PG&E cuts $2 billion in planned spending over wildfire liability fight

PG&E plans to cut $2 billion in 2027 spending as California lawmakers grapple with a high-stakes fight over utility wildfire liability and investment.

PG&E says it will slash $2 billion from its planned 2027 capital spending, blaming an unresolved standoff in Sacramento over who pays when California utilities start catastrophic wildfires. The utility had previously committed to roughly $15 billion in annual investment through the end of the decade, targeting grid hardening, undergrounding power lines, and wildfire mitigation. The pullback is a direct response to a legislative deadlock over Senate Bill 254 and related proposals that would overhaul how utilities absorb wildfire liability costs.

If you hold utility stocks or funds like XLU, this $2 billion cut is a leading indicator of earnings pressure, since lower capital deployment typically means less rate base growth and weaker long-term returns for shareholders. For California ratepayers, scaled-back grid investment translates directly into slower reliability improvements and continued wildfire exposure in high-risk counties.

PG&E's 2018 Camp Fire bankruptcy reshaped state policy, forcing lawmakers to create a $21 billion wildfire fund in 2019 that utilities pay into for liability coverage. That fund is now straining, and carriers have signaled they want to exit the market entirely, which is the pressure point behind the current legislative fight. Insiders say utilities across the West are watching Sacramento closely because any liability shift in California sets a template for Oregon, Washington, and Hawaii regulators.

Watch for a floor vote in the California Senate before the August recess, where lawmakers must decide whether to expand the wildfire fund, shift more liability onto ratepayers, or let utilities absorb the risk directly. PG&E's Q2 earnings call on July 23 will likely include the first specific project cancellations tied to the $2 billion cut. The counterintuitive twist: PG&E cutting investment actually gives Sacramento less reason to grant rate hikes, meaning the political fight could end with the utility losing on both sides of the ledger.