PG&E Corp. announced that it will defer approximately $2 billion of planned California infrastructure investment in 2027 and review how the company is organized and financed, following the Legislature’s failure to change the state’s utility wildfire-liability system.
The company now expects to invest approximately $11.4 billion in 2027, down from its previous capital plan of about $13.4 billion. The revised plan would allow PG&E to borrow approximately $2 billion less in 2027, reducing financing costs that could otherwise be recovered from customers.
PG&E said it will continue to fund critical safety programs and comply with its Wildfire Mitigation Plan, safety-certification requirements and other regulatory obligations. The reductions could delay some electrical connections for new housing and renewable-energy projects, PG&E CEO Patti Poppe said, according to Reuters.
Wildfire legislation dies without a vote
The announcement followed the collapse of SB 492, a wildfire measure negotiated by Gov. Gavin Newsom and legislative leaders during the closing days of the session.
Newsom had sought broader structural changes intended to stabilize California’s Wildfire Fund, contain electricity rates, and reduce the risk that another catastrophic fire could force an investor-owned utility into bankruptcy.
The compromise would have accelerated compensation for wildfire victims, restricted investments in insurance claims, limited executive bonuses under certain circumstances, and created a statewide wildfire strategy. It did not include the more substantial changes to utility liability that Newsom and the utilities had sought.
Assembly leaders declined to bring the measure to a vote before the session ended. Newsom responded that the proposal did not address the system’s underlying structural problems and called on lawmakers to pursue more comprehensive reform.
PG&E strategic review
PG&E’s board created a committee of four independent directors to examine “the full range of regulatory, financial, operational and strategic alternatives” available to the company.
Poppe said California’s wildfire-liability framework “continues to create financing risks that drive higher costs, affect customer affordability, and limit investment in the energy system.”
Lower financing costs but slower investment
The reduction gives California’s wildfire-liability debate a direct infrastructure consequence. Investor-owned utilities must raise substantial amounts of capital to finance wildfire mitigation, transmission expansion, renewable-energy interconnections, electrification and service for new homes and growing electricity demand.
Higher perceived wildfire risk can increase the cost of utility debt and equity. Because regulated utilities generally seek to recover authorized financing costs through customer rates, those costs can contribute to higher electricity bills.
PG&E said deferring investment will reduce its immediate borrowing needs and benefit customers through lower financing costs. The corresponding tradeoff is that some grid projects and customer connections could take longer.