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California utilities face stock plunge as wildfire liability bill fails
California utility stocks, including PG&E Corporation and Edison International, experienced significant price drops after state lawmakers rejected a proposal to limit their liability for wildfires. The rejected measure, advocated by Governor Gavin Newsom, would have prevented insurance companies from suing utilities to recover costs through a process known as subrogation.
Insurers argued that bearing these costs would necessitate higher premiums or the withdrawal of coverage in high-risk areas. While the primary liability shield failed, a compromise bill, Senate Bill 492, was introduced. This legislation includes provisions to speed up payouts to wildfire survivors, block hedge funds from purchasing certain wildfire-related insurance claims, and limit attorney fees for wildfire-damage suits. Additionally, the bill may deny bonuses to utility executives in years when their companies cause catastrophic fires.
Despite these concessions, Wall Street analysts expressed disappointment. Mizuho Securities downgraded both PG&E and Edison International to neutral, citing the lack of meaningful liability reform and the continued exposure to uncapped wildfire-related risks. The California Assembly ultimately declined to vote on the compromise bill on the final day of the legislative session, effectively stalling the measure.
Entities
California State Legislature · Edison International · Gavin Newsom · Mizuho Securities · Monique Limón · PG&E Corp. · PG&E Corporation · Sempra
Claims
What the coverage asserts, and how many sources carry each claim.
- [● 6 SOURCES] Proposed compromises include limiting attorney fees for wildfire-damage suits and potentially denying CEO bonuses in years when companies cause wildfires. www.fool.com · www.claimsjournal.com · offthepress.com · www.carriermanagement.com · nypost.com
- [○ 1 SOURCE] Edison International stock fell by approximately 24.2%. www.fool.com
- [● 4 SOURCES] California lawmakers advanced Senate Bill 492 without including a liability shield for utilities. www.world-today-news.com · nemosnewsnetwork.com · offthepress.com · nypost.com
- [○ 1 SOURCE] PG&E Corporation stock fell by approximately 19.6%. www.fool.com
- [● 16 SOURCES] California legislators rejected a proposal to prevent insurance companies from suing utilities for wildfire damages. www.fool.com · www.world-today-news.com · www.claimsjournal.com · nemosnewsnetwork.com · offthepress.com · +9 more
- [● 12 SOURCES] Insurers argued that bearing the full cost of wildfires would lead to higher premiums or the withdrawal of coverage in high-risk areas. www.fool.com · www.claimsjournal.com · www.carriermanagement.com · nemosnewsnetwork.com · offthepress.com · +5 more
- [● 2 SOURCES] Mizuho analyst Anthony Crowdell downgraded PG&E from Outperform to Neutral and lowered the price target from $21 to $16. www.world-today-news.com · nemosnewsnetwork.com
- [○ 1 SOURCE] Mizuho Bank downgraded Edison International stock to neutral and lowered its price target to $70. www.fool.com
- [● 2 SOURCES] The legislation includes provisions to block hedge funds from buying wildfire-related insurance claims. www.claimsjournal.com · www.carriermanagement.com
- [● 5 SOURCES] Utility company CEOs may be denied bonuses in years their companies cause wildfires. www.fool.com · www.claimsjournal.com · offthepress.com · www.carriermanagement.com