PG&E and Edison International fall after lawmakers block wildfire plan

Investing.com -- Shares of California utility companies PG&E and Edison International fell Friday after state lawmakers blocked Governor Gavin Newsom's proposal to prevent insurance companies from suing utilities that cause wildfires, according to KCRA 3.

Edison International traded down approximately 3.5%, while PG&E dropped 10%.

California lawmakers stopped the governor from pursuing his plan to prevent insurance companies in California from recovering their losses from investor-owned utilities that cause catastrophic wildfires, multiple sources confirmed to KCRA 3 Friday morning.

Negotiations broke down late Thursday night during a closed-door meeting between the governor's staff and Democratic state lawmakers who are part of a working group on wildfire liability, the report said.

The proposal to shift some wildfire liability costs onto insurers was part of a broader plan the governor pushed to limit who and how much the state's three investor-owned utilities pay when they cause catastrophic wildfires. The governor wanted to end subrogation, a process in which insurance companies recoup losses from utilities after the companies pay wildfire claims for damaged or destroyed property.

CEOs of major insurance companies warned this would cause premiums to increase substantially and risked destabilizing the state's insurance market.

The governor pushed this plan amid concerns that a future wildfire caused by an investor-owned utility could drain the state's wildfire liability fund that is funded by ratepayers and shareholders and risk bankruptcy for the investor-owned utility companies.

In a memo obtained by KCRA 3, the governor's office staff acknowledged Thursday night there was not a "path to take on the larger structural reform in a way to meaningfully contain costs."

The memo noted the governor's office would still propose to ban utility CEOs from receiving bonuses if their company starts a wildfire, create a fast-pay program to speed up victim payouts, establish a statewide community wildfire strategy, create a wildfire data sharing platform, and outlaw speculative investing in wildfire claims by hedge funds and private equity.

You May Also Be Interested In

• PG&E Corp. (PCG), Edison (EIX) see havy mid-day pressure
• Fed chair Warsh kicks off Jackson Hole keynote address
• Blue Owl leads $2.4B equipment financing for IREN's Canada data center