May 9 (Reuters) - The California utilities regulator on

Thursday rejected PG&E's ( PCG ) move to transfer its

non-nuclear generation assets to Pacific Generation amid talks

with private equity firm KKR & Co ( KKR ) to sell a minority

interest in the unit.

The Oakland, California-based company had moved to separate

its non-nuclear generation assets in 2022 into Pacific

Generation, estimated to be worth $3.5 billion, and had been

seeking regulatory approval to sell a stake of up to 49.9% in

the unit.

PG&E ( PCG ) had entered into exclusive talks to sell the minority

interest in Pacific Generation to KKR & Co's ( KKR ) unit last month, as

the utility firm seeks funding to improve its energy grid.

The California Public Utilities Commission said "PG&E ( PCG ) has

done no substantive analysis to support the claim that the

proposed transaction will be a superior alternative" and added

that it has not attempted to quantify or analyze the costs and

benefits of the deal, compared to others alternatives.

PG&E ( PCG ) has been blamed for sparking numerous wildfires,

including some of California's most deadly, and has been making

investments to improve the reliability of its power grid.