(Bloomberg) -- The Biden administration is offering PG&E Corp. a loan of up to $15 billion for a portfolio of projects that includes upgraded hydropower generation, battery storage and transmission lines.
The conditional commitment from the Energy Department will help California’s largest utility meet forecasted increases in power demand, ensure electric reliability and cut consumers electricity bills, the agency said. The financing, the largest deal yet through the department’s Loan Programs Office, is still subject to additional requirements before being finalized and could be halted by the incoming Trump administration if not closed before the presidential inauguration on Jan. 20.
PG&E plans to use the financing for several infrastructure projects that will allow the utility to meet its net-zero emissions goals while aiming to keep up with demand growth, the company said. Potential projects include capacity increases to its network of hydroelectric dams, new batteries coupled with transmission upgrades and tapping into “virtual power plants,” networks of batteries and energy management systems that can help meet local demand needs.
“This loan is going to reduce greenhouse gases. This loan is going to increase the useful life of energy infrastructure in California,” said Chris Creed, chief investment officer of the Energy department’s Loan Programs Office, in an interview. “This is going to replace needed pieces of equipment, and all the while, do so while saving rate payers money.”
The financing comes as PG&E is under pressure to reduce its electricity rates, which have jumped more than 50% in the past three years, according to California’s public advocates office. The utility has been forced to spend billions of dollars to reduce wildfire risk after its equipment sparked the deadly 2018 Camp Fire, which destroyed the town of Paradise and drove the company into bankruptcy.
PG&E told investors in November that it plans $63 billion in capital spending through 2028 for work including wildfire risk reduction and grid upgrades for increased electricity demand from electric vehicles, appliances and new data centers. The loan will save PG&E customers close to $1 billion over the life of the financing, the utility said.
“We see this as a win for our customers and we think this is a great opportunity to lower rates through this financing,” PG&E Treasurer Mari Becker said in an interview.
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