San Jose negotiates partnership with PG and E for electric infrastructure improvements

The San Jose City Council held a special meeting on March 21, 2025, to discuss the exploration of a municipal electric utility and the potential partnership with Pacific Gas and Electric (PG&E). The meeting focused on evaluating the risks and benefits associated with establishing a new electric utility versus collaborating with PG&E.

The discussion began with an overview of the challenges involved in launching a new municipal electric utility. City officials highlighted that while a developer-financed approach could minimize risks, starting a new utility would still present significant challenges, particularly in staffing and operational management. The city would bear the full responsibility for the utility's success, which could detract from addressing other pressing issues such as homelessness and public safety.

City staff presented a recommendation to deepen the partnership with PG&E through a binding implementation agreement. This agreement aims to enhance the reliability and speed of power delivery for large customers in North San Jose and downtown. The staff emphasized that PG&E has made substantial improvements in emergency management and infrastructure, which has fostered a more collaborative relationship.

The proposed implementation agreement includes several key elements, such as joint planning for economic development, dedicated city energy development teams, and performance benchmarks to ensure timely project delivery. The city plans to incorporate seven key deal points into the agreement, which is currently in draft form and expected to be finalized by mid-April.

City officials also discussed the potential economic benefits of the partnership, particularly regarding the development of a 159-acre property owned by the San Jose Santa Clara Regional Wastewater Facility. This area is anticipated to attract high-energy industries, such as data centers, which could significantly boost the city's revenue.

The meeting concluded with a commitment to monitor PG&E's performance under the new agreement, with provisions for the city to revisit the establishment of its own electric utility if PG&E fails to meet its obligations. The council's decision to pause efforts on launching San Jose Power reflects a strategic focus on leveraging PG&E's existing infrastructure and expertise to meet the city's growing energy needs while addressing other critical priorities.