California Wildfire Legislation Postponed; These Utility Stocks Pare Losses

California scrapped a wildfire liability overhaul, leaving utility credit ratings at risk. PG&E and Southern California Edison bonds and stocks were affected, with S&P warning of potential downgrades. The original proposal included a liability cap and was seen as credit supportive, but the revised bill was deemed insufficient. The issue will be left to the next governor, with Moody's warning of higher electricity rates and economic competitiveness challenges.

Edison International (EIX) shares dropped 6.14% on Wednesday after JPMorgan analyst Aidan Kelly cut his price target to $61 from $82, citing regulatory setbacks. The California legislature did not vote on the Wildfire Liability Bill, leaving Edison's subsidiary, Southern California Edison, exposed to lawsuits over the Eaton fire. Kelly maintained a neutral rating.

California lawmakers adjourned without passing a wildfire bill, which utility companies and Gov. Newsom deemed insufficient. PG&E (PCG) and Edison International (EIX) shares rose 6% and 8.9% respectively, rebounding from Monday's declines. The bill aimed to address wildfire costs and liability but lacked key provisions sought by utilities and insurers.

California's wildfire liability plan, SB 492, failed to pass in the Assembly. Edison International and PG&E opposed the bill, citing potential higher rates and lawsuits. Their shares rebounded after the bill's defeat, with Edison gaining 7.3%. The companies had lost over $20 billion in value earlier. The bill's failure was attributed to the utilities' unwillingness to compromise.

Joy Chen and Jamie Court criticized the failure of SB 492, a utility bailout bill, citing its rejection by legislators. They attributed recent stock price declines of PG&E (20%) and Edison International (23%) to Wall Street's lack of confidence in their wildfire risk management. The statement highlighted the companies' role in costly wildfires and their substantial profits, urging them to focus on prevention rather than seeking bailouts.

California lawmakers passed energy bills, including solar and data center measures, but rejected Gov. Newsom's proposal to limit utility wildfire liability, causing PG&E (PCG) and Edison International (EIX) stocks to drop 20% and 23% respectively. Other bills address rate structures, renewable energy, and grid support. Bank of America downgraded Edison International to 'neutral'.