PG&E Defers $2B in Spending as California Wildfire Liability Stalemate Deepens

Key points

• PG&E announced it will cut capital spending in 2027 from $13.4 billion to $11.4 billion, deferring roughly $2 billion in projects.
• The deferrals affect non-safety projects, including connections for new housing, renewable energy, data centers, and large commercial loads.
• PG&E CEO Patti Poppe blamed California’s wildfire liability laws, which hold utilities liable even when they comply with safety standards, for driving up borrowing costs and credit risk.
• The move follows the death of Senate Bill 492, a compromise bill that failed to pass the Assembly in the final days of the legislative session.
• PG&E’s board has launched a strategic review to restructure the company’s financing and organization to improve affordability and attract investment.

Background

This development follows the collapse of Senate Bill 492 in early September 2026, a bill intended to overhaul how wildfire costs are assigned to utilities and insurers. Previous attempts to reform the system, including a broader proposal by Governor Gavin Newsom, faced opposition from both utility companies and wildfire survivors. The current stalemate leaves utilities bearing significant financial risk for wildfires caused by their equipment, even when they have met state safety requirements.

How outlets are covering it

PG&E and its CEO, Patti Poppe, argue that the current liability framework is unsustainable and forces customers to pay for claims even when the utility is not at fault. Poppe described the situation as a barrier to necessary infrastructure growth. In contrast, State Senator Scott Wiener called the utility’s response 'straight up extortion,' arguing that delaying grid connections punishes housing and clean energy projects. Consumer Watchdog president Jamie Court labeled the spending cut a 'capital strike' and 'blackmail,' demanding that the Public Utilities Commission investigate whether PG&E is withholding approved services. CalMatters noted that Governor Newsom’s attempt to push a last-minute legislative 'jam' failed, highlighting the limits of his power as a lame-duck governor. The Mercury News reported that while PG&E claims the cuts are due to financing difficulties, the timing coincides with a significant drop in utility stock prices following the bill’s failure.

Why it matters

The deferral of $2 billion in spending could delay critical infrastructure projects, including new housing connections and renewable energy interconnections, potentially exacerbating California’s housing crisis and slowing the transition to clean energy. The dispute highlights a fundamental conflict between utility profitability and public safety, with no clear legislative resolution in sight before the next legislative session.

What to watch

PG&E expects to restore the deferred spending if lawmakers enact acceptable reforms. Governor Gavin Newsom has not ruled out calling a special legislative session to address the issue, though he has acknowledged the difficulty of passing such measures without broad support. The state Public Utilities Commission may investigate PG&E’s spending cuts, and the utility’s board will continue its strategic review to determine the best path forward for financing and operations.