San Jose creates city-run power utility with many unknowns

As San Jose’s power needs increase with electrification and climate change solutions, the city will explore creating its own power utility.

San Jose City Council today unanimously approved the creation of San Jose Power, a city-run electric utility that is being touted as a once-in-a-generation opportunity to provide power at lower rates and bring in more competitive development.

But city staff say the creation of San Jose Power is purely in an exploratory phase, and will still need years of research to determine if a publicly owned and operated power utility is worth the investment.

“Today’s vote is really only about studying the potential for offering a second option for delivery of power to new developments,” Councilmember David Cohen said at Tuesday’s meeting.

Proponents of San Jose Power say the public utility could provide cost savings and incentivize new large developments to come to San Jose—including data centers to further support big tech companies.

“Santa Clara has been the hub for data centers,” Cohen said. “One of the reasons for that is their municipal utility.”

A public utility would capitalize on two high voltage power lines that will soon run through San Jose. California Independent System Operator is the state-chartered nonprofit that manages the wholesale electricity market for 80% of California, and is the organization that has approved and funded the new power lines.

Much is still unknown about which residents would be offered electricity through San Jose Power, including details on rates and the overall cost to build out infrastructure for San Jose’s public utility.

Nanci Klein, San Jose’s economic development director, previously told San José Spotlight this is not a utility residents will be selecting instead of Pacific Gas and Electric or San Jose Clean Energy. It would instead be an option for new development and to bolster key infrastructure sites like the San Jose Mineta International Airport and Diridon Station substations, which she said are in need of power, rebuilding and expansion.

Tim McRae, senior vice president at Silicon Valley Leadership Group, said establishing the public utility is premature.

“You’re basically being asked, ‘Change the municipal code, we’re not sure why yet,” McCray told council.

Nora Frimann, San Jose’s city attorney, said creating San Jose Power is not “imperative” to submitting an application to use the new high voltage power lines, but it would certainly help.

“If we try to make the application and we don’t have the utility established … there may be an effort to undercut that application,” Frimann said.

City staff said council would not be asked to make their first major financial decision on San Jose Power until 2025. The earliest a customer could start receiving power from the municipal utility would be 2028, according to city officials.

This story will be updated.

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