PG&E Balances Affordability and Energy Investment Amid Financing Challenges

In September, PG&E announced a strategic review and revised 2027 Capital Plan with the goal of improving its credit rating and lowering costs for customers by reducing its financing needs. 

As part of its updated capital plan, PG&E shared it will defer about $2 billion in 2027 planned investments. The work PG&E does for customers is financed by borrowing or by issuing equity.  Deferring work therefore enables PG&E to borrow less money and avoid expensive interest rates, which it would have to pass on to customers through bills.

PG&E began notifying potentially affected customers in October that their project or projects could be delayed, to give them as much time as possible to plan.

Projects that could be delayed include work to:

• Connect new clean-energy resources to the grid
• Expand the electric system to meet growing energy demand
• Support city and county transportation and public works projects
• Connect new customers or upgrade their service.

While many projects may be impacted, PG&E will continue meeting its safety and compliance obligations. If you have received a letter about a possible delay to your project, and have questions, you may contact PG&E’ project support office at 1-888-576-6250. Representatives are available Monday through Friday from 7 a.m. to 6 p.m. 

Why PG&E is deferring work

California’s current wildfire liability laws create financial uncertainty for investors who fund energy infrastructure projects, which in turn limits available investment to meet California’s growing energy needs. That risk also increases PG&E’s borrowing costs, similar to how a lower credit score can result in higher interest rates for a consumer.

Like other utilities, PG&E borrows billions of dollars every year to invest in new and improved infrastructure for customers.  But unlike other utilities, PG&E has credit ratings below investment grade and is effectively an insurer of last resort in the state, because of the way California law spreads the cost of wildfire.  The resulting added costs can be substantial: since 2017, wildfire-related risk has resulted in over $4 billion in additional interest expense that customers will pay over the life of PG&E’s debt.

The company is actively pursuing solutions to reduce the scope of project impacts, while protecting customers from unnecessary long-term rate increases.

PG&E expects to have more information about which projects will be impacted in mid-December.