Why Edison International Stock Withered on Wednesday

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'.

BMO Capital downgraded Xenia Hotels (XHR) to Market Perform, cutting its target to $20.5. B of A downgraded PG&E (PCG) to Neutral, reducing its target to $13, and Edison International (EIX) to Neutral, slashing its target to $51. XHR, PCG, and EIX closed at $18.75, $13.27, and $53.98 respectively on Monday.

California lawmakers will vote on a bill (SB 492) that increases accountability for utilities causing wildfires, impacting PG&E (PCG) and Edison International (EIX). The bill includes a fast-pay program for victims, bans claim sales to private equity, and limits executive compensation during wildfires, potentially increasing costs and regulatory risks for the utilities.