One week after California’s biggest utility cut power to hundreds of thousands of residents, Mayor Sam Liccardo says he wants to explore a San Jose without Pacific Gas and Electric.
Last week’s blackout aimed at reducing the risk of wildfires in Northern California not only caused a frenzy for more than 60,000 San Jose residents, commuters and business owners who lost power, it also exposed the downside of depending on what they see as PG&E’s unreliable, outdated grids and the utility’s questionable decisions about when and where to turn off the power.
Confronted with that stark reality, Liccardo drafted a memo that will go before San Jose’s rules committee next week asking staff to investigate creating a city-owned utility to develop independent power systems such as microgrids, as well as other less draconian short and long-term measures that would protect the city from future shutdowns.
“PG&E faces financial and repetitional liability for wildfires, but very uncertain liability, if any, for lost lives and livelihoods resulting from lengthy blackouts,” the memo states. “PG&E’s ostensible exposure to only one side of the risk equation puts the well-being and safety of millions of Californians on the other side.
“…It’s time to explore a San Jose without PG&E.”
The mayor’s memo places San Jose among a growing movement of cities and entities across the country looking for alternatives to investor-owned utilities in the face of increasing outages and frustration with unpredictable grids.
For example, San Francisco recently offered $2.5 billion to PG&E to buy its local power lines. The company rejected the offer last week, however, saying it was too low and customers could see their rates rise. Other cities such as Palo Alto and Santa Clara already operate city-owned utilities.
Liccardo said he’s not convinced that city-controlled utilities are the answer to the problem, but it could be a part of the solution that he thinks should be vetted. Other suggested measures he’s interested in pursuing include identifying reimbursement funds for taxpayers affected during shutdowns and exploring how San Jose Clean Energy can help homeowners get off the grid during a blackout.
Ever since May, when the state gave PG&E the authority to shut down power when it deems it necessary to reduce wildfire risk, Liccardo has been a vocal critic.
He has written op-eds, held press conferences, testified before state legislative subcommittees and lobbied the governor for greater government oversight of the utility.
“What we saw last week realized and confirmed our concerns about a state regime that essentially allows a private investor-owned utility to unilaterally have authority to flip off the switch,” Liccardo said in an interview.
Before and during last week’s blackout, the mayor said the city faced challenges due to inaccurate data disseminated by the utility.
According to Liccardo’s memo, PG&E included 45 schools in the potentially impacted shutdown zones that were, in fact, not going to be affected. The company also allegedly missed or inaccurately identified dozens of residents on its list of potentially affected medical baseline customers — residents depending on electrical power for life-sustaining medical equipment.
“In a world of scarce resources — and with the most thinly staffed city hall of any big city in the country — what is most critical to us is to prioritize and focus on those in need,” Liccardo said. “And when you have a community demanding response unnecessarily, it undermines our ability to help those really in need of that help.”
PG&E, however, is likely to continue to resist selling any of its power lines.
In its rejection letter to San Francisco, company CEO William Johnson wrote, “We disagree with the suggestion that PG&E’s San Francisco customers would be better served by another entity.”
The company doubled down in a statement Thursday, saying that its San Jose infrastructure also wasn’t for sale and “would not be consistent” with its charter to serve Northern and Central California communities.
“While we recognize this was a hardship for our customers throughout Northern and Central California, we stand by the decision because the safety of our customers and communities must come first,” PG&E said in a statement released Thursday afternoon.
Earlier this year, San Jose switched electricity suppliers from PG&E to San José Clean Energy — a nonprofit, locally-controlled utility known as a community choice energy program that provides residents and businesses with carbon-free electricity. Although the electricity is supplied by the nonprofit, the power still runs through PG&E transmission and power lines.
Creating a city-owned utility would allow the city to control distribution and the nonprofit to maintain energy production. But that could take decades to do, according to Peter Asmus, a microgrid expert at Navigant Research, a market research and advisory firm. And, even once created, public utilities are not immune to PG&E shutdowns because the systems still remain connected to the company’s distant transmission lines.
Some customers in both Palo Alto and Santa Clara, for instance, were still in jeopardy of losing power last week.
That’s why Asmus sees microgrids as the best recourse for avoiding a shutdown.
Three Fremont fire stations, Apple’s new campus in Cupertino, Kaiser-Richmond Medical Center and a growing number of both public and private entities and businesses all have begun using their own independent power systems, referred to as “microgrids.”
Microgrids, which can be run off of solar power, batteries, generators or a mix of various power sources, run in tandem with PG&E’s power supply most of the time. But when a shutdown takes place, the microgrids allow customers to use the energy they’ve created and stored even when PG&E’s transmission lines are down.
Asmus said the latest power shutoff and new state policy are going to accelerate the creation of microgrids across the state — especially as the cost for a cleaner alternative such as solar and batteries decline.
“Concepts like microgrids in some ways are inevitable. It’s just a matter of how fast we move in that direction,” Asmus said.
Liccardo acknowledged that the long-term solutions of creating microgrids and maintaining local power lines are going to take a significant amount of resources and capital investment to bring to fruition. But, he said, it doesn’t compare to the “extraordinary cost of uncertainty.”
“We had a taste of immense disruption to the lives of our residents last week,” he said. “And as that blackout extends from hours to days, the disruption results both in lost livelihoods and lost lives.
“We cannot reasonably expect our residents to tolerate that level of risk in their daily lives, certainly not in the heart of Silicon Valley.”
