A month after San Jose Mayor Sam Liccardo announced plans to convert the state’s largest and most controversial utility into a customer-owned cooperative, the rest of the city’s elected officials have joined the cause.
In a unanimous vote Tuesday night, the San Jose city councilmembers joined a growing number of more than 115 representatives from 58 cities and 10 counties who have pledged support for Liccardo’s ambitious proposal to take over PG&E.
“I think this is a concept and idea that is very important and very timely,” Councilmember Johnny Khamis said during the meeting.
Other backers include Oakland Mayor Libby Schaaf, Berkeley Mayor Jesse Arreguin and supervisors from nine counties including Santa Clara, San Mateo, Alameda, Marin, Santa Cruz and Sonoma.
Liccardo and his team of city staff began researching the proposal earlier this year amid a series of blackouts inflicted on hundreds of thousands of customers across the Bay Area and Northern California earlier as part of PG&E’s efforts to avoid starting a wildfire with its power equipment during dry, windy weather events.
A municipal takeover of the local electric system was initially weighed in San Jose. San Francisco, which is not among cities that have signed on to pursue a cooperative, was rejected by PG&E earlier this year after offering $2.5 billion to take over the company’s equipment within the city.
Councilmember Maya Esparza, who voiced support for the customer-owned takeover, cautioned against pursuing a municipal utility during Tuesday night’s meeting.
“I don’t support the city investing millions of our infrastructure dollars into an energy infrastructure system to replace PG&E,” Esparza said. “I don’t want to invest city money into being the new PG&E.”
Due to mounting multi-million dollar liability claims filed against the utility by insurers and wildfire victims, PG&E filed for bankruptcy reorganization in January. The company’s power equipment has caused some of the deadliest wildfires in recent state history, including many of the devastating Wine Country wildfires in 2017 and last year’s Camp Fire that killed 86 people in Paradise.
A federal bankruptcy judge early next year is expected to consider reorganization plans for the utility company, and Liccardo hopes his customer-owned utility proposal could be considered as a viable option.
The coalition of leaders behind the plan has not yet filed paperwork to establish the proposed cooperative, name its directors or raise the capital necessary to put in a bid to be considered by the bankruptcy court. But Dan Richard, a former senior PG&E executive advising the San Jose mayor’s cooperative effort, said in a recent interview that they are forging ahead.
“Representatives of the coalition have been engaging in active discussion with major banks and financial institutions, and we’ve had very strong interest expressed,” Richard said.
According to proponents of the proposal, restructuring PG&E as a cooperative would give it access to lower-cost financing and allow it to avoid dividend and tax payments, making it cheaper to complete needed upgrades to the utility’s grid system.
A cooperate structure on the scale of PG&E, which serves 5.4 million electric customers across 70,000 square miles, is unprecedented and many questions have yet to be answered.
In order to try and offer some clarity, Liccardo last week released a set of governing principles, which stated that the private cooperative would abide by open-meeting and public records access rules for public agencies.
Under the coalition’s guidelines, the coalition vows to keep PG&E’s service area intact, maintain all of the utility’s labor contracts and independent power producers and ensure governing board members would be nominated by a selection committee that will vet the candidates based on their relevant skill sets.