You mean shrinking the service area?
If so, some other entity will have to take over distribution in the areas removed from PG&E. It's not like those areas are going to go off-grid.
If those entities are locally owned and controlled (i.e. municipal power, as some CA cities have) it might make those more incentivized to proactively deal with maintenance issues - after all - people don't generally want to endanger their neighbors. But if it's just a slightly smaller investor-owned utility, it's not clear that they'll be incentivized any differently than PG&E is.
And remember that PG&E's size is part of what enabled it to achieve economies of scale, which in turn results in higher profits and dividends for investors.
Finally, even if you shrink PG&E, you still have the problem of maintaining transmission lines, which have been responsible for starting a number of fires. Some entity has to be responsible for maintaining those.
Edison settled the lawsuits over the Thomas fire without admitting guilt. To me that seems like a good indication that there was a much less clear case for negligence than there is for PG&E. Guess who started the largest fire…
It sounds like their fire prevention shutoffs haven't been going so well either: https://www.latimes.com/california/story/2019-11-01/southern....
Edison started a fire as they started to turn electricity back on. How many did PG&E start while the power was out? The last count I'd heard was five.
San Diego Gas & Electric, only managed to cause "far fewer fires than PG&E" thanks to their own aggressive monitoring and targetted blackouts - which is to say that they're still causing fires - and they're far smaller than PG&E.
Maybe it's time to shrink PG&E down to a manageable size? I'm not suggesting the other utilities are particularly well behaved, rather PG&E is worse. Take, for instance, fire prevention efforts. Edison disables their automatic reclosers during fire season. PG&E? lol. They're thinking about it.