbook.

      • Underground utilities would run over $1 million per mile. It”s not feasible due to the earthquake issue we have in CA. And, San Jose managing utilities on their own, when they have an issue doing just about anything, is similarly not feasible.

      • > when Medicare for All replaces the current private providers that really don’t care about your health or pocketbook.

        So, what public health provider cares about MY health and pocketbook?

        The VA? ObamaCare? Canada’s National Health Service?

        Anticipating your thoughtful and progressive response, I have my finger on the “horse laugh” button.

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