San Jose weighs municipal electric utility as new high‑voltage lines create connection window

San Jose City Council on Dec. 17 received a status report on exploratory work to stand up a municipal electric utility, a staff proposal branded “San Jose Power” that would initially serve selected growth areas and potential large customers in North San Jose and downtown.

The report said favorable timing hinges on two newly approved high‑voltage transmission lines overseen by the California Independent System Operator that will increase transmission capacity and could reduce transmission costs. "CAISO recently doubled the capacity of LS Power's project to 2,000 megawatts," Erica Garofolo, the city's lead resilience strategist, told the council. City staff said San Jose's average electricity use is roughly 1,000 megawatts, and that the new capacity would allow the city to request interconnection capacity into the transmission grid.

Why it matters: staff said a municipally run utility tied directly to new transmission could lower electricity costs for targeted customers, increase local resilience for critical infrastructure and support development on city‑owned or other priority lands. Councilors and the public pressed staff on tradeoffs, including where new substations will be sited, how startup costs would be allocated and the potential effects on existing utility workforces.

What staff proposed and the timeline Staff described four startup cost categories for any San Jose Power launch: electricity generation (power purchases), transmission interconnection, electrical distribution and staffing/consulting. Staff presented a model in which a developer or customer would finance some upfront infrastructure — particularly transmission interconnection and distribution build‑out — and then transfer assets to the utility, a structure intended to limit general fund exposure.

Kip Harkness, deputy city manager, and Garofolo said the city has submitted two 250‑megawatt interconnection requests with LS Power, one for North San Jose and one for downtown, and that the LS Power projects begin construction in 2026 with energization expected by late 2028. Staff said an initial 50 megawatts of reserve capacity could power critical systems such as the regional wastewater facility and support development on adjacent industrial land.

Labor and utility stakeholders weigh in Representatives from the International Brotherhood of Electrical Workers urged the city to pair any expansion with workforce development and training. Will Smith, business representative for IBEW Local 332, described the union’s training facility and said it can supply a trained workforce if local construction accelerates. Hunter Stearns of IBEW Local 1245 warned that the municipal code adopted in October 2023 allows the city broad authority — including the potential to acquire existing PG&E assets — and said any change of ownership or service provider raises questions about pensions and benefit structures for utility workers.

PG&E told the council it is negotiating a cooperation agreement with the city to speed infrastructure for economic development in North San Jose and downtown. Christina Ramos, PG&E senior government affairs representative, said the utility has improved new‑service connections and reliability performance in San Jose over the past year and that future rapid delivery of new infrastructure will require significant long‑term investments and a strong partnership with the city.

Next steps and council direction City staff said the next possible steps are: (1) a mutual cooperation agreement with a preferred developer‑customer to advance feasibility and due diligence; (2) continued negotiation on an MOU with PG&E to coordinate transmission, interconnection and infrastructure delivery; and (3) return to council with a recommended next step at a special meeting anticipated in March 2025. "We would anticipate knowing in the next several weeks whether we will be bringing forward a mutual cooperation agreement to you and would likely bring that to you for your consideration perhaps in March," Harkness said.

Council reaction and concerns Council members who spoke generally supported further study but pressed staff on several points: how the city will avoid siting conflicts that could affect protected open space (Councilmember Matt Mahan asked PG&E whether Metcalf siting could avoid impacts to Coyote Valley open space); how startup costs would be managed; and how the city will coordinate with IBEW and other labor groups to protect local jobs and benefits. Councilmembers repeatedly said they wanted both faster infrastructure and strong worker protections, and asked staff to continue outreach with labor stakeholders before advancing major next steps.

Outcome Council accepted the status report and directed staff to continue developing the business case, staffing plan and financing strategy and to continue parallel negotiation with PG&E and engagement with IBEW. The action was recorded as "Motion passes unanimously with Jimenez absent."