There are always issues and that’s the nature of business, politics and life.
Even something as popular as the city owned electric company isn’t free from thorny issues, though they may be less obvious. On the outside, residents benefit. Because the City owns its power company, Santa Clara provides electric power to residents at a significant discount versus what PG&E customers pay just across Stevens Creek Boulevard.
This has been one of the primary attractions in Santa Clara for decades, as businesses and residents have benefitted from lower power costs. It has also been a primary attraction for major companies to move to, and stay in Santa Clara. Especially since these industrial giants use huge amounts of power.
But below the surface, there seems to be a new wrinkle developing. As you may have noticed, the number of server farms to power the cloud have been increasing along Central Expressway and in other parts of the City. These farms use a majority of the City’s power while contributing little to the City by way of the business tax. Most server farms have few employees and so the taxes levied against them are negligible.
But what if these server farms are getting an added benefit? Rumor has it that in recent months “deals” have been made to new Silicon Valley Power clients that offer lower rates than the actual cost of the power. If this is true, it becomes a serious reversal. It means that current customers, including residents, become subsidizers of these new customers.
If you examine Santa Clara residential and corporate power rates, they appear to be about 40% less than PG&E. This should be reason enough for many power hungry companies to locate in the City.
But for the first time in years, SVP has requested and received approval for a mid-year rate hike. This is on top of the rate hike that occurred at the start of 2023. While not a smoking gun, it seems to point to more than just the skyrocketing natural gas prices City staff pointed to when explaining the most recent rate hike. Could it be that residents are already beginning to subsidize these new customers?
If so, then the council needs to examine the policies and procedures of SVP, including the rate structure to assure the competitive rates benefit both residents and businesses. Not one over the other.
