San Jose City Council Approves New Community Choice Energy Plan, the Largest in California

SAN JOSE — San Jose on Tuesday became the largest California city to launch “community choice energy” — an alternative electricity provider that environmentalists say will save money and reduce pollution linked to climate change.

“While leaders in Washington continue to languish in a petroleum-fueled past, cities like San Jose will chart the path to a more sustainable future,” said Mayor Sam Liccardo. “Through our CCE program, we will significantly lower our greenhouse gas emissions and boost our renewable energy supply, while also providing cost-competitive electricity rates for our residents and businesses.”

The City Council unanimously approved the new utility program at Tuesday’s council meeting. The “CCE” program would begin next spring and would be among eight statewide that offer residents an alternative to traditional utilities like Pacific Gas & Electric.

But some elected leaders worry the new energy option — dubbed “San Jose Clean Energy” — may not save ratepayers money, is financially risky and could result in a strain to the city’s general fund.

Councilman Johnny Khamis, who ultimately voted in favor of the plan, said San Jose should require the new energy program to operate without support from the city’s general fund so that it doesn’t tap money needed for police, fire protection, roads and parks.

“Our residents are owed this security as we enter a new line of business and experience the risks and unknowns that naturally attend any new venture,” Khamis said.

PG&E spokeswoman Ari Vanrenen said the utility supported the legislation that allowed governments to launch community choice energy programs. PG&E will deliver energy to San Jose consumers enrolled in the CCE program through existing infrastructure and by providing meter readings, billing and maintenance services, Vanrenen said.

“For more than 100 years, it has been PG&E’s privilege to provide our customers clean, reliable and affordable energy, and we look forward to the opportunity to do so for many years to come,” Vanrenen said. “At the same time, we respect the energy choices that are available to our customers, and will continue to cooperate with local governments as they consider pursuing and/or developing a CCE program.”

The San Jose program is expected to cover its own costs, but would require $55 million in startup money, either from a line of credit, vendor funding or a loan.

Residents and businesses in San Jose today have only one electricity option — PG&E — which has been a national leader among utilities in promoting the use of renewable energy. The utility is ahead of schedule on its 2020 goal of having 33 percent of its energy provided by renewable sources. But it still trails the record of California counties that have already implemented CCEs.

Eight have been launched since 2010, including Peninsula Clean Energy, which involves all San Mateo County cities, and Silicon Valley Energy, which includes most Santa Clara County cities except San Jose. Another five CCEs are expected to begin service in the next year. All provide environmental benefits with either cheaper or comparable rates for customers.

San Jose leaders have explored the idea since 2011. Launching the program requires creating a new city department with an unknown number of staff members. Though the ongoing costs are unclear, Liccardo in 2016 pegged $300,000 in one-time funding to study the alternative energy choice.

All city residents automatically would be enrolled as customers in the new San Jose Clean Energy plan unless they opt out. They will receive at least four mailed notices before the launch.

Environmental Services Director Kerrie Romanow recommended offering at lease one “power mix option” with a rate equal to or less than PG&E’s rates, and to maintain low-income programs at the same level as PG&E.

“This is the biggest thing we can do to reduce our greenhouse gas emissions in the city,” Romanow said Tuesday. “We can provide a lot more renewable energy for about the same price. We all need to do more to reduce the impacts of climate change and this is a very affordable way to do that.”

To reduce greenhouse gas emissions at higher rates than PG&E, Romanow said the plan should offer power options with at least 10 percent more energy from renewable sources than PG&E.

The City Council approved creating a community advisory committee to oversee the program. San Jose leaders say the model allows the city to have “more direct control over rates and how any surplus revenues are reinvested in their communities.”

Khamis also was concerned about how the city would raise its electricity rates under the proposed plan, and recommended that any rate change require at least 8 votes from the City Council. But that idea did not win support.

City administrators are expected to bring back a detailed financing plan this summer. The utility program will require 18 to 19 employees once it’s operational. Romanow said officials will develop a plan that does not impact the general fund. That could be done, she said in a staff report, either by borrowing from another city fund or by issuing short-term debt.

San Jose City Council Approves New Community Choice Energy Plan, the Largest in California, by Ramona Giwargis, The Mercury News, May 16, 2017

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