PG&E Corporation (NYSE:PCG) remains exposed to significant wildfire-related liabilities in California, as lawmakers have failed to reach consensus on reforms that would reduce utilities’ financial exposure. On September 22, UBS analyst Gregg Orrill warned that the company faces significant risks amid inaction on wildfire liability legislation.
We recently analyzed the risks of PG&E trimming its investments amid the Wildfire liability stalemate in California: Read Here: PG&E (PCG)’s $2 Billion Spending Deferral Raises Questions Over its Growth Outlook
The analyst downgraded the stock to Neutral from Buy and cut the price target to $14 from $19, citing concerns that the company will continue to operate in a system where insurers can pursue it for wildfire losses. According to UBS, the growing risk that California lawmakers will fail to advance wildfire liability reform this year has removed an important potential catalyst for the utility.
The company already remains exposed to substantial liabilities associated with past wildfires. As of June 30, 2026, PG&E had estimated aggregate liabilities of $2.25 billion for the 2021 Dixie fire and $400 million for the 2022 Mosquito fire. The company had previously estimated $1.325 billion of aggregate liability for the 2019 Kincade fire, and as of June 30, 2026, it had received $128 million from the Wildfire Fund related to the fire.
Uncertainty around wildfire liability is also affecting its ability to finance the massive investments needed to modernize California’s power grid. It has announced it will defer approximately $2 billion of planned 2027 investment, reducing its capital plan to $11.4 billion.
Despite the reduction, the company has said it will continue funding critical safety programs and meeting its regulatory obligations. However, some reliability improvements and new customer and energy connections could be delayed.
Wildfire Fund Provides Some Protection
One factor that could help limit PG&E Corporation’s ultimate wildfire exposure is California’s AB 1054 Wildfire Fund, which provides protection for eligible wildfire claims. For eligible wildfires occurring on or after September 19, 2025, California also established a separate Continuation Account designed to provide up to $18 billion of additional liquidity, subject to certain funding conditions. PG&E has already recognized significant probable recoveries through the fund and other mechanisms.
The key issue for investors, therefore, is not simply whether the Wildfire Fund exists, but whether California’s broader liability framework and funding mechanisms provide sufficient long-term financial protection. PG&E has warned that uncertainty surrounding wildfire liability continues to affect its access to affordable capital and its ability to plan long-term investments.
Hedge Fund Positioning
Hedge fund interest in PG&E remained notable during the second quarter, with 80 hedge funds holding positions in the company. Insider Monkey Database indicates AQR Capital Management increased its PG&E position slightly, to approximately $1.45 billion, while Sessa Capital maintained a stake worth roughly $413.4 million.
The Bottom Line
PG&E Corporation remains caught between California’s growing need for grid investment and a wildfire liability framework that continues to create uncertainty around the cost of financing that investment.
The company’s ability to recover wildfire-related costs through insurance and regulatory mechanisms provides an important offset to its gross liabilities. However, the latest UBS downgrade underscores how a prolonged lack of regulatory reform could continue to weigh on PG&E’s long-term earnings visibility and capital plans.
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