PG&E is experiencing extreme financial duress in the wake of a series of wildfires that have led credit agencies to strip the company of its investment-grade rating and exposed it to what it estimates as more than $30 billion in potential liability costs.

California’s largest utility recorded a $10.5 billion charge related to the Camp Fire, which killed 85 people and destroyed the town of Paradise in November. It also took an additional $1 billion charge related to a series of wildfires in 2017 after recording a $2.5 billion charge last year. The company has to date recorded $14 billion in wildfire-related charges, a total that exceeds its current market capitalization. PG&E shares fell 4.3% Thursday to $17.03.

“We recognize that more must be done to adapt to and address the increasing threat of wildfires and extreme weather in order to keep our customers and communities safe,” said John Simon, who is serving as the company’s interim chief executive following the resignation of CEO Geisha Williams last month.

Analysts and experts say PG&E’s fate may now lie with California lawmakers and regulators, who will have to find a way to help all of the state’s utilities survive as wildfire risk grows throughout their service territories.

Unlike many private businesses, PG&E provides essential services, supplying more than 16 million customers with gas and electric service across a 70,000-square-mile territory, posing critical questions for the state.

“Their future and viability revolves around the political process,” said Paul Fremont, managing director at Mizuho Securities USA LLC. “What is necessary is a game plan.”

A California legal principle known as “inverse condemnation” renders utilities liable for property damage caused by their equipment, even if they aren’t found negligent in maintaining it.

In addition to PG&E, credit-ratings firms have questioned the long-term financial stability of Edison Internationa l’s Southern California Edison, and Sempra Energy ’s San Diego Gas & Electric if their liability risk remains unabated.

“This a statewide problem and not just a utility problem,” said analyst Jeff Cassella of Moody’s Investors Service, which recently withdrew its rating on PG&E’s debt after downgrading it to junk. “State leaders recognize that there is an inverse condemnation issue and that actions need to be taken.”

California Gov. Gavin Newsom recently formed a “strike team” to assess PG&E’s challenges and develop a strategy in the coming months. But it will likely take far longer for lawmakers to agree on a path forward. Mr. Newsom’s office didn’t respond to a request for comment.

On Thursday, Southern California Edison recorded a $1.8 billion charge in the fourth quarter related to fires and mudslides outside of Los Angeles last fall.

“The governor will need to provide leadership,” said Edison International Chief Executive Pedro Pizarro, adding that he has seen “good indications that this administration is taking this seriously.”

State fire investigators have determined that PG&E’s equipment played a role in starting 18 wildfires in 2017 that killed a total of 22 people, and the company now faces hundreds of related lawsuits.

The cause of the Camp Fire hasn’t yet been determined. But PG&E disclosed that some of its equipment on a transmission line malfunctioned in the area of the fire just moments before its ignition.

On Thursday, PG&E said it was probable that state investigators would find its equipment was the likely ignition point of the fire, as it detailed the reasons for the $10.5 billion charge in a regulatory filing. It also said the California Attorney General’s office has opened a criminal investigation into the Camp Fire.

The Wall Street Journal reported Wednesday that PG&E had planned a safety overhaul of the line since 2013, but had repeatedly delayed the work, which never took place before the Camp Fire. The Journal also reported that the company in December decided to shut down the line after a close inspection revealed safety problems.

On Thursday, PG&E confirmed the line remained closed and said it might consider decommissioning the line following a safety inspection. PG&E has vowed to do more to reduce the likelihood of wildfires. In February, it filed a wildfire-mitigation plan with state regulators that outlined its intent to substantially expand its tree-clearing practices, beef up inspections of its equipment and install more weather stations and cameras for earlier risk detection.

PG&E has also said it would consider proactively shutting off power in high-risk areas during wildfire season. The company estimated that the so-called public-safety power shut-offs could affect as many as 5.4 million customers, up from 570,000 today.

The company is in the process of accelerating inspections all of its electric lines in areas of high fire risk. It said it has completed more than two-thirds of its transmission equipment inspections and initiated similar efforts on its distribution equipment in February. It plans to complete the enhanced inspections by May.

—Allison Prang contributed to this article.

Write to Katherine Blunt at Katherine.Blunt@wsj.com and Russell Gold at russell.gold@wsj.com