California’s largest utility, PG&E, has unveiled a $73-billion capital expenditure plan over the next five years, with a significant portion earmarked for infrastructure upgrades to accommodate growing electricity demand, particularly from data centers. The strategy was outlined by company executives during a September 29 investor call, highlighting the utility’s dual focus on grid modernization and wildfire mitigation.
Patricia Poppe, PG&E’s CEO, emphasized the company’s commitment to reducing rates and serving large customers, stating, “This is the year we show customers that rates are going down, and this is a year to focus on serving our large load customers and enabling rate-reducing load growth.” She also underscored the company’s progress in executing its plans, saying, “While many have been focused on the California legislative process, my PG&E coworkers have been busy executing, making these plans a reality and leveraging our performance playbook to deliver consistent outcomes for customers and investors.”
The investment plan includes PG&E’s participation in the state’s expanded wildfire fund, a critical component of the utility’s strategy to manage wildfire risks and protect ratepayers. The utility, which serves about 5.3 million electricity customers and 4.6 million natural gas customers across 47 of California’s 58 counties, has been working to harden its infrastructure and mitigate the impacts of wildfires following a series of devastating fires in 2017 and 2018. These fires, linked to PG&E equipment, led to billions in damage claims and the utility’s bankruptcy filing in January 2019. PG&E emerged from bankruptcy in July 2020, agreeing to participate in a state-run fund to cover future wildfire costs.
Recent legislative developments, including the passage of Senate Bill 254, have reformed the wildfire liability program and funding framework for investor-owned electric utilities. The bill, signed into law by Governor Gavin Newsom on September 19, creates a wildfire fund continuation account and requires utilities to issue new debt for fire mitigation. It also calls for a report next year to explore new ways to manage natural disaster risks.
Poppe noted that PG&E will contribute $144 million annually to the wildfire fund beginning in 2029, a 25% reduction from its current contribution of $193 million. She highlighted the utility’s ongoing wildfire mitigation work, including undergrounding power lines and preparing the grid for new homes, businesses, and electric vehicles.
In addition to wildfire mitigation, PG&E’s capital expenditure plan includes investments in transmission upgrades and cleaner energy resources. Poppe mentioned the utility’s involvement in the Calistoga Resiliency Center, a hybrid microgrid project in Calistoga, California, developed in partnership with Switzerland-based Energy Vault.
The utility is also focusing on load growth, particularly from data centers. Poppe reported that PG&E’s pipeline of load growth tied to data centers has grown to 10 GW, representing more than 50 different projects. She described this growth as “Goldilocks load,” noting that it is substantial enough to be beneficial for all customers but not so large as to pose a problem.
PG&E’s capital expenditure plan is expected to shape the development of the energy sector in California by addressing critical infrastructure needs, enhancing grid resilience, and supporting the transition to cleaner energy resources. The utility’s focus on load growth and data centers also highlights the increasing demand for electricity in the state and the need for strategic planning to meet this demand.
As PG&E implements its capital expenditure plan, the utility’s actions will likely influence the broader energy sector, setting precedents for grid modernization, wildfire mitigation, and the integration of new technologies. The company’s commitment to reducing rates and serving large customers also underscores the importance of balancing the needs of ratepayers with the financial health of investor-owned utilities.