PG&E Recovery Funding, LLC, a subsidiary of Pacific Gas and Electric Co., recently finalized an US$860 million green bond issuance to finance electric work that will have significant environmental benefits, while also keeping customers and hometowns safe.
PG&E Recovery Funding issued the bonds to finance a variety of investments that the utility has made in its power system and were recently designated as green bonds following an analysis by S&P Global Ratings. Green bonds are a designation for capital project financings with environmental benefits.
“These first green bonds are another way we are working to deliver on the triple bottom line of serving people, the planet and California’s prosperity,” said Chris Foster, PG&E Corp.’s executive vice-president and chief financial officer. “These bonds will reduce costs for our customers while financing projects that will help protect California’s forests against the impacts of extreme weather and our changing climate, facilitate the distribution of clean energy, and protect our customers and planet from future climate-driven risks.”
In addition to the environmental benefits, financing critical wildfire safety work through these recovery bonds authorized by Assembly Bill 1054 will result in significant customer savings due to the lower cost of securitization when compared to traditional utility financing. The transaction is expected to result in US$450 million of customer savings on a net present value basis relative to traditional rate base financings.
The investments financed by these green bonds include electric system improvements and hardening efforts found within Pacific Gas and Electric Company’s Community Wildfire Safety Program. These investments have been authorized by the California Public Utilities Commission through the utility’s 2020 General Rate Case, as well as its Wildfire Mitigation Plans.
In conducting its analysis of the bond issuance, S&P Global Ratings noted that the utility’s work would have environmental benefits by hardening the electric system and preventing the ignition and spread of wildfires, therefore preserving the health of California’s forests, and maintaining the existing state of natural ecosystems.