Edison International’s shares fell 5.9% in afternoon trading after California lawmakers blocked Governor Gavin Newsom’s proposal to restrict insurers from suing energy utilities for wildfire-related losses, a legal process known as subrogation.
The legislative setback, which occurred during closed-door negotiations that collapsed ahead of an August 31 deadline, leaves Southern California Edison—Edison International’s utility subsidiary—exposed to potentially unlimited lawsuits from insurers over wildfire liabilities. The stalled bill had aimed to cap insurer claims, reducing the financial risk for utilities operating in high-risk wildfire regions.
Analysts responded swiftly to the development. Barclays downgraded Edison International from equal-weight to neutral on Thursday, lowering its price target from $78 to $75. The bank’s analyst, Nicholas Campanella, cited escalating regulatory and political uncertainty in California as the primary concern, while noting that Edison International had been the best-performing California utility year-to-date. Argus followed on August 26, downgrading the stock from buy to hold due to wildfire liability risks.
Morgan Stanley and Wells Fargo had already adopted bearish stances on the company prior to the legislative impasse. The broader utility sector in California also came under pressure, with rival PG&E experiencing a sharp decline, underscoring that the sell-off was driven by systemic legislative risk rather than company-specific issues.
Edison International’s stock, which had reached a 52-week high of $81.62 earlier in the session, retraced losses alongside broader U.S. equity benchmarks. The S&P 500 fell 0.3%, the Dow Jones declined 0.1%, and the Nasdaq dropped 0.5% during the same period.
