US announces nearly $23 billion in loans to energy utilities across 12 states

The U.S. Energy Department's loan office on Thursday announced $22.92 billion in conditional financing for several energy utilities across a dozen states.

The financing, if finalized, will come through the energy infrastructure reinvestment program at the department's Loan Programs Office (LPO) created under President Joe Biden's signature climate legislation, the Inflation Reduction Act.

The program guarantees loans to projects that retool or replace energy infrastructure that has stopped operating or that enables reductions in emissions blamed for global warming.

WHY IT'S IMPORTANT

The LPO administers more than $385 billion in low-interest loans to companies with green energy projects such as batteries, nuclear power and advanced vehicles, and this will be among the last rounds of financing under Biden before Donald Trump takes office on Jan. 20.

Last month LPO announced a conditional loan of up to $15 billion to California-based utility PG&E.

The LPO faces an uncertain future under Trump.

BY THE NUMBERS

The recipients of the financing include two utility subsidiaries of Detroit, Michigan-based DTE Energy Company, which got as much as $8.8 billion. The money will fund pipeline replacements to reduce gas leaks as well as the installation of renewable energy.

Consumers Energy Company, a subsidiary of CMS Energy, which is also based in Michigan, got a conditional commitment of up to $5.23 billion for investments in renewable energy and the replacement of old gas pipelines.

PacificCorp, a utility serving six western states, secured a conditional commitment for up to $3.52 billion for transmission lines that will boost the system's ability to send wind power to consumers.

KEY QUOTE

"Loans to utility borrowers pose minimal risk to the taxpayer," an Energy Department official told reporters, adding that unlike the LPO's loans for individual projects, the financing to investment-grade utilities was supported by all the assets of the company. "In the unlikely event of default, LPO could recover what it is owed, up to the loan amount, beyond the sale or acquisition of assets financed through the loan."