San Jose Council unanimously backs implementation agreement with PG&E, pauses municipal utility effort

The San Jose City Council on Friday voted unanimously to authorize the city manager to negotiate and execute a binding implementation agreement with Pacific Gas & Electric that aims to accelerate grid upgrades, guarantee interconnection timelines and support workforce development for large electricity customers in downtown and North San Jose.

City leaders said the agreement, if finalized, would pause immediate work to stand up a limited municipal electric utility called "San Jose Power" while preserving the city's right to revisit municipalization if PG&E does not meet measurable performance milestones.

The implementation agreement would fund a dedicated city team and require PG&E to provide enforceable milestones for engineering, construction and energization of new distribution infrastructure to serve data centers, advanced manufacturing and other so-called "large load" customers. Kip Harkness, deputy city manager, told the council: "We come to you at what I think of as a magic moment when it comes to electricity in the city of San Jose," adding that timely power delivery could unlock a wave of investment and jobs.

Why it matters: City staff and consultants concluded that a narrowly scoped municipal utility could offer lower rates and local control for a small number of customers near new transmission lines, but starting and operating a utility carries higher implementation risk and heavy city-level staffing demands. The staff recommendation reflects that tradeoff: pursue a deepened partnership with…