Newsom, in a five-page letter sent to PG&E CEO William Johnson, said the $13.5 billion settlement that the San Francisco-based utility struck with wildfire victims "falls woefully short" under state law as the proposed changes did not "provide safe, reliable, and affordable services to its customers."
The decision to reject the settlement was the latest blow to PG&E, which is hoping to move past its bankruptcy.
The restructuring plan is "the best course forward for all parties," PG&E told FOX Business in a statement. The utlity says it is committed to getting wildfire victims paid and is "continuing to implement changes across our business to improve our operations for the long term and emerging from Chapter 11 as a financially sound utility."
Gov. Newsome's office did not respond to FOX Business' request for comment.
PG&E filed for Chapter 11 bankruptcy protection in January due to liabilities related to deadly wildfires in Northern California in 2017 and 2018.
Last month, PG&E took a $2.5 billion charge for claims related to wildfires in Northern California, and said it expects to absorb $6.2 billion to $6.3 billion of costs related to the blazes.
PG&E shares have plunged 77 percent since Nov. 8, 2018, when the Camp Fire, the deadliest and most destructive wildfire in California history, broke out. The California Department of Forestry and Fire Protection found PG&E was responsible for that blaze and others.
Shares have lost 52.7 percent of their value this year through Friday while the S&P 500 was up 26.4 percent.