The Biden administration said Tuesday it was offering Pacific Gas & Electric a record $15-billion loan guarantee to help the utility upgrade its transmission lines, which have been blamed in causing wildfires, and make other improvements to meet fast-rising energy use.
The commitment, which still must be finalized, would help PG&E expand hydropower generation and battery storage, the utility said in a release. The money would also help PG&E extend its transmission system to connect with new clean energy facilities.
“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,” said Patti Poppe, the company’s chief executive.
The company said the loan would come with a lower interest rate than what it could otherwise obtain and save customers as much as $1 billion over the years.
“We would pass along savings from our lower cost of debt to our customers as we work to modernize the grid and stabilize customer bills,” said Lynsey Paulo, a PG&E spokesperson.
Electric rates at the utility have soared by 56% over the last three years, according to a new report by the Public Advocate’s Office at the state Public Utilities Commission, more than either Southern California Edison or San Diego Gas & Electric.
This year, PG&E hiked rates four times. The company’s rate requests must be approved by the utilities commission, whose members are appointed by Gov. Gavin Newsom and confirmed by the state Senate, which is controlled by a supermajority of Democrats.
Last year, the company recorded $2.2 billion in profits — an increase of almost 25% over the year before.
Paulo said the company was now trying to keep average annual residential gas and electric bill increases within 2% to 4% through 2026.
The announcement of the federal loan drew skeptics on Tuesday.
“This loan is less a solution for California’s energy future and more a bailout for PG&E,” said Ken Cook, president of the Environmental Working Group, a nonprofit advocacy group. “Somebody must repay it, and it certainly won’t be the company’s shareholders or executives.”
The Biden administration has been hurrying to release more money from the 2022 Inflation Reduction Act before President-elect Donald Trump takes office in January.
The loan guarantee is the biggest commitment to date from the Department of Energy’s Loan Programs Office. The money would be provided to PG&E in installments over several years. Loan office officials must approve the projects it pays for.
Federal officials said the company must still satisfy certain technical, legal, environmental and financial conditions before the loan is funded.
In 2019, Pacific Gas & Electric announced a $13.5-billion settlement for several Northern California wildfires sparked by its equipment that killed dozens of people and destroyed thousands of homes and businesses. Those fires included one that nearly destroyed the town of Paradise in 2018, the deadliest in state history.
The company had filed for bankruptcy earlier that year. It reorganized and emerged from bankruptcy in July 2020.