By Vallari Srivastava and Pranav Mathur
Sept 2 (Reuters) – California utility PG&E said on Wednesday it will defer about $2 billion in spending for next year and launched a strategic review, after an amended state Senate bill raised concerns around wildfire liability costs.
The company faces renewed uncertainty over liability costs after a California Senate bill amendment did little to reduce utilities’ exposure to expenses related to the fires or address the long-term solvency of the state’s fund for it.
The company’s 2027 plan now includes an investment of $11.4 billion, compared with $13.4 billion previously.
Shares of the utility had fallen 20% on Monday following the bill’s amendment. They were down 5% in morning trading.
California’s utilities have faced growing wildfire-related liabilities, with PG&E emerging from bankruptcy in 2020 after its equipment was linked to several deadly fires.
Some California lawmakers had sought to bring about broader cost-sharing reforms to avoid pressure on the state’s Wildfire Fund.
“California’s wildfire liability framework continues to create financing risks that drive higher costs, affect customer affordability, and limit investment in the energy system,” PG&E CEO Patti Poppe said.
“Something has to change so that we can better serve our customers.”
The $21-billion Wildfire Fund was created to help cover future claims, while utilities have pushed for broader reforms to reduce their exposure to wildfire costs.
The lower spending plan also reduces PG&E’s debt needs by $2 billion, the company said.
“After two years of working toward reform, we have concluded that PG&E will not wait for the policy framework to change,” the company said.
The company said it plans to either delay or defer some work, including connecting new housing projects, interconnecting new renewable generation projects, technology upgrades and large load beyond the initial 1.6 gigawatts.
It expects adjusted profit of $1.78 to $1.82 per share in 2027, compared with expectations of $1.80 per share, according to data compiled by LSEG.
The utility added it is no longer providing a five-year capital plan or earnings growth rate beyond 2027.
(Reporting by Vallari Srivastava and Pranav Mathur in Bengaluru; Editing by Anil D’Silva and Leroy Leo)
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