A growing chorus of consumer advocates and environmentalists are urging the Department of Energy to lock in billions of dollars in loan guarantees for utilities, arguing that the loans will help cut utility bills for everyday Americans as prices spike nationwide.
The $23 billion in loans rolled out in the waning days of the Biden administration — much of which would go to Midwest states that voted for Trump in November — could trigger big investments in new transmission lines, batteries, renewable energy and natural gas infrastructure.
But to move ahead, the loans need approval from the Trump team.
If the DOE elects to close the loans, advocates argue the financing will help boost electric reliability and control the high costs of upgrading and expanding infrastructure. And all of that is needed as artificial intelligence projects and broad electrification of the economy drive a surge in U.S. electricity demand.
“These loans are critically important at a time of growing load, especially for affordability,” said Christian Fong, senior associate in RMI’s carbon-free electricity program.
A recent report from the consultancy ICF International says U.S. electricity demand is likely to grow a whopping 25 percent between 2023 and 2030, and an even more staggering 78 percent by 2050. Citing demand growth and risks of disruption, Energy Secretary Chris Wright issued directives in recent weeks to force utilities to keep fossil fuel plants running.
While the precise terms of the DOE loans are kept confidential, the guarantees generally mean lower interest rates than typically offered by banks. That’s especially important as interest rates keep the cost of private capital relatively high. The Federal Reserve is expected to keep interest rates at current levels after a meeting later this month despite pressure from President Donald Trump and some industries to cut rates to free up more money for investment.
Meanwhile, the Biden administration singled out “investment-grade utilities” as lower risk than other borrowers.
“Of course, one of the benefits of a loan guarantee is that you can access that capital for much cheaper since the federal government is guaranteeing the loan,” said Tyson Slocum, the director of Public Citizen’s energy program.
But the fight for the loans comes at a sensitive time for the DOE’s Loan Programs Office. Republicans and the Trump administration, including Wright, routinely blast the previous administration for pushing through eleventh-hour grants and loans, including the conditional commitments made in January for loan guarantees to DTE, Consumers Energy, Alliant Energy, PacifiCorp and other utilities.
The Senate is also now taking up the “big, beautiful bill” reconciliation legislation, which House members used to claw back some LPO funding.
‘A key tool’
In testimony at the Senate Appropriations Committee in May, Wright said the Biden administration “lent or committed $93 billion” between Election Day in November and the inauguration of Trump, adding that he’s “moving slow” in evaluating the loans to ensure they fit with the Trump administration agenda.
In total, the Biden team closed $61 billion in loans and left $47 billion in conditional commitments, much of which, including the utility loan guarantees, could be closed under Trump.
Despite the headwinds for the loan office, Wright called it “a key tool.”
“We do need to make sure we have funding available in the Loan Programs Office because, used judiciously, it’s a way to leverage private capital to make things happen fast,” he told Senate appropriators.
The Department of Energy budget proposal for fiscal 2026 urges $750 million in new credit subsidies to help finance the Loan Programs Office Title 17 program, which deals with nonvehicle projects and was used to strike the tentative utility loans. The DOE’s fiscal 26 budget lays out the administration’s priorities to Congress as it begins to craft annual appropriations legislation, a separate process from the budget reconciliation debate.
Some of the Trump administration’s free-market allies, however, are calling on DOE to nix loans altogether. Tom Pyle, president of the American Energy Alliance, said Republicans should “terminate” the office.
“Ideally, all of the loans issued after the election and before President Trump assumed office should be halted,” Pyle said. “The federal government isn’t a bank. There is no reason they should be issuing loans to companies in the first place.”
A month before the tentative utility loan guarantees were announced in January, the DOE’s inspector general called on the loan office to suspend financing, arguing that DOE was not properly safeguarding against conflicts of interest. Trump later fired the inspector general, along with others at different departments and agencies.
Other conservatives, like Michael Chamberlain, a Trump first-term veteran who now leads the conservative watchdog Protect the Public’s Trust, urged DOE officials to judge the loans based on how closely they align with the president’s agenda.
“They need to evaluate if these loans and the projects that they’re funding are consistent with the things they want to do,” Chamberlain said.
In a statement to POLITICO’s E&E News, a spokesperson for DOE said it’s “conducting a department-wide review to ensure all activities follow the law, comply with applicable court orders and align with the Trump administration’s priorities.”
Upgrading infrastructure
The loans would deliver money to a sprawling list of grid projects.
The loan to the Michigan utility DTE includes $1.6 billion to upgrade gas distribution lines and metering and another $7-billion-plus toward renewable generation and storage.
Another $5.2 billion would go to Michigan utility Consumers Energy for solar and wind generation, bringing the total state’s share of the loan packages to roughly $14 billion.
American Electric Power would get $1.6 billion for transmission projects across multiple states, while the PacifiCorp loan would put $3.5 billion toward transmission lines meant to boost overall capacity and reduce curtailment of wind power. Jersey Central Power & Light Co. would also get more than $700 million for transmission.
For now, the utilities are still working to secure the loans.
“The conditional commitment from the Department of Energy, if completed, could help lower costs for the customers we serve through lower-interest federal loans,” Brian Wheeler, a spokesperson for Consumers Energy in Michigan, said in an email. “Consumers Energy is continuing to work with the administration to achieve the shared goal of doing what’s best for the Michigan customers we serve.”
David Eskelsen, a spokesperson for PacifiCorp, which serves Utah, Idaho, Oregon and other states, said the company “continues to work with the U.S. Department of Energy on the loan guarantee terms and anticipates that the review and negotiation process will take several weeks to several months to complete.”
Days before the inauguration, the Biden loan team closed a $15 billion loan guarantee to Pacific Gas & Electric Co., the LPO’s largest loan ever. PG&E spokesperson Jennifer Robison said in an email that “drawing down that lower-cost loan” could save the company’s roughly 16 million customers over $1 billion in interest costs over the life of the loan.
“PG&E has met several times with the DOE to talk about the infrastructure investments we are making in California, which support the administration’s goals to power the technology industry and secure our country’s energy independence,” Robison said.
But in a recent filing with state regulators, PG&E said that “uncertainty” around the loan was one reason that it was requesting a slight bump in customer bills in 2026, along with tariffs and wildfire costs.
Utilities are required by law to pass their savings from DOE loans onto customers. The Inflation Reduction Act, which Democrats passed alone in 2022 and heralded as the biggest climate legislation in U.S. history, says utilities have to provide “an assurance” to deliver “financial benefit” to customers.
Rising costs
On the campaign trail last year, Trump pledged to slash energy bills in half. But federal data shows that electricity prices are poised to rise faster than inflation at least through next year. A recent report from the nonprofit PowerLines shows residential electricity costs have gone up nearly 30 percent since 2021, while natural gas costs have increased nearly 40 percent since 2019.
High interest rates are not the only headwind facing utilities and the energy sector. Energy experts say Trump’s trade wars, triggered by the most aggressive tariffs by an American president in a century, threaten to spike the costs of building new energy infrastructure. On Tuesday, Trump doubled steel and aluminum tariffs to 50 percent.
Recent polling from PowerLines, conducted by Ipsos, finds that nearlythree-quarters of Americans are concerned that utility bills will rise over the coming year.
“We are seeing an unprecedented affordability crisis across the U.S. when it comes to rising utility bills and rising electricity prices, and that’s something that’s afflicting, not just one or two regions here and there, but frankly the whole country,” said Charles Hua, executive director of PowerLines.
Hua said the DOE loan guarantees could pare down costs.
“Utilities are looking at DOE loan financing as an opportunity to put some downward pressure on electric prices,” Hua said. “For a lot of utilities, this is an attractive option because it means they can reduce the cost of capital for some of these projects.”
RMI’s Fong said the loans align with the Trump administration’s agenda.
“The new administration is trying to prioritize energy abundance and slashing electric rates at the same time,” Fong said. “The LPO loans and tax credits are the preeminent way to do that. I’m hopeful the administration will see how beneficial these tools are.”