Shares of PG&E and Edison International fell sharply on Friday after California lawmakers blocked Governor Gavin Newsom's proposal to shield investor-owned utilities from lawsuits over catastrophic wildfires.
PG&E dropped 10% while Edison International declined 4.76%, reflecting investor concerns over the state's regulatory uncertainty. The plan, which sought to prevent insurers from suing utilities for wildfire-related losses through subrogation, was part of a broader effort to cap utility liability payments for such disasters.
Negotiations collapsed late Thursday during a closed-door meeting between the governor's staff and Democratic state lawmakers. The governor's office acknowledged in a memo that larger structural reforms could not advance, though it noted plans to pursue narrower measures including banning wildfire-related bonuses for utility executives and establishing a fast-pay program for victim compensation.
Major insurance industry leaders had warned that the original proposal could drive up premiums and destabilize California's insurance market. The governor had pushed for the reforms amid fears that a future utility-caused wildfire could deplete the state's wildfire liability fund—financed by ratepayers and shareholders—potentially risking bankruptcy for investor-owned utilities.
Additional elements still under consideration include a statewide wildfire strategy, a data-sharing platform for wildfire risks, and restrictions on speculative investments in wildfire claims by hedge funds and private equity firms.
