PG&E Stock Rises on Department Of Energy’s Record $15B Loan Commitment, But Fails to Inspire Retail Sentiment
The loan is the biggest commitment from the U.S. Department of Energy’s Loan Programs Office to date.
FollowShares of Pacific Gas & Electric Corp. (PG&E) ticked nearly 1% higher in midday trading Tuesday following the U.S. Department of Energy’s (DOE) announcement of a conditional $15 billion loan guarantee to the utility giant.
The funding, the largest single commitment from the DOE’s Loan Programs Office (LPO), aims to bolster California’s electrical grid and finance climate resilience projects.
The loan will support PG&E’s efforts to expand hydroelectric power generation, battery storage and upgrade its power lines.
This aligns with the utility's push to meet rising energy demands driven by California's electrification goals, including the widespread adoption of electric vehicles, the proliferation of data centers, and the state’s commitment to phasing out fossil fuels.
The provisional loan comes as PG&E faces mounting challenges, including its responsibility to prevent equipment-induced wildfires and the need to upgrade infrastructure to support grid reliability.
“These investments will address forecasted load growth, enhance electric reliability, and reduce costs for consumers across California,” the Department of Energy stated.
PG&E, which emerged from bankruptcy protection in 2020 after shouldering billions in wildfire liabilities, continues to grapple with its legacy issues.
The Wall Street Journal, citing sources, reported that the initial loan commitment was reduced from $30 billion to $15 billion, partly due to PG&E’s concern over the financial strain of significant upfront payments.
PG&E Sentiment and Message Volume on Dec 17 as of 12:34 p.m. ET | Source: Stocktwits
However, the news failed to lift retail sentiment, which continued to dip lower in the ‘bearish’ zone even as chatter increased to ‘high’ from ‘normal’ levels.
The development comes after Barclays recently trimmed its price target for PG&E to $24 from $25, maintaining an ‘Overweight’ rating.
The current average price target is $23.61, with 13 out of 19 analysts assigning the stock a Buy-equivalent rating, according to Koyfin data.
PG&E shares have gained 9.72% year-to-date but remain sensitive to regulatory challenges and macroeconomic pressures.
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