The mayor of San Jose, California’s third largest city, has a preliminary proposal on the table to take over the natural gas and electric systems of bankruptcy-bound Pacific Gas and Electric Co. (PG&E) and transform it into a customer-owned cooperative utility. 

Mayor Sam Liccardo’s plans first were disclosed on Monday by The Wall Street Journal. The reports came as PG&E indicated another public safety power shutoff is on the table as windy conditions return this week.

Liccardo's far-reaching plans, which would require approval by the California Public Utilities Commission (CPUC), could transform the San Francisco-based utility, which has 16 million customers, into a nonprofit electric/gas cooperative.

In California there is a process to create a community choice aggregator (CCA), but it does not own and operate infrastructure. Liccardo’s proposal calls for creating a municipal utility that would own and operate the electric and gas systems on a nonprofit basis.

The mayor’s proposal, spokesperson Chloe Meyere told NGI, “suggests we first study all these issues,” including microgrid, asset purchases or municipalization, “and make an informed decision after we have all the information…

"The mayor's proposal still needs to go to the city council rules committee and then the city council; if approved, the city would study the proposal's feasibility.” Neighboring Santa Clara has had municipal power for decades under Silicon Valley Power, Meyere noted.

Questions about wildfire liabilities and the estimated value of the PG&E system in San Jose won't be considered until the council approves a study. Liccardo said he wants to align financial and public interest in the city with a utility structure that "better addresses the public need."

CPUC spokesperson Terrie Prosper put the San Jose proposal in the context of a CCA, which first requires submitting implementation plans. Once formed, a community-based entity has to have a resource adequacy plan adopted at the CPUC to assure where the power generation and gas supplies come from and at what cost.

Earlier this month PG&E rejected an offer from San Francisco and San Francisco County to acquire the utility's retail electric facilities for $2.5 billion. PG&E CEO Bill Johnson said earlier this month the facilities were not for sale. "To do so would not be consistent with our charter to operate or our mission.”

Regarding the San Jose proposal, PG&E spokesperson Mayra Tostado again said the facilities were not for sale and “we remain focused on the safety of our customers and communities."