PG&E Secures $15 Billion Federal Loan for Upgrading Power Grid
Some advocates for consumers are raising concerns that rates may rise as a means of repaying the infrastructure loan.
Pacific Gas and Electric (PG&E) plans to utilize these funds to enhance grid technologies and boost battery storage capacity and hydroelectric power generation, among other initiatives designed to meet demand, enhance reliability, and reduce rates, according to the Energy Department.
The utility’s chief executive indicated that this funding will empower them to enhance operations and provide advantages to Californians.
Certain communities will gain from the construction and job opportunities generated by prioritized projects such as increasing transmission capacity and preparing to integrate more “clean energy generation” sites.
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The agreement establishes a collaboration between the utility and the International Brotherhood of Electrical Workers Local 1245 to offer opportunities to disadvantaged communities.
The loan will also be allocated for retooling and updating the utility’s hydroelectric equipment, as specified in the agreement.
Currently, flowing water generates energy through 61 powerhouses throughout PG&E’s extensive distribution network, providing enough electricity to power roughly 4 million homes for an entire year.
Projects will also increase battery storage from the current supply of 4.2 gigawatts, sufficient to power nearly 4 million homes yearly, as stated.
PG&E possesses one of the world’s largest battery storage facilities located in Monterey County.
Additionally, the funds are intended to enhance transmission systems by facilitating virtual power plants—where networks consolidate small energy producers, such as rooftop solar installations or wind, along with storers like batteries and electric vehicles.
Presently, PG&E operates about 400 megawatts of virtual power plants—enough to service up to 400,000 homes.
The conditional loan is still under final evaluation, with PG&E needing to comply with specific legal and financial criteria set forth by the Energy Department’s Loan Programs Office before finalization.
President Joe Biden boosted loan program funding through allocations in the Inflation Reduction Act aimed at advancing clean energy efforts, focusing on enhancing reliability and climate resilience via the Energy Infrastructure Reinvestment Program.
Regulators examine the anchor projects of applicants to establish eligibility, requiring community benefit plans.
To be accepted, applicants must demonstrate that financial benefits from the loan will favor those served rather than shareholders.
The utility company, serving approximately 16 million customers statewide with natural gas and electricity, stressed that these funds will assist in meeting state and federal objectives.
“PG&E sought the loan guarantee to access this unique funding source to help reduce costs for customers, aligning with California’s policy goals regarding lowering electricity expenses,” the company indicated in a statement.
Securing a federal loan with reduced financing costs could potentially save customers up to $1 billion, the utility asserted.
Calculated savings based on respective interest rates for 30-year loan terms could reach as high as $17 billion.
Mark Toney, executive director of The Utility Reform Network—a consumer advocacy group based in Oakland, California—stated that this agreement might be advantageous for utility customers.
“This is beneficial for ratepayers since PG&E has secured a loan at a more favorable interest rate,” he conveyed to The Epoch Times. “Ratepayers benefit from the fact that shareholders will not earn profits from this.”
He mentioned that his organization is evaluating the financial figures and will continue to oversee the utility provider’s financial accountability.
“There will be accountability for every dollar spent,” Toney stated. “We must ensure that every dollar saved … is transferred to ratepayers.”
Californians already incur nearly double the national average for electricity, and with additional rate increases approved on December 19, he expressed worries that even more rate increase requests may be forthcoming.
“I assure you, it’s not the shareholders who will be repaying this loan—it’s the ratepayers,” Toney warned. “Unless there are changes, ratepayers can expect to pay more, not less.”