PG&E and Edison International Stocks Drop as California Wildfire Liability Deal Fails
Shares of PG&E Corporation (PCG) and Edison International (EIX) fell sharply after a proposed update to California's wildfire liability framework failed to provide the expected legal protections for utilities. The bill, introduced by state lawmakers on August 31, did not include Governor Gavin Newsom’s proposal that would have shielded utilities from lawsuits by insurers over wildfire-related losses. This outcome dashed investor hopes and led several Wall Street firms—including Mizuho, BofA, and JP Morgan—to downgrade or cut price targets for both stocks. PG&E responded to the uncertainty with a strategic review of its operations on September 2, including cutting $2 billion from its capital investment plan by 2027. Despite this move, PG&E reaffirmed its adjusted core earnings guidance for FY 2026 and provided new projections for FY 2027. The failure to reform liability protections leaves both utilities exposed to significant financial risks, particularly as California’s wildfire fund could be exhausted in the future. While the immediate market reaction has been negative, analysts suggest that a potential return to negotiations by lawmakers might lead to more favorable reforms and potentially reverse current stock declines.
Topics: California legislation Edison International PG&E utility stocks wildfire liability