California Democrats panic as PG&E cuts $2 billion in planned spending over wildfire liability fight

California’s Democratic leaders are facing a fresh standoff with the state’s biggest utility after PG&E announced it would pull back billions of dollars in planned spending.

The move now has put renewed pressure on Sacramento to resolve a bitter fight over who should pay when utility equipment sparks catastrophic wildfires.

PG&E said it plans to reduce its 2027 investments by about $2 billion, citing the growing financial burden of California’s wildfire-liability rules.

The announcement comes just after lawmakers ended their legislative session without reaching a deal that would have changed how the state’s major investor-owned utilities shoulder wildfire costs.

The move has put Democratic lawmakers in the position of weighing the utilities’ concerns about financing against demands for accountability when their equipment is responsible for devastating fires.

Assemblywoman Cottie Petrie-Norris, the Democratic chair of the Assembly Utilities and Energy Committee, told KCRA 3 that utilities depend on borrowing to finance major construction projects — and that higher borrowing costs can ultimately affect customers.

“With utilities, like any company, in order to build stuff, they’ve got to borrow money,” Petrie-Norris said. “Much like you and I, when we’ve got a mortgage, if our credit rating isn’t good, it costs us more money.

“And when it costs PG&E or any of the utilities more money to build and construct utility projects, that’s a bill that gets passed on to all of us, and that’s not OK,” she added.

Petrie-Norris said the reduction in spending could affect projects involving infrastructure such as poles, wires and sensors, as well as housing-related work, according to the outlet.

“That’s also not OK. So that’s why I’m concerned, and that’s why it matters for all of us,” she said.

The confrontation follows a dramatic collapse of a proposed wildfire-liability overhaul in Sacramento. PG&E, Southern California Edison and San Diego Gas & Electric had pushed lawmakers to shift some wildfire-related costs toward insurance companies. But the legislature ultimately abandoned the proposal after negotiations broke down during the final days of the session.

The failed effort came after the utilities suffered a sharp market reaction with their stock tumbling just the day after.

The broader dispute centers on subrogation, under which insurers that pay homeowners after a wildfire can seek reimbursement from utilities they believe are responsible for the blaze. Gov. Gavin Newsom and the utilities had backed restrictions on that practice as part of a broader liability overhaul, while opponents argued the changes could leave wildfire victims and insurers carrying more of the financial burden.

Petrie-Norris said she hopes PG&E’s spending decision was not intended to pressure lawmakers.

“I certainly hope not. But that is definitely a question you would have to ask their CEO, not me,” she told KCRA 3.

The lawmaker also warned that the fight has drawn an array of powerful interests, including utilities, insurers, hedge funds and attorneys.

“When two elephants are fighting, it’s the grass that suffers,” Petrie-Norris said. “We don’t care about your companies. We don’t care about your industry. We care about what you are doing for Californians.”

PG&E has maintained that its spending reduction is driven by the difficulty and expense of financing its operations under California’s current liability structure.

The company is still planning billions of dollars in investment next year and has said its pullback will focus on projects that can be delayed rather than critical wildfire-safety obligations.

The utility’s CEO has also rejected the suggestion that the announcement was intended as a political pressure tactic, arguing that customers ultimately bear the consequences of the state’s financing and liability framework.

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