LPO announces conditional commitment to Pacific Gas & Electric Company to expand hydroelectric generation, battery energy storage and transmission

As part of the Biden-Harris Administration’s Investing in America Agenda, the U.S. Department of Energy’s Loan Programs Office (LPO) announced a conditional commitment for a loan guarantee of up to $15 billion to Pacific Gas & Electric Company (PG&E) , a combined natural conglomerate, to gas and electric utilities for Northern and Central California. PG&E submitted its loan application to LPO in June 2023. Upon completion, the loan guarantee for PG&E’s Polaris Project will support a portfolio of projects to expand hydroelectric generation and battery storage, improve transmission capacity through diversion and grid improvement technologies, and enable virtual power plants throughout PG&E’s service territory. These infrastructure investments will help PG&E manage projected load growth, increase power reliability and reduce costs for its consumers across California.

Today’s announcement marks the second Energy Infrastructure Reinvestment (EIR) project under LPO’s flexible credit facility and payout approach tailored to investment-grade regulated utilities. Electric utility borrowers for EIR projects must demonstrate that the financial benefits of the DOE loan guarantee will be passed on to the customers or communities served by that utility. LPO financing of each project under the credit facility will be provided at a lower interest rate than traditional capital markets financing and will help reduce upward pressure on electricity costs for PG&E’s 16 million customers.

PG&E will partner with the International Brotherhood of Electrical Workers (IBEW) Local 1245 to train and employ members of underserved groups interested in operational roles through its existing PowerPathway program. Currently, about two-thirds of PG&E employees are covered by collective bargaining agreements with unions. When fully deployed, PG&E’s investments are expected to support thousands of ongoing construction and operations contracts.

Through its due diligence approach to regulated utility loans, LPO confirms that one or more anchor projects meet the program eligibility and environmental review requirements for inclusion in the guaranteed credit facility, thereby verifying PG&E’s ability to identify and execute eligible projects.

LPO borrowers must develop and implement a comprehensive Community Benefits Plan (CBP) that ensures that borrowers engage meaningfully with community and workforce stakeholders to create well-paying, quality jobs and improve the well-being of the local community and workforce . In its CBP, PG&E plans to expand its outreach programs to increase engagement and create community benefits in collaboration with key stakeholders, including local governments, Indian tribes, community-based organizations, and low- and moderate-income customers. PG&E is committed to locating many projects in disadvantaged communities identified through the Climate and Economic Justice Screening Tool.

President Biden’s Inflation Reduction Act created the EIR category under the Title 17 Clean Energy Financing Program. Also known as the Title 17 Clean Energy Financing Program (Section 1706), EIR supports projects that retrofit, retrofit, repurpose, or replace energy infrastructure that has ceased operations or that enable the operation of energy infrastructure to prevent, reduce air pollutants , to use or bind or greenhouse gas emissions.

While this conditional commitment indicates DOE’s intent to provide a loan guarantee to finance the project, DOE and the Company must meet certain technical, legal, environmental and financial conditions before the Department will prepare final financing documents and fund the loan.