S.J. energy program under threat
New community choice program could be undermined by PG&E, which may raise fees
“It’s a program that will enable every resident, every business to be able to choose the source of their electricity, to be able to find electricity that is cheaper and greener.” — Mayor Sam Liccardo
As scientists and environmental advocates convene across the San Francisco Bay Area for a global climate summit this week, San Jose is taking a major step toward reducing local greenhouse gas emissions by becoming the largest U.S. city to create its own energy program.
On Wednesday, Mayor Sam Liccardo officially launched San Jose Clean Energy, which the city says will provide residents and businesses with a more affordable, cleaner power alternative than PG&E currently provides.
But advocates of the new community choice energy program worry it could be thwarted by the state’s Public Utilities Commission, which is set to vote in a couple of weeks on a policy that would increase charges on customers who leave PG&E for the new system.
“By threatening the clean energy programs that are launching in San Jose and cities throughout the state,” Liccardo said, “there is no more damaging decision that could be made in this state to hinder our efforts to put California on a more sustainable path.”
Most people in San Jose now get their electricity through PG&E. When residents and businesses switch to San Jose Clean Energy, PG&E will charge
what city officials are calling an ongoing monthly exit fee. The commission, which PG&E is heavily lobbying, is considering raising that fee, which varies significantly per household or business, by as much as 25 percent, Liccardo said Wednesday. Currently, the city says it’s program would be about 1 percent less expensive than PG&E. But if it’s forced to absorb the potential increase, which it says it would rather do than pass the cost on to customers, the city’s program could actually be more expensive, which could jeopardize it altogether.
PG&E says it supports community choice programs and will continue to work with cities looking to create them. It disputes the idea that the charge is an exit fee, and maintains that it’s charging the payment to make sure customers who remain with PG&E aren’t saddled with the cost of paying for energy the company purchased to deliver to people who left before using it.
“Really for us, it comes down to ensuring all customers are treated equally and ensuring that customers do not pay for other customers,” said spokeswoman Lynsey Paulo.
Liccardo hit back at that idea, pointing out that PG&E proposed a rate reduction in June and adding that the company shouldn’t have suggested the idea if it is worried about costs. The charges, he argued instead, are designed “to limit the ability of community choice programs like San Jose to launch and to grow.”
Regardless of any obstacles, the mayor is adamant that the new program move forward.
“It’s a program that will enable every resident, every business to be able to choose the source of their electricity, to be able to find electricity that is cheaper and greener,” Liccardo said. “This is the most impactful thing that we can do in any city to be able to reduce greenhouse gas emissions and be able to put our city and our planet on a more sustainable path.”
In 2017, about 80 percent of the electricity PG&E delivered came from a combination of renewable and greenhouse gas-free sources, with about 33 percent coming from renewable sources. San Jose’s energy program is set to be entirely greenhouse gas free, with about 40 percent from renewable sources and about 60 percent from hydroelectric sources, Liccardo said. Over time, the city wants to convert entirely to renewable energy sources.
For now, the city’s more than 1,700 municipal energy accounts — from City Hall to the airport — have transitioned to San Jose Clean Energy. In March, the program will expand to businesses and residents, who will need to opt out if they don’t want to participate.
Essentially, San Jose will buy energy on the wholesale market, in some cases from PG&E and in other cases from other sources, such as a solar company. The city says it can keep costs lower by negotiating better contracts than some of PG&E’s older existing contracts. People will still only get one bill, but PG&E will continue to distribute the energy.
While the city is the largest in the country to create such a program, it is not the first. In California alone, there are already about 19 programs serving some 8 million people, said Lori Mitchell, the city’s community energy director. San Francisco has a program, and there are others in the East Bay and the Peninsula. Based in part on some of those programs, Mitchell said, San Jose expects to see an opt-out rate of around 5 percent or lower.
“Overwhelmingly, people want to be part of a solution to this climate change crisis that we’re facing,” Liccardo said, “and it’s important that we offer opportunities for people who can’t afford a Tesla to be part of the great dividend that green energy is bringing to us.”