PG&E just deferred new housing connections. Your ADU needs a meter

Every ADU owner I've worked with has a mental model of the project that ends at the final inspection. You get the permit, you build the thing, an inspector signs off, you list it.

The step that wrecks timelines isn't in that model. It's the meter. And on September 2, PG&E made it worse.

What PG&E announced

The utility said it will defer $2 billion in planned 2027 spending, cutting its capital budget from $13.4 billion to $11.4 billion, a reduction of about 15%. The trigger was the collapse of Senate Bill 492, the wildfire liability reform measure, in the final week of session.

The deferral list covers renewable interconnections, company technology upgrades, very large electrical loads, and connections for new housing projects. PG&E was explicit that the last one means all kinds. CEO Patricia Poppe put it this way: "Apartments, affordable homes, single-family homes, they all could be" affected.

Nobody has said which projects, in which order, or starting when. The announcement is about the 2027 budget, so the honest read is that this is a signal about next year rather than a change to what happens in October. I'd treat it as a reason to build slack into a 2027 timeline, not a reason to panic about a project already in the queue.

Why this lands hardest on ADU owners

Because your project is small, and small projects lose.

When a utility rations engineering and construction capacity, the work that gets protected is the work that's either legally mandated or economically large. A single backyard unit needing a service drop is neither. You're what the industry calls a small energization project, and small energization projects have been the slowest-moving category at PG&E for years without any budget cuts at all.

The waits were already bad. The San Francisco Chronicle's reporting has homeowners and ADU builders waiting nine to twelve months for a hookup. Just the engineering design step, before anyone digs anything, has been running eight weeks or more against PG&E's current backlog. If your service needs a new transformer rather than a tap off an existing one, add months.

I've had two clients in the last eighteen months finish construction and then sit on a completed, uninhabitable unit waiting for power. One of them for seven months. That's seven months of a finished asset producing nothing while the loan accrues, and it's the single most expensive failure mode in this whole business.

The bill sitting on the Governor's desk

The timing of what happened next is the genuinely interesting part.

SB 1196, from Senators McNerney and Wahab, was enrolled and presented to the Governor at 3 p.m. on August 21. It passed the Assembly 56 to 8 and cleared concurrence in the Senate 29 to 10.

The bill directs the CPUC to set clear timelines for utility hookup requests on ADUs and other small energization projects, and to impose penalties on utilities that miss them. It also lets you file the utility application concurrently with the building permit application rather than sequentially, and bars a utility from cancelling an application without the applicant's consent.

Read those two stories next to each other. PG&E is telling investors it will slow down new housing connections. A bill telling PG&E it must connect on a deadline or pay for missing it is waiting for a signature. Newsom has until September 30 on both that and the two ADU bills that passed last week.

I don't know which way he goes. The utility will argue it can't be penalized for missing deadlines while it's cutting the budget that would let it meet them, and there's a version of that argument that lands. But if SB 1196 is signed, the concurrent-filing provision alone is worth months to anyone starting a project in 2027.

What to do about it on your project

Apply for the utility connection far earlier than feels reasonable. Most owners submit the PG&E application after the building permit is issued, because that's the intuitive order and because the contractor suggests it. If SB 1196 is signed you'll be able to file both together. Until then, file the utility application the day you're able to, even if the design isn't final, because your place in the queue is worth more than the tidiness of your paperwork.

Find out early whether your service needs a transformer. This is the single biggest fork in your timeline and most homeowners never ask. A unit that can be served off existing capacity is a different project, calendar-wise, from one that triggers new equipment. Your electrician can usually tell you before you're committed to a design, and there are cases where moving a panel or trimming the load calculation keeps you on the fast path.

Consider whether you need a separate meter at all. Not every ADU does. Feeding the unit off the main house avoids the new service connection entirely, and while that decision has real consequences for how you bill utilities and set rent, it's worth pricing against nine months of delay rather than deciding on principle.

And build the wait into your financing. If you're carrying construction debt, model the hold cost of a six to twelve month energization gap and make sure you can survive the long version. The owners who get hurt are the ones who budgeted for the permit timeline and treated the meter as an afterthought.

The larger point

California spent this legislative session making it easier and cheaper to get an ADU approved. Two more bills doing exactly that are on the Governor's desk right now.

None of it matters if the unit can't be turned on. Permitting reform moves the paperwork; it doesn't move electrons. For the last several years the binding constraint on Bay Area ADU delivery hasn't been the planning counter, it's been the utility, and this month the utility said it's spending less next year.

That's not a reason to abandon a project. It's a reason to sequence one differently, and to get in line sooner than you think you need to.

Planning a build, or sitting on a finished unit waiting to rent it? Get a free ADU rental analysis and I'll walk through the timeline and the numbers for your property. Or call me at (408) 813-8001.

Sources

• PG&E to scale back spending following failure of wildfire liability bill — The Press Democrat
• PG&E says it will scale back planned work after California wildfire reforms fail — San Francisco Chronicle
• SB 1196 bill history — California Legislative Information
• McNerney bill to streamline ADUs by accelerating utility hookups — Senator Jerry McNerney
• PG&E is delaying ADU construction in California, builders and homeowners say — San Francisco Chronicle
• How PG&E Adds Months-Long Delays, Costs to New Housing — KQED