PG&E Corp. executives are cutting $2 billion from their 2027 capital spending in response to the failure (for now) of broad reforms to California’s wildfire liability framework.

Speaking to analysts and investors on the morning of Sept. 2, CEO Patti Poppe said the capex reduction to $11.4 billion won’t affect the utility’s work on safety or wildfire mitigation programs but does mean some projects connecting new housing and renewable generation assets will be delayed. Also being deferred (but not necessarily canceled) are some large-load projects and technology upgrades. Poppe and CFO Carolyn Burke also said they’re suspending their capex outlook from 2028 through 2030, a period during which they had been planning for capex of nearly $48 billion.

In addition to those decisions, Poppe and PG&E’s other board members have authorized a wide-ranging strategic review that could bring with it some significant changes, including from a regulatory standpoint but also as it relates to allocating capital over the long term and to the legal structure of PG&E.

“This is a consequential moment for PG&E and for California's energy future and I also believe it can be a turning point,” Poppe said on a conference call.

Word of PG&E’s spending plan changes came a day after California legislators adjourned their 2026 session without voting on a wildfire liability reform compromise crafted a few days before. That proposal did not include a path to replenishing an $18 billion insurance fund when it runs out and did not cap utilities’ liabilities if their operations contribute to large fires. Poppe and Pedroa Pizarro, the CEO of Edison International Inc., said the compromise would not assure investors about the potential risk in their companies’ operations and thus drive up their funding costs.

Poppe reiterated that message Sept. 2 and pointed out that her team’s work to improve PG&E’s operations and profitability means it has hit financial benchmarks to be rated as investment grade. The risk picture and policy environment remains a big hurdle, she said, although some sort of legal restructuring decided on after the strategic review could shorten the journey to at least parts of the company becoming more highly rated.

“It’s a capital attraction problem that we are having to solve,” Poppe said. “There’s no doubt that our different businesses, if looked at individually, would have different value propositions. And so we’re really just thinking about how best to reflect the full value of this entire corporation and make it visible to investment capital in a variety of forms.”

Poppe said PG&E directors’ strategic review is likely to last a year to 18 months and that she intends to provide updates on the company’s quarterly earnings calls. That period could grow shorter if lawmakers agree on broad reforms during a special session this fall, which is an option California Gov. Gavin Newsom didn’t rule out early this week.

“The markets, they bat last and bat a thousand," KCRA 3 quoted Newsom as saying Monday night in reference to the shares of PG&E and Edison plunging in recent days. “This is a consequential moment and you’re seeing the consequences play out in real time. We’ve got work to do.”

PG&E shares (Ticker: PCG) and those of Edison (Ticker: EIX) bounced back somewhat on Sept. 1 after lawmakers didn’t vote the compromise plan into law. But they dipped again a day later, with PG&E falling 5% and increasing its losses over the past week to more than 26%. Edison shares were down 6% on the afternoon of Sept. 2; they, too, have fallen 26% since late last week.