Pacific Gas & Electric Co. (PG&E) is set to receive up to $15 billion in federal loans aimed at modernizing its power grid and expanding clean energy infrastructure across central and northern California.

These loans will be disbursed in installments over several years, funding projects that include enhancing hydropower generation, improving battery storage, and upgrading transmission capacity.

Issued through the Energy Department's Loan Programs Office, the funding is intended to help PG&E achieve net-zero emissions while managing the increasing demand for electricity.

Despite reporting $2.2 billion in profits in 2023, a nearly 25% increase from the previous year, PG&E faces pressure to reduce electricity rates, which have surged over 50% in the last three years.

Mark Toney, executive director of The Utility Reform Network, emphasized that for rates to decrease, PG&E must change its practices, especially after four rate hikes in 2024 that added an average of $60 to monthly bills.

Environmental advocates have criticized the loan, arguing it acts more as a bailout for PG&E, which emerged from bankruptcy in 2020, rather than a sustainable solution for California's energy future.

With energy demand in California projected to rise by up to 76% by 2045 due to the electrification of transportation and buildings, the need for infrastructure improvements is becoming increasingly urgent.

PG&E, the largest electric utility in California serving about 16 million people, aims to enhance safety, reliability, and economic growth through these investments, according to CEO Patti Poppe.

By leveraging these low-cost federal loans, PG&E anticipates potential savings of up to $1 billion for its customers over the financing's lifetime.

The U.S. Department of Energy's commitment for this loan represents one of the largest loan guarantees under its Energy Infrastructure Reinvestment program, with funds to be distributed based on PG&E's compliance with specific requirements.

In addition to the federal loans, PG&E is also seeking another rate hike from the California Public Utilities Commission, which, if approved, would take effect in 2026.

The loan aims to improve PG&E's transmission lines, which have been implicated in causing wildfires, thereby addressing both grid stability and increasing energy demands.