PG&E shares slid 8.1% to $16.50 in afternoon trading on Friday after California lawmakers rejected Governor Gavin Newsom’s proposal to limit insurers’ ability to sue utilities over wildfire damages.
The legislative setback, which followed the collapse of closed-door negotiations in Sacramento on August 27, directly threatens PG&E’s capital investment plan through 2030. The company had previously tied its long-term funding commitments to a favorable resolution on wildfire liability reform.
The broader utilities sector also came under pressure, with Edison International ending 4.76% lower at $70.17. The S&P 500 fell 0.3%, the Dow slipped 0.1%, and the Nasdaq declined 0.5%, reflecting a mixed day for major U.S. equity benchmarks.
Analysts had already signaled growing caution ahead of the legislative outcome. On August 25, Baird reiterated its Buy rating on PG&E, citing progress toward wildfire legislation as a key support for the stock’s valuation. Morgan Stanley, however, had trimmed its price target to $22 from $23 in the prior week, reflecting mounting concerns over regulatory risks.
Options market positioning amplified the bearish sentiment, with put volume running heavily elevated. The collapse of the bill removes a near-term catalyst that had underpinned the company’s equity case, leaving investors to reassess PG&E’s financial and operational outlook amid ongoing wildfire exposure in California.
