PG&E CEO Patti Poppe said Wednesday she’s hopeful the fight over California’s wildfire liability reform is far from over.
“I really hope they find a way to get back to the table and get the job done for their customers,” Poppe said on CNBC’s “Mad Money.” “The people of California are waiting.”
PG&E and other power company stocks edison international They fell 20% and 21%, respectively, this week after lawmakers failed to advance a proposal to limit the amount individuals can seek from utility companies whose equipment ignited wildfires. PG&E is a utility company that provides electricity and natural gas to millions of people in California.
Consumer advocacy groups, including wildfire victim groups, have criticized efforts to protect utilities from liability for fires caused by their equipment, saying utilities need to do more to prevent them. Last year’s deadly Eaton Fire near Los Angeles was started by an idle power transmission tower owned by Edison, Los Angeles County fire officials said.
Assembly Speaker Robert Rivas issued a statement saying, “Sacramento should not settle when wildfire survivors have lost everything. Over the past few weeks, we have spent hundreds of hours at the table with Californians on all sides of this fight, and the verdict is clear: The proposals before us still do not deliver the relief, accountability, and meaningful reforms Californians deserve.”
But Poppe said the effort is not necessarily over, and that Congress could return to a special session to take up the issue.
“We’re very close and I think under the leadership of (California Governor) Gavin Newsom and Speaker Rivas, they can really get the job done,” she said.
For PG&E, the risks are significant. The utility announced a strategic review Wednesday, cutting $2 billion from its 2027 capital spending plan, bringing planned investments to $11.4 billion. Poppe said the cuts will delay housing starts and renewable energy projects in California.
Unresolved wildfire liability risks also complicate PG&E’s efforts to restore its investment-grade rating. Poppe said the company has spent the past six years strengthening its business, including reducing wildfire risk, improving reliability and lowering customer rates. But he said the potential for large debts from the bushfires continued to raise the cost of raising capital and deter some investors.
“If an investor or bank decides the risk is too high, they will either charge an additional fee or not enter the stock at all,” Poppe said.
Poppe estimated that lower borrowing costs could have saved clients “$600 million in bond issuance over the last two years alone.” He said reaching investment grade would open the door to further investment in the business and strengthen PG&E’s long-term growth prospects.
“This will allow us to put that $2 billion back into the plan,” Poppe said. “This will allow us to grow our profits by more than 9% each year and continue to increase our dividend.”
