By all traditional measures, it's a golden era for the Golden State. California's economy is booming, the state boasts a world-leading higher education system, and it currently enjoys a significant budget surplus. 

But in spite of that progress and prosperity, the state is coming up against problems that Governor Gavin Newsom says have been deferred for far too long. 

"We’re facing hard decisions that are coming due," said Newsom in his first State of the State address Tuesday.

A lot of those hard decisions involve California's largest electric utility, Pacific Gas & Electric, which is in the midst of a liability-fueled bankruptcy.

"We're all frustrated; we're angry it's had to come to this. PG&E did not do enough to secure dangerous equipment or plan for the future," said Newsom. "My administration will work to make sure PG&E upholds its obligations."

The California governor announced he has convened a group of the nation's best bankruptcy attorneys and financial experts from across the energy sector, and that the group will work as his "strike team" to develop a comprehensive PG&E strategy that the administration will present within 60 days. 

The governor reiterated previous statements that his priorities include ensuring continued access to safe and affordable power, seeking justice for fire victims, fairness for employees and protection for ratepayers. 

“And we will never waver on achieving the nation's most ambitious clean energy goals," he said. 

“But the problems we face are far greater than PG&E,” Newsom added.

Tackling future wildfire risk amid an energy transition

PG&E, which officially filed for Chapter 11 bankruptcy protection on Jan. 29, isn't the only California utility facing headwinds. The state’s other investor-owned utilities — Southern California Edison and San Diego Gas & Electric — recently had their credit ratings downgraded due to wildfire liability concerns. 

"Climate change is putting pressure on all of our utilities, public and private, north and south," said Newsom.

This pressure comes as the state's entire energy sector is evolving, Newsom said, from distributed solar, to large-scale wind power, to community-choice aggregation and direct access.

The state's decades-old regulations and insurance practices did not anticipate these changes. So in addition to the administration's near-term PG&E plan, Newsom said he will work to map out a longer-term framework "not just for the utilities' future, but for California's energy future, to ensure that the costs of climate change don't fall on those least able to afford it."

Newsom took a concerted step in mitigating future wildfire risk earlier this week by directing additional resources to fire prevention. 

In a rebuke to President Trump, Newsom signed an executive order on Monday to withdraw California's National Guard troops from the border. Of the roughly 360 National Guard personnel deployed, one-third will continue to assist in stopping the flow of criminal drugs and guns across existing ports of entry. 

Another third will join the National Guard's Counterdrug Task Force, which is cracking down on illegal cannabis grows, many of which are owned by cartels and are increasingly becoming fire hazards, Newsom said during his State of the State speech.

The remaining third of the troops, he said, have been tasked with assisting CalFire with preparations for the upcoming wildfire season — work that was curtailed during the federal shutdown earlier this year.