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.