Opinion | San José mayor: Beyond blackouts — resilient grid requires local action

Pacific Gas and Electric Co.’s performance of the state-authorized public safety power shut-off evokes coach Sam Mussabini’s words in a chaotic scene in “Chariots of Fire”: “I’ve seen better organized riots.” Many worried residents seeking information from PG&E encountered a crashed website, and others beckoned overwhelmed call centers. Residents, businesses, and local communities paid a steep price for poor preparation, with our most vulnerable residents bearing the greatest hardship.

Not that anyone was surprised. Within weeks of the California Public Utilities Commission’s expansion of PG&E’s unilateral authority to implement widespread blackouts, I criticized the decision in this paper, and in testimony before the California Senate. I asserted that investor-owned utilities like PG&E may too eagerly flip off the switch to mitigate their own financial liability for wildfires, without sufficient regard for the downstream public health and safety consequences of a shut-off.

Until the state dramatically changes the shut-off rules — such as through Sen. Scott Wiener’s still-pending SB378 — it will only get worse. We’ll see more power shut-offs. While last week’s brief blackouts were nuisance enough, a four- to five-day shut-off will deprive our communities of both livelihoods and lives.

Though a malady created by state regulation, local communities can provide solutions — if they’re allowed to. For example, San José anticipated PG&E’s limitations by creating a map-based data platform to enable simultaneous multiagency access for emergency personnel, and started an app to crowd-source information from residents to provide more accurate real-time assessment of blackouts and impacts. If the state ordered PG&E to provide its complete data to local emergency operations staff, we could do even better. Properly trained city and county staff can also take geo-tagged photos of power lines to accelerate inspections necessary to restore power once shut off — as we offered PG&E last week — but only if the state requires PG&E to work with us.

More importantly, the most promising long-term solutions to the many grid-related risks we face — from wildfires and earthquakes to cyberattacks — are local. A resilient future, according to most experts, is distributed. That is, we can reduce our dependence on PG&E’s long-distance electricity transmission by creating local islands of power generation and storage, commonly known as “microgrids,” starting with critical public facilities and expanding to strategically located hubs within neighborhoods.

Microgrids aren’t cheap, however, and become economical only at scale. State regulations limit this scale, and utilities often impose high interconnection fees that further challenge the economics. The Legislature and CPUC must level these obstacles, and clear the red tape to microgrid permitting. They can also incentivize local energy storage; the CPUC’s recent $100 million commitment to the Self-Generation Incentive Program will help, but it should be expanded to every community potentially exposed to precautionary blackouts. Finally, the state must eliminate barriers to full participation in electricity markets by purveyors of local clean-energy-and-storage.

An important source of local investment in microgrid and other resiliency improvements will come from local community choice aggregation programs, which currently serve 10 million Californians. CCAs supplant PG&E’s role in procuring electricity, providing local residents with cheaper and greener electricity than does PG&E. The CPUC has repeatedly blunted the competitive advantage of CCAs over investor-owned utilities by boosting fees on CCAs. Continuing to protect PG&E in this way will undermine the ability of CCAs to reinvest in resiliency projects, which they can do at a lower cost of capital than PG&E.

As mayor of the largest U.S. city with a CCA, I’ve proposed that San José invest in islands of resiliency within neighborhoods, by pooling consumer purchasing power to leverage lower costs for needed infrastructure — primarily energy storage and solar inverters — and by leveraging state subsidies to help low-income neighborhoods build microgrids. Success requires the state’s willingness to allow California’s 19 CCAs to continue to flourish.

Finally, I’ve proposed that San José create a publicly owned utility to enable more robust development of microgrids. This would involve developing local generation, distribution and storage infrastructure to ensure critical facilities and participating neighborhoods can operate during outages.

Separately, I urge that we fully explore whether San José should take over PG&E’s distribution infrastructure, as San Francisco has proposed. Cities and counties also have a greater incentive to invest in distributed, hyperlocal renewable generation and energy storage projects than PG&E, which profits primarily from its transmission and distribution of electricity.

Finally, we must better align financial interests of PG&E with the public interest in resiliency investment, and to better access capital markets needed for microgrid development. Public ownership comes in different forms, and while San José is exploring taking over PG&E’s distribution infrastructure — as San Francisco has proposed — I believe a more promising path lies in creating a customer-owned utility. Utility cooperatives serve 19 million customers today throughout the United States, and ensure that the interests of customers come first in company’s investment decision-making for safety, reliability, and resilience. A cooperative utility faces a much lower cost of capital than an investor-owned utility — it does not need to pay dividends to shareholders, and enjoys exemption from federal and most state taxation — thereby providing a better investment vehicle for capital infrastructure. San José, along with several other cities and counties, urge the state and PG&E to further explore and embrace this model for a more sustainable PG&E.

A resilient future for California’s electricity is distributed and local. San José and other local communities can provide solutions to avert our dystopian future of unpredictable blackouts. We just need the state to support or efforts — or at least to get out of the way.

Originally published at https://www.sfchronicle.com on October 21, 2019.

Mayor of San José, California