Pacific Gas & Electric announced plans on Tuesday to sell a minority stake in its power-generation business, part of its strategy to reduce electricity rates, continue wildfire prevention and further develop clean energy.
The exclusive deal with the global investment firm KKR is part of PG&E’s plan to transfer its nonnuclear power generation to a newly formed subsidiary, Pacific Generation. The proposals for the subsidiary and the KKR stake require approval by the California Public Utilities Commission and the Federal Energy Regulatory Commission.
“As we continue to build our systems, we must accelerate the infrastructure investments that will enable us to provide our customers with safe, sustainable, reliable and affordable energy,” Carolyn Burke, executive vice president and chief financial officer at PG&E, said in a statement.
KKR operates a global infrastructure business that manages $59 billion in assets, with expertise in the utility and renewable energy industry. PG&E said in a statement that the investment firm’s access to capital gave it the ability to take a long-term approach in its strategies.
PG&E had been reshaping its operations and image since a series of wildfires led the utility — the largest in California — to seek bankruptcy protection in 2019 after amassing tens of billions of dollars in liability. PG&E has been investing in wildfire prevention as well as clean energy technologies like utility-scale batteries, work that has contributed to higher customer rates.
The proposed deal is expected to reduce customer rates by more than $100 million over the next 20 years, assuming Pacific Generation has a higher credit rating and lower cost of debt than PG&E, the utility said. It said the potential investment would also enhance PG&E’s credit profile, which would benefit customers.
Raj Agrawal, a partner and global head of infrastructure at KKR, said in a statement: “With our longstanding roots in California, deep commitment to sustainable investing and decarbonization, and long-term view on asset management, we feel we are well placed to support Pacific Generation in this new chapter. Should this transaction move forward, we feel confident we can deliver benefits for these facilities, the employees that operate them and the people of California.”
