PG&E Stock Rebounds 2.4%; a $2 Billion Capex Cut Leaves the Wildfire Discount Intact

California lawmakers failed to pass wildfire reform legislation (S.B. 492) by the Aug. 31 deadline, leaving utilities PG&E and SCE exposed to unlimited liability for wildfire damages. The bill's failure caused a $20B market value drop for the utilities, as investors reacted to the lack of liability caps and subrogation limits. PG&E and SCE have been linked to multiple devastating wildfires in the past decade, with critics arguing they prioritize dividends over infrastructure upgrades.

California scrapped a wildfire liability overhaul, leaving utility credit ratings at risk. PG&E and Southern California Edison bonds and stocks were affected, with S&P warning of potential downgrades. The original proposal included a liability cap and was seen as credit supportive, but the revised bill was deemed insufficient. The issue will be left to the next governor, with Moody's warning of higher electricity rates and economic competitiveness challenges.

California lawmakers failed to pass a bill that would have limited liability for investor-owned utilities in wildfire cases. Governor Newsom had negotiated a compromise, but the Assembly did not vote on it. Utility stocks, including PG&E, Edison, and SDG&E, dropped sharply. The bill's failure has raised concerns about utility financial stability and potential rate hikes. Hearings are planned for the fall to continue discussions on wildfire policies.

Pacific Gas and Electric Company (PG&E) plans to defer $2B in capital investments next year, reducing its 2027 plan to $11.4B from $13.4B. CEO Patti Poppe cited increased borrowing costs due to state liability frameworks. The move follows California lawmakers' failure to pass wildfire liability bill SB 492, which could have limited PG&E's payouts for wildfire damages. PG&E's stock rose 7% after the bill's collapse.

PG&E and its subsidiary are reviewing their energy business structure and financing, deferring $2bn in 2027 investments to reduce borrowing costs. A committee of independent directors will evaluate alternatives to achieve a financially sound status. The company aims to maintain safety investments and compliance while improving customer affordability and system reliability. PG&E plans to provide updates on the review's progress.

PG&E (PCG) deferred $2B in 2027 spending, reducing its capital plan from $13.4B to $11.4B and debt financing needs by $2B. The move follows California's failure to pass wildfire-liability reforms, raising concerns about the company's long-term outlook. PG&E maintained its 2027 adjusted earnings forecast of $1.78-$1.82 per share but withdrew its five-year capital plan and earnings-growth target, citing uncertainty.