Pacific Gas and Electric (PG&E) will use the money to upgrade grid technologies and expand battery storage capacity and hydroelectric power generation, among other things meant to help meet demand, improve reliability, and lower rates, according to the Energy Department.
The head of the utility company said the money will allow it to improve its operations and benefit Californians.
Some communities will benefit from construction and job opportunities created by the list of priorities, which includes expanding transmission capacity and preparing for interconnection with more “clean energy generation” sites.
The agreement calls for a partnership between the utility company and the International Brotherhood of Electrical Workers Local 1245 to provide opportunities for disadvantaged groups.
The loan will also fund retooling and refurbishing the utility company’s hydroelectric equipment, according to the agreement.
Flowing water currently provides energy through 61 powerhouses spread across PG&E’s vast distribution network, delivering enough electricity to power about 4 million homes for a year.
Projects will also expand battery storage from the existing 4.2 gigawatt supply that is enough to power nearly 4 million homes for a year, the statement said.
PG&E owns one of the largest battery storage sites in the world in Monterey County.
The money is also intended to improve transmission systems by enabling virtual power plants—where networks pool together small energy producers, like rooftop solar or wind, and storers like batteries and electric vehicles.
Currently, PG&E has about 400 megawatts—enough to supply up to 400,000 homes—of virtual power plants active.
The conditional loan is still undergoing final review, and PG&E is required to meet certain legal and financial conditions established by the Energy Department’s Loan Programs Office before the deal is completed.
President Joe Biden increased funding for the loan program with money in the Inflation Reduction Act meant to propel clean energy policies, with a goal of increasing reliability and climate resiliency with its Energy Infrastructure Reinvestment Program.
Regulators look at applicants’ anchor projects to determine eligibility, and community benefit plans are required.
To qualify, applicants must show that any financial gains received from the loan will benefit those served, rather than shareholders.
The utility company—which provides natural gas and electricity to about 16 million people statewide—said the funds will help achieve state and federal goals.
“PG&E applied for the loan guarantee to pursue access to this non-traditional funding source to help save customers money, which aligns with California policy goals on lowering electricity costs,” the company said in a statement.
Securing a federal loan with lower financing costs could save ratepayers up to $1 billion, the utility giant said.
Calculations based on respective interest rates for 30-year loan terms suggest interest savings could amount to as much as $17 billion.
Mark Toney, executive director of The Utility Reform Network—a consumer advocacy group based in Oakland, California—said the deal could benefit utility customers.
“This is good for ratepayers that PG&E has a loan that’s at a lower interest rate,” he told The Epoch Times. “It’s also good for ratepayers that shareholders are not getting a profit from this.”
He said his organization is analyzing the numbers and will continue to watch over the utility provider’s accounting.
“There’s going to be accountability for every dollar,” Toney said. “We want to make sure that every dollar of savings ... is passed on to ratepayers.”
Californians already pay nearly twice the national average for electricity, and with more rate increases approved Dec. 19, he expressed concern that even more rate increase requests are on the horizon.
“I guarantee you, it’s not shareholders paying this loan back, it’s ratepayers,” Toney said. “Unless something changes, ratepayers are still going to pay more, not less.”
