San Jose council authorizes talks with PG&E to speed electric infrastructure for data centers and decarbonization

San Jose City Council on March 4 authorized staff to negotiate a nonbinding cooperation agreement with Pacific Gas and Electric Company (PG&E) intended to accelerate planning, financing, construction and maintenance of electrical infrastructure to serve anticipated economic growth in North San Jose and Downtown San Jose.

City staff described the agreement as a framework to improve interconnection speed and certainty for large electricity customers — notably data centers and advanced manufacturing driven by artificial intelligence demand — while aligning with the city's Climate Smart San Jose decarbonization goals.

The cooperation agreement would fund a city team dedicated to coordination with PG&E, create milestones for interconnection of large-load customers, explore options for joint financing and project delivery, and include process improvements, workforce development and a PG&E demonstration facility. City staff emphasized the agreement is nonbinding and that a separate, more detailed implementation agreement would be negotiated and return to council for approval.

Erica Garafo, lead resilience strategist in the city manager's office, told the council the partnership grew out of two parallel streams of work: emergency-response coordination and longer-term planning for electric connections and resilience. Christina Ramos, senior government affairs at PG&E, said the utility would finance, engineer, construct, operate and maintain distribution infrastructure needed to deliver power to new large industrial and commercial facilities in planned economic development areas, and would provide financial support for limited city staff augmentation to reduce near-term budget pressure.

Council members repeatedly stressed two priorities: (1) ensure the city can give potential large-load customers certainty and speed of interconnection, which local officials said is essential to capturing near-term investment; and (2) protect the city’s everyday residential customers (“heartbeat customers”) so improvements for large customers do not come at the expense of routine service and permitting for residents. Mike Madero (PG&E) and other PG&E representatives said adding beneficial new load could reduce per-customer rates, and described permits and process changes they and the city have identified to speed delivery.

Councilmember Cohen, who represents North San Jose, moved to accept staff’s recommendation and two council memos that direct negotiation points and additional items to be addressed in a study session scheduled for March 21. The motion included a request to return with a more detailed implementation agreement and to provide an update on site negotiations over the Ellis transmission project and any impacts on Coyote Valley wildlife connectivity.

The motion passed unanimously. Councilmembers and staff emphasized the cooperation agreement does not foreclose creating a municipal utility; instead, it is intended to improve outcomes now and preserve options if PG&E does not meet agreed milestones.

What happens next: staff will continue drafting the cooperation agreement and a more detailed implementation agreement to return to council, and will include available information at the March 21 study session on LS Power/ELLIS-related transmission conversations and how they affect Coyote Valley and nearby open space. The council also asked for measurable service-delivery metrics tied to any staff-augmentation funded by PG&E.