Bridging Investment, Bill Growth
Patti Poppe is CEO of PG&E Corporation.
I’m thrilled to contribute to this special issue on energy affordability, a topic I believe will help define the future of our industry. At PG&E, affordability is not just a priority — it’s at the heart of our stand to ensure that clean, resilient energy is accessible to all.
We’re proud of the progress we’ve already made. Our energy portfolio is one of the nation’s cleanest, and we’ve significantly cut our customers’ exposure to wildfire risk. But growing energy demand and extreme weather conditions mean we have more work to do, and we need to do it at the lowest possible cost for customers.
How can we do it? Through our Simple, Affordable Model. This model captures our plan to annually grow capital investment for customers by nine to ten percent while limiting customer bill growth to two to four percent.
Bridging that gap between investment growth and bill growth will rely on three keys: Operating and maintenance savings; Beneficial electric load growth to meet new demand; and Efficient financing of our operations. Let’s look more closely at each part of the model.
Working More Efficiently to Create Savings
Serving new demand and building a more resilient grid will require capital investments of about sixty-three-billion dollars through 2028. While these investments will benefit our customers in the long term, we’re working hard to minimize the impact on customer bills in the near term by lowering our own costs of doing business.
Our plan calls for operating and maintenance cost savings of at least two percent annually. Our track record shows we can do it. In 2024, we saved customers an estimated seven- hundred-fifty-million dollars through new technologies, improved processes, and renegotiated contracts — all without compromising safety.
Additionally, we plan to return more than five-hundred-million dollars to electric customers for programs on which we spent less than our regulator approved. We also collaborated with customer advocates on an alternative to commercial insurance that is saving customers up to 1.8-billion dollars over four years.
Growing Electric Load
On top of operational savings, we expect load growth to provide additional rate base to help fund electric system investments. Demand for electricity is surging for the first time in decades.
PG&E added fourteen thousand new customers to the grid in 2024 — a modern company record. As California continues to add data centers and electric vehicle charging stations, our fixed operations and maintenance costs can be spread across more customers.
In other words, continued load growth means a lower price per kilowatt-hour for all. In fact, we see an opportunity for load growth of two to four percent a year through 2040 — which would amount to double the amount of load compared to 2023. Beyond data centers and electric vehicle charging, we see new demand from building electrification to meet California’s decarbonization goals.
Load growth also opens opportunities to use our grid more efficiently. Our grid is designed to handle those rare peak periods when demand spikes. But during times of average demand, only forty-five percent of our grid’s capacity is in use. We’re focused on optimizing the grid so we can deliver more power to our customers while keeping costs in check.
One big key to this optimization: Electric vehicles! We see a future where we send signals to customers to charge at off-peak times when power supply is plentiful and draw from electric vehicles as battery storage during peak times.
Investing For Our Customers’ Benefit at a Lower Cost
Finally, we’re layering these efforts onto new savings from lower borrowing costs. For example, we closed a fifteen-billion-dollar loan guarantee through the U.S. Department of Energy’s Loan Programs Office.
The loan guarantee would provide lower-cost financing for projects to: Enhance California’s grid; Help ensure reliability; and Support development of distributed energy resources including battery storage and electric vehicles.
Partially funding these projects with lower-cost financing could save customers up to one-billion dollars over the life of the financing.
That’s not all: In August 2024, the Department of Energy awarded a six hundred-million-dollar grant to a consortium to bring more clean energy online while lowering customer costs. We’re excited to partner in that consortium with Southern California Edison, the California Public Utilities Commission, the California Energy Commission, the California Independent System Operator, and the University of California, Berkeley.
Our operational improvements and financial stability have also resulted in improved credit ratings. The world’s largest credit rating agencies — Moody’s, S&P, and Fitch — have upgraded PG&E’s credit rating in the last five years, with all three now rating PG&E’s credit outlook as positive.
We believe we are on a path to improve even more as we continue to reduce risk, improve reliability and add load. With higher credit ratings, lower financing costs will follow — leading to savings we can pass on to customers.
The Result for Customers
So, how does all this affect energy affordability for customers? By combining lower operating and financing costs with a growing customer base to help share those costs, we can reduce upward pressure on rates over time. This is how we plan to increase customer capital investment by nine to ten percent while limiting customer bill growth to just two to four percent.
We’re excited to see how our Simple, Affordable Model will help our customers. Our goal is to show that the transition to a clean, resilient energy system can be affordable for all.
