The City of San Jose Approves Agreement to Construct Electric Transmission Infrastructure Projects
The City of San Jose has approved a franchise agreement with LS Power to construct electric transmission infrastructure projects and strengthen grid reliability, support economic development, as well as improve the city’s climate and electrification goals.
While construction is scheduled to begin in spring 2026, it is expected to be completed by December 2028. The transmission investments will improve grid reliability across San Jose and the broader South Bay region. The projects will enhance redundancy and enable bidirectional power flow for residents and businesses to receive access to reliable electricity during periods of peak demand or unexpected outages by establishing new high-capacity connections between critical substations.
The two projects, Power the Santa Clara Valley Project and the Power the South Bay Project, were selected by the California Independent System Operator to meet critical reliability needs in the South Bay. Together, the projects will deliver approximately 2,000 MW of new transmission capacity to the region, enhancing power delivery across Silicon Valley.
The projects will add approximately 17 miles of new transmission infrastructure across San Jose. This includes a 12-mile underground power line along Monterey Road connecting to downtown San Jose, and about two miles of additional power lines in north San Jose along Los Esteros Road.
The upgrades will expand the City’s ability to deliver electricity safely and reliably to homes, businesses and major employers. As part of the agreement, LS Power will also install about three miles of shadow conduit, empty underground pathways, for the city to add new fiber optic cables in the future.
The fiber optic cables will be used to enhance traffic signal coordination and support real-time data systems monitoring conditions, detect incidents, and enable faster emergency responses, strengthening public safety and making city streets more efficient and secure.
The City Council approved a 10-year franchise agreement with LS Power, with automatic renewals for up to 40 years, giving both the city and the company the opportunity to revisit shared priorities and partnership opportunities over time. LS Power will pay the City an annual franchise fee equal to 2.3% of net revenue, matching the rate paid by PG&E.
Once operational, annual payments are expected to range between $500,000 and $750,000, all of which will be deposited into the City’s General Fund to support local programs and services. The projects have undergone environmental review through the California Public Utilities Commission’s Environmental Impact Report processes.
“A modern, resilient energy grid is foundational to sustaining San José’s role as a global center of innovation,” said City Manager Jennifer Maguire. “With these two transmission lines, we are maximizing public benefit from infrastructure built in our rights-of-way; and building a modernized energy backbone that will sustain Silicon Valley's leadership in innovation for decades to come.”
The expanded transmission capacity will help the City accommodate emerging sectors, including advanced manufacturing, artificial intelligence, and large-scale data centers, depending on significant and dependable power resources. The investments will attract new businesses, create jobs, and reinforce the region's long-term economic competitiveness.
Additionally, the new transmission infrastructure supports San Jose's climate commitments by enabling a transition to clean, electrified systems. Greater transmission capacity will allow renewable energy to move across the grid and facilitate the electrification of buildings, transportation, and industrial operations.