OAKLAND — PG&E has landed a record-setting $15 billion federal loan guarantee in one of the final acts of Joe Biden’s presidency, an approval that could help the utility and its customers save money.
The loan guarantee enables PG&E and its ratepayers to save money on an array of vital projects, including upgrades to power lines and hydroelectric systems.
“Savings from the lower-cost financing would be used to lower customer bills,” PG&E stated in a post on its website.
Oakland-based PG&E said customers could save up to $1 billion.
Any savings would be a welcome respite from the brutal increases in PG&E electricity and gas costs that have risen far faster than the overall inflation rate in the Bay Area.
Recent reports released by the U.S. Bureau of Labor Statistics regarding consumer prices in the Bay Area and nationwide sketched out dramatic differences between the region’s inflation rate and utility costs for services such as those offered by PG&E.
In December, electricity utility services such as those provided by PG&E jumped by an annual pace of 11.2%. Gas utility services akin to those supplied by PG&E rose 6.3%, the federal labor agency reported.
In contrast, the Bay Area inflation rate rose at a yearly pace of just 2.4% in December.
Lately, though, some hopeful signs have emerged for PG&E customers.
Starting with this month’s bill cycles, a typical PG&E residential customer who receives both electricity and natural gas services from the investor-owned utility began paying an average of $295 a month.
This is $1 higher than the $294 a month that typical PG&E residential customers were paying for combined electricity and gas services in January 2024. It’s also a dramatic turnaround from the increases ratepayers had experienced in recent years.
The average that customers paid in January 2024 for combined services was 22% higher than the $241 that customers were paying in January 2023.
The loan guarantee from a U.S. Energy Department program could enable PG&E to tap unique sources of funding that would provide PG&E with lower payment costs than would otherwise be the case through commercial finance markets.
PG&E said the loan will be used to help bankroll work that is already approved and would have to be conducted anyway, regardless of the loan guarantee.
The federal financing would pay for planned projects that are intended to enhance California’s energy infrastructure such as hydroelectric facilities, help ensure reliability, and support distributed energy resources including battery storage and electric vehicles, while lowering costs for customers, the utility stated.
“The loan guarantee is designed to align with state policy goals on lowering electricity costs for customers,” PG&E stated in a post on its website. “Savings from the lower-cost financing would be used to lower customer bills.”
The energy loan guarantee program is one of the provisions of the 2022 Inflation Reduction Act that Joe Biden signed into law.
President Donald Trump’s flurry of executive orders included a directive that federal agencies pause the distribution of funds — including the federal loan guarantee — that were enabled through two Biden-approved laws, the Inflation Reduction Act and the Bipartisan Infrastructure Law.
On Jan. 17, PG&E filed a regulatory document with the Securities and Exchange Commission that indicated the company had yet to actually receive any funds through the program, but had only received the approval of the federal Energy Department.
In mid-December, PG&E made it clear that the funding woiuld be used to help bankroll work that is already approved.
“These projects are not new work,” Lynsey Paulo, a PG&E spokesperson, said. “Partially funding these projects with the lower-cost financing from the DOE Loan Program Office would allow us to do already-approved grid work at a lower cost to our customers than conventional borrowing.”