By Megan Fan Munce, Kathryn Palmer, SAN FRANCISCO CHRONICLE
https://www.sfchronicle.com/california/article/pge-ceo-politics-bill-22414649.php
Pacific Gas & Electric Co. will defer $2 billion in connections to new renewable-energy projects and housing developments, among other investments, after the California Legislature failed to reach a deal on limits for what utilities could be forced to pay if they start wildfires.
CEO Patti Poppe told the Chronicle the cuts, representing about 15% of the utility’s planned investments for 2027, will reduce the amount of money the company must borrow, preventing potential higher costs for ratepayers. Deferring the planned work will save everyday customers money without compromising on safety, Poppe said, but it will mean disruptive impacts for the company’s larger customers.
The announcements come one day after legislators officially killed a pared-down version of a wide-reaching proposal from the governor seeking to limit the liability utilities face when they’re found to have started wildfires. Some consumer advocates said the utility’s announcement felt politically motivated.
Gov. Gavin Newsom had initially proposed major reforms, including preventing insurance companies from suing utilities to recoup the cost of wildfire claims. The Legislature rejected any new limitations on utility liability and instead introduced legislation that would have created a program to speed up wildfire survivor compensation, limited attorneys’ fees and banned utility CEOs from receiving bonuses in years the company started a fire, among other measures.
On Tuesday, the last possible day to pass such legislation, Assembly Speaker Robert Rivas, D-Hollister (San Benito County), announced the Assembly would not be taking it up, calling it a half-measure that did not deliver adequate reforms. State Sen. Sasha Pérez, D-Pasadena, who supported the compromise bill as a first step in a larger effort, pushed back on criticisms that the slimmed-down legislation would have created more risk for utility companies.
Wildfire victims and insurance companies cheered the lack of action, saying it preserved utility accountability and prevented liability costs from being transferred on to insurers and their policyholders.
When contacted for comment on PG&E’s announcement, a spokesperson for Newsom referred to a letter the governor sent to the California Public Utilities Commission on Tuesday in the wake of the bill’s collapse. Newsom requested that the regulatory agency monitor the market and credit rating response to the legislative session ending without structural reform, and to report on the potential statewide impact by Nov. 1.
“Unfortunately, we were not able to enact structural reforms this legislative session to stabilize the utility sector and address the customer affordability crisis,” Newsom wrote in his letter. “As a result, I remain deeply concerned that the financial instability of the utility sector will continue to drive up already high utility bills and jeopardize the ability of all California utilities — public and private — to deliver affordable power to Californians, and make the investments the State needs to support economic growth, and continue progress on our clean energy future.”
Seven of California’s 20 most destructive wildfires have been caused by utility power lines or electrical equipment. California is the only state where these utilities can be held liable even if they aren’t found to have been negligent.
The threat of this liability spawns hesitation among investors and credit rating agencies, in turn raising the costs investor-owned utilities like PG&E and Southern California Edison must pay to borrow money to fund infrastructure investments. Those higher costs ultimately translate into higher bills for ratepayers, PG&E and energy advocates say.
Over the past two years, PG&E’s borrowing has cost customers an extra $600 million in interest expenses because of its poor credit rating, said Poppe.
“It is too expensive in this construct to raise the money to do that work. Our customers can’t afford it, and it really puts us in a tricky spot. We were counting on legislative action this year,” she said. “As a result of inaction, we’re forced to make these announcements today.”
Sen. Josh Becker, D-Menlo Park, lead author of the wildfire compromise bill, was not available for comment Wednesday. His office told the Chronicle the senator was not informed in advance of PG&E’s decision to pull back on investments.
Assembly Member Cottie Petrie-Norris, D-Irvine, the bill’s coauthor and chair of the Assembly’s Utilities and Energy Committee, declined to comment on PG&E’s announcement. The lawmaker’s spokesperson said she is currently focused on next steps and preparing for future wildfire hearings. Petrie-Norris and Assembly Member Lisa Calderon, D-Whittier (Los Angeles County), pledged in the hours after the Assembly torpedoed the bill to hold public hearings on the wildfire reforms, after complaints from many lawmakers that the rushed deal did not provide enough time for constituent feedback.
As of Monday afternoon, Newsom had yet to say whether he would call a special session to revisit the issue or leave it for when the Legislature next convenes in December. Poppe said that a special session would make a “huge difference,” but that she had not directly discussed the possibility with Newsom. Edison spokesperson Scott Johnson said the company hopes legislators will take action “in the near future” to deliver comprehensive reform. The company had not publicly announced actions similar to PG&E’s as of Wednesday afternoon.
None of PG&E’s cuts will endanger the utility’s efforts to improve safety and reduce wildfire risk, Poppe said. Nor, she said, will it impact planned spending in San Francisco, which experienced a widespread hours-long power outage in December 2025 after a fire at a SoMa substation.
It does mean PG&E won’t have the room to perform additional work that would have been beneficial, but ultimately optional, Poppe said.
The utility will now need to delay some connections to new housing projects starting in January 2027, Poppe said. She said the company will be reviewing plans over the next six weeks to determine the exact scope of work that will be impacted.
Dun Dunmoyer, CEO of the California Building Industry Association, said in the past, new housing developments have gotten delayed anywhere from a few weeks up to several months due to long waits to get connected to PG&E. He noted that the utility had made major improvements over the past few years in resolving the issue.
The new deferred investments are not surprising given the lack of reform, Dunmoyer said, but they are nonetheless harmful.
“We’re concerned this will slow down our projects, or in some cases, push the pause button entirely on projects that haven’t started yet,” he said.
PG&E’s investment cuts will also mean slowing down the deployment of funding for new interconnections with renewable energy infrastructure, Poppe said.
“A lot of those projects are massive transmission and substation types of infrastructure projects, and we will have to slow the deployment of the funding for those,” she said. “It’s not that they won’t ever be ever interconnected, but it’s very likely they’ll be interconnected late.”
Those delays could jeopardize projects’ ability to qualify for federal clean energy tax credits, said Poppe and Michael Wara, director of Stanford University’s Climate and Energy Policy Program.
Under the One Big Beautiful Bill Act passed in 2025, renewable energy companies must have begun construction before July 2026 or must have their projects in service by the end of 2027 to be eligible for the credit.
“That could put a lot of them into bankruptcy,” Wara said.
While those renewable energy facilities could eventually be brought online later, Wara said, the threat of delays happening again could ward off financiers from future clean energy projects.
Other new technology projects, such as new charging facilities for electric vehicles, will also be deferred, said Poppe.
On Wednesday, the advocacy group Consumer Watchdog called on the California Public Utilities Commission to examine whether PG&E should be forced to refund customers on the basis that it was deferring already-planned work.
“PG&E appears to be engaged in a ‘capital strike,’ where it withholds paid-for-services in exchange for a political result,” the group wrote in a letter to the regulator.
Wara said the cuts were a predictable outcome of the Legislature’s rejection of reforms utilities were counting on.
A consequence of entrusting a public service like electricity to private companies is that those private companies will need to make a reasonable amount of money, Wara said. California could choose to do the opposite — pivot to publicly owned utilities — but doing so would mean leaving public funds entirely on the hook for wildfire costs, he said.
PG&E’s and Edison’s stocks tanked Friday when it became clear that the Legislature would not pass major liability reform. Both remained down on Thursday. S&P has not given PG&E an investment grade credit rating since it emerged from its bankruptcy brought on by the 2018 Camp Fire, which was caused by the utility’s equipment. Edison’s rating is one notch above speculative grade. In a Tuesday note, S&P held both ratings firm and noted it could downgrade Edison in the near future if the claims from the Eaton Fire, or a new utility-sparked wildfire, deplete the state Wildfire Fund.
“This is a systemic problem. It’s about the way we are approaching paying for our electricity in California and creating an environment of risk and reward for private companies,” Wara said. “But we need to think pretty quickly, because the markets are not going to wait.”
