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The Biden administration announced Tuesday its conditional approval of a loan guarantee for Pacific Gas & Electric Co. (PG&E) of up to $15 billion, which would serve to decarbonize the large company’s operations and increase its reliability.
The funds, which would come from the Department of EnergyOffice of loan programswould serve PG&E’s Project Polaris: a portfolio of initiatives to expand hydroelectric power generation and battery storage, improve grid transmission capacity and enable the establishment of virtual power plants.
These investments, according to the Department of Energy, would help the company meet its load growth forecast, ensure reliable and affordable electricity and lower costs for California consumers.
The offering was made through the Lending Office’s Energy Infrastructure Reinvestment Project, which uses a flexible loan facility and disbursement approach for regulated investment-grade services.
To get approved, borrowers must demonstrate that the financial benefits earned from a loan guarantee will be transferred to the communities served by the company, according to the Department of Energy.
As for PG&E, the agency determined that project financing within the loan would have a lower interest rate than traditional capital market financing, meaning the money would reduce upward pressure on electricity costs for 16 million customers.
The Wall Street Journal reported the Department of Energy’s loan office had planned to offer PG&E a $30 billion loan, but eventually cut that amount in half.
In response to Tuesday’s conditional commitment, PG&E noted in a news release that its customers could save up to $1 billion by receiving this federal loan.
“Investments in a clean and resilient grid for Northern and Central California will have significant returns for our customers in safety, reliability and economic growth,” Patti Poppe, CEO of PG&E Corp. he said in a statement.
“The DOE (Department of Energy) loan program can help us accelerate the pace and impact of this work, which supports thousands of living wage jobs, at a lower cost to our customers,” Poppe added.
PG&E underwent a massive reorganization afterwarddeclaration of bankruptcyin January 2019, exiting that state in July 2020. The filing came after the 2018 Camp Fire, a deadly blaze that devastated the community of Paradise and was sparked by utility power lines.
Since then, and as part of an agreement made with the state of California, the company committed to a long list of expensive revisions and security updates.
Bob Dean, the business manager of IBEW 1245, a Central California branch of a global utility workers union, said in a statement that the group was “encouraged by PG&E’s commitment to rebuild, retrofit and reinvest in infrastructure energy”.
That infrastructure, he added, is vital to achieving California’s “electric reliability and climate resiliency goals, and delivering those benefits to PG&E customers at a lower cost.”
