PG&E Corp. shares fell 8.1% to $16.50 in afternoon trading on Tuesday after California lawmakers on August 27 rejected a proposal that would have limited insurers' ability to sue utilities for wildfire-related payouts.
The rejected legislation, part of Governor Gavin Newsom’s proposal, aimed to curtail subrogation rights, a legal process through which insurers seek reimbursement from utilities for wildfire damages. PG&E management had previously tied its entire capital investment plan, valued at approximately $20 billion through 2030, to securing favorable wildfire liability reform.
The legislative setback follows recent analyst actions. On August 25, Baird maintained its Buy rating on PG&E, citing progress on wildfire legislation as a key support for the stock’s valuation. Earlier in the prior week, Morgan Stanley reduced its price target for PG&E to $22 from $23.
The decline in PG&E shares coincided with broader market weakness. The S&P 500 fell 0.3%, the Dow Jones Industrial Average lost 0.1%, and the Nasdaq Composite declined 0.5%. Edison International, another California utility, also retreated on the same legislative development, reflecting a sector-wide impact.
Options market activity showed a bearish tilt, with elevated put volume signaling increased hedging against further downside risk.
