PG&E Enters Into Significant Loan Guarantee Agreement with the U.S. Department of Energy

On January 17, 2025, Pacific Gas and Electric Company (PG&E) made a notable move by entering into a loan guarantee agreement with the U.S. Department of Energy (DOE). According to a recent 8-K filing with the U.S. Securities and Exchange Commission, PG&E, commonly known as the Utility, inked this pivotal agreement alongside two other key documents, namely a Note Purchase Agreement and a Future Advance Promissory Note.

The loan agreement outlines a multi-advance term loan facility known as the Facility, enabling PG&E to secure quarterly term loan borrowings through the Federal Financing Bank (FFB). This Facility comes with a cap of $15 billion, with proceeds to be allocated towards reimbursing ‘Eligible Project Costs’ previously incurred in association with specific projects deemed ‘Eligible Projects’ by the DOE.

Under this agreement, the DOE will guarantee PG&E’s obligations with the FFB Note Documents through the Guaranteed Loan, which is part of the loan guarantee program established under Title XVII of the Energy Policy Act of 2005. PG&E will have access to borrowings during an ‘Availability Period,’ which expires when certain conditions are met, including reaching the $15 billion loan cap, or by specific dates outlined in the agreement.

Advances under this Facility can be requested by PG&E on a quarterly basis. They are subject to various conditions including DOE’s approval, compliance with regulatory requirements, and maintaining certain credit ratings. Interest rates for borrowings will be calculated based on the applicable Treasury rate plus a spread, with provisions for rate adjustments under specific circumstances.

To secure this agreement, PG&E undertakes various covenants, both affirmative and negative, with a focus on completing Eligible Projects and ensuring compliance with laws and regulations. Additionally, provisions for events of default and prepayment scenarios have been detailed, offering clarity on outcomes in case of default instances or prepayment choices.

The loan agreement offers details on security measures, maturity dates, interest rates, and eventual payback terms. PG&E commits to meeting its obligations under the Facility, outlining mandatory and optional prepayment events and associated conditions. These terms are in line with the intent to ensure financial stability and the successful execution of Eligible Projects.

This significant move by PG&E signals a strategic step towards securing funding and ensuring project completion while upholding regulatory and financial standards. The agreement sets a clear path for PG&E to access vital financial resources and execute projects in alignment with DOE approved initiatives, ultimately shaping the company’s future endeavors.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read PG&E’s 8K filing here.

PG&E Company Profile

PG&E Corp. operates as a holding company, which engages in generation, transmission, and distribution of electricity and natural gas to customers. It specializes in energy, utility, power, gas, electricity, solar and sustainability. The company was founded in 1995 and is headquartered in Oakland, CA.