- Thesis
- PG&E carries a wildfire liability that most other regulated utilities do not face in the same way. California's inverse-condemnation rule can make PG&E pay for fire damage even without proven negligence. The 2019 bankruptcy showed that one bad fire season can erase years of profit. CaliforniaIn 2025, lawmakers again failed to passextended the Wildfire Fund with SB 254, but they kept inverse condemnation. In 2026, a liability reform bill, SB 492, did not get a final vote before their session endedthe Assembly adjourned on August 31, 2026September 1. This open-ended risk remains unresolved, and PG&E responded by cuttingthen cut about $2 billion of planned 2027 capital spending, suspended its long-term growth outlook, and started a strategic review of its structure. For the gap to close, lawmakers need to pass a durable reform, such as a liability cap or a faster victim-payment fund. Or PG&E needs to run several more fire seasons without a major equipment-caused fire, so its real-world loss record improves how the market prices this risk. PG&E's board also launched aThe strategic review in September 2026 that could bring structural changes meant tocan also lower the company's risk if it separates parts of the business from the wildfire liability. The CPUC plans to issue a proposed decision byon November 13, 2026 on PG&E's request to recover costs from the 2019 Kincade fire and the 2021 Dixie fire. This is the first test of the prudence standard in the 2019 wildfire law, AB 1054. The next earnings report comes October 22, 2026. A new legislative session starts on December 7, 2026, and lawmakers could revisit reform when the legislature reconvenesa new governor takes office in January 2027. Because reform has now failed more than onceOn September 30, this2026, the governor said that a reform deal may fall to his successor. This discount likely will probably not close before 2028, even if PG&E keeps avoiding major fires in the meantime.
- Risks
- PG&E still faces open-ended wildfire liability. Lawmakers failed todid not pass a billliability reform in 2026 that would have capped this liability, so a large future fire caused by PG&E equipment could again threaten its balance sheet, as it did in 2019.
After the reform bill failed on September 1, 2026, PG&E cut about $2 billion of planned 2027 capital spending, and suspended its longerfive-range 2028-2030year capital outlook, and its growth target after wildfire liability reform failed again in September 20262027. ContinuedPG&E said the cut could delay new customer connections, such as data centers, which are central to its growth plan. More reform failures could keep forcing PG&E to scale back the growth spending its plan relies on.
At July 15, 2026, PG&E knew of about 190 lawsuits, with at least 9,062 plaintiffs, over the 2021 Dixie fire. PG&E says it resolved most of these claims. The court cancelled the individual trial set for December 2, 2026, and no trial is scheduled. The larger open question is cost recovery. PG&E asks the CPUC to let it recover about $1.59449 billion of Kincade and Dixie fire costs that the Wildfire Fund and insurance do not covercannot pay, plus about $329 million of repair costs, at July 31, 2026. If the CPUC finds that PG&E was not prudent, PG&E cannot recover these costs and may need to pay back part of the about $674 million it drew from1.2 billion that the Wildfire Fund paid for the two fires.
PG&E's board authorizedstarted a strategic review in September 2026 that could lead to major changes in how the company is structured or financed. A committee of four independent directors leads it. The outcome and timing of this review are not yet known.
PG&E's multi-year capital plan depends on a favorable outcome on wildfire liability reform. After the 2026 reform effort failed, PG&E already deferred billions of dollars of work, including new data center connections that are central to its growth plan.
- Balance sheet
- Cash: $972M
Debt: $64.3B2B
Net debt: $63.3B2B
Net debt / EBITDA: 6.0× (high)
Interest cover: 3.4×
Undrawn credit line: $5.5B
Debt due within 12 months: $2.5B
Ratings: S&P BB+ (stable outlook), Moody's Baa3 (positive outlook), Fitch BBB- (negative outlook)
PG&E borrows mostly at the regulated utility, and debt is high for the cash that PG&E makes. Free cash flow was about minus $4.3 billion in the 12 months to June 30, 2026, because capital spending isof $12.4 billion was larger than operating cash flow of $8.1 billion. The CPUC lets the utility fund its rate base with about 52% common equity and, 47.5% long-term debt and 0.5% preferred stock, and customers pay the interest through rates. At June 30, 2026, debt wasOf the $61.8 billion of long-term debt at June 30, $1.1 billion due within a year and $1.4 billion of short-term borrowings. Of the long-term debt2026, $55.2 billion sat at the utility. This includes $11.6 billion in special-purpose entities, such as: about $10 billion of wildfire recovery bonds that dedicated customer charges pay, and a $1.75 billion receivables securitization. About $6.6 billion sat at the parent, PG&E Corporation, which pays it from utility dividends. This includes $2.15 billion of 4.25% convertible secured notes due December 1, 2027 and, $12.0 billion of 6secured notes due 2028 and 2030, and $2.850%5 billion of junior subordinated notes. All debt due within a year and all short-term borrowings sat at the utility. On August 4, 2026, the utility issued $1.7 billion more of first mortgage bonds. The leverage ratio and the interest cover come from Yahoo Finance data and use trailing EBITDA. Total liquidity was of about $610.56 billion atfor the 12 months to June 30, 2026, mostly thecalculated as pretax income plus interest, depreciation and amortization. The undrawn credit is the revolving credit lines of the utility and the parent, and total liquidity was about $6. One major agency5 billion. S&P still rates the utility's unsecured debtPG&E BB+, one step below investment grade. Fitch changed its outlook to negative on September 16, 2026, after wildfire reform failed. The debt load and the open wildfire liability limit PG&E's choices. This is why itOn September 2, 2026, PG&E cut planned 2027 capital spending and did not raise moreby $2 billion, with $1 billion less new debt or equityat the utility and $1 billion less at the parent, and said that it wants to avoid issuing shares at a low stock price.
As of 2026-06-30.
- Checkpoints
- Aug 31, 2026: California legislature votes on wildfire liability reform. Failed. Watch: A passed bill that caps liability or speeds victim payments passes; a session end with no bill fails. Outcome: The session ended with no reform billAssembly adjourned on September 1 without a vote on SB 492, and PG&E stock fell about 20% in one dayon August 31.
Oct 22, 2026: Q3 2026 results: capital plan and strategic review update. Pending. Watch: Kept 2026 and 2027 guidance and a funded capital plan without new equity passes; a guidance cut or a plan to issue equity fails.
Nov 13, 2026 (estimate): CPUC proposed decision on Kincade and Dixie fire cost recovery. Pending. Watch: A proposed decision that finds PG&E prudent and, lets it recover most of the about $1.5945 billion of costs that the Wildfire Fund cannot pay, and needs no payback to the Fund passes; a finding that PG&E was not prudent, or an order to pay back the Wildfire Fund, fails.
Jan 2027 (estimate)Dec 7, 2026: Legislature reconvenesNew legislative session starts and can take up wildfire reform. Pending. Watch: A reform bill with a liability cap or a faster victim-payment fund moving forward in 2027 passes; no progress fails.
- Recent events
- 2026-10-05: At an S&P Global Ratings webinar, CFO Carolyn Burke said wildfire liability legislation is PG&E's preferred path, but it is highly uncertain. She said the strategic review looks at the full range of options, which can include ring-fencing the power plant and gas businesses. She gave no timeline for the review. She said the CPUC expects to issue a proposed decision on Kincade and Dixie fire cost recovery in November.
2026-10-02: The CPUC judge in the Kincade and Dixie fire cost case (A.25-11-001) set an oral argument for October 26, 2026. On October 8, the judge refused a request to delay the decision and said that the evidence record is closed.
2026-10-01: PG&E filed a 10-year plan to put about 5,000 miles of power lines underground in high fire-risk areas from 2028 to 2037. The state Office of Energy Infrastructure Safety must approve the plan first. After that, PG&E will ask the CPUC to approve the cost.
2026-09-30: Governor Newsom said that a wildfire liability deal may fall to the next governor, who takes office in January 2027. He did not rule out a special session, but he did not expect a vote this year.
2026-09-16: Fitch Ratings changed its outlook on PG&E Corporation and the utility to negative from stable. It kept the BBB- rating. Fitch cited the failed wildfire liability reform and said more downgrades are likely without progress.
2026-09-0211: In its CPUC brief on the Kincade and Dixie fires, PG&E said it will cutasked to recover about $21.449 billion of costs that the Wildfire Fund cannot pay, plus about $329 million of system repair costs. It also asked the CPUC to confirm that PG&E does not have to pay back about $1.2 billion that the Wildfire Fund paid for the two fires by July 31, 2026.
2026-09-02: PG&E cut planned 2027 capital spending by about $2 billion, from $13.4 billion to $11.4 billion, after wildfire liability reform failed again in the California legislature. It alsokept its 2026 core EPS guidance of $1.64 to $1.66 and gave 2027 guidance of $1.78 to $1.82. It suspended its 2028five-2030year capital and rate base outlook, previously aboutwhich was $4873 billion for 2026 to 2030, and its growth target after 2027. Its board authorizedformed a broadcommittee of four independent directors for a strategic review of the company, with no timeline.
2026-0809-3101: The California lawmakers ended their legislative sessionAssembly adjourned without passing a vote on SB 492, the wildfire liability reform bill. The governor and legislative leaders had announced the deal in this bill on August 29. Lawmakers had removed parts of the governor's plan, such as limits on lawsuits by insurers and on damages.
2026-08-31: PG&E stock fell about 20% in one trading day, its worst single-day drop since March 2020. The wildfire liability bill in the legislature did not include the main parts of the reform that PG&E wanted.
2026-07-23: PG&E reported Q2 2026 results. Core earnings per share were $0.40, above what analysts expectedthe analyst estimate of about $0.37. Revenue was below estimates. The company reaffirmed full-yearits 2026 core EPS guidance of $1.64 to $1.66.