San Jose pauses municipal utility plan after PG&E improvements

San Jose has decided to pause its plan to create a municipal utility. Instead, the city will work with PG&E after the company promised to improve its infrastructure and speed. This decision comes as San Jose aims to meet growing energy demands in its downtown and northern areas. Problems with PG&E had led the city to consider its own utility nearly 18 months ago. Rising costs and unreliable service were major concerns. However, PG&E has since sought to improve relations with San Jose by negotiating commitments to accelerate important projects. Mayor Matt Mahan emphasized the need for economic development. He stated that residents should see clear benefits in exchange for potentially higher energy rates. The city’s deputy manager noted that the municipal utility was never meant to replace PG&E but to support growth in new areas of the city. Some nearby cities have their own utilities, like Santa Clara and Palo Alto, which can offer cost savings. With a decline in sales tax revenue, San Jose officials are keen to attract new businesses, including data centers, which could significantly boost city revenue. Officials understand that creating a municipal utility is complex and would require partnerships with private developers. They hope that the new agreement with PG&E will lead to quicker service and economic benefits. PG&E has already started addressing complaints about reliability and service. The agreement’s terms are still being finalized but should include key provisions for economic development initiatives and performance tracking. San Jose is also preparing for leadership changes, having hired a new Chief Utility Officer to help guide these efforts. PG&E believes the new agreement can help the city achieve its goals without adding financial risks.