PG&E (PCG) Is Down 13.9% After Launching Wide-Ranging Strategic Review Amid Wildfire Risks

PG&E (PCG) and Edison (EIX) shares fell after California lawmakers introduced a bill without liability protection for utilities. Analysts downgraded both stocks, and PG&E cut its 2027 capital investment plan by $2 billion. PG&E reaffirmed its FY 2026 earnings guidance and initiated FY 2027 guidance. Both companies face significant wildfire liability risks, with PG&E potentially covering 48% of the state's wildfire liability fund.

PG&E plans to reduce spending by $2B on energy and housing projects by 2027, citing financial pressures. California lawmakers express concern, as this may impact wildfire prevention and infrastructure. The company, along with other utilities, has been lobbying to shift wildfire costs to insurance companies, but no action was taken in the recent legislative session.

Dell Technologies shares rose to all-time highs after strong Q2 earnings and raised full-year guidance. Uber announced 3,300 job cuts to focus on robotaxi development. Broadcom shares fell despite strong earnings due to lower-than-expected Q4 revenue guidance. Robinhood Markets gained after bullish analyst notes. Edison International and PG&E fell over 20% due to wildfire-related legislation.

PG&E (PCG) shares fell 20% after California's wildfire-liability reform failed, increasing financial risks. The company deferred $2B in capital spending, reducing its 2027 plan to $11.4B. CEO Patti Poppe announced a strategic review to restore investment-grade credit, with everything on the table. Wildfire risk may raise borrowing costs, impacting future growth.

PG&E (PCG) shares rose 2.4% to $14.30 on Friday, though still down 20.3% from August 27. The company cut its 2027 capital plan by $2 billion, reducing debt needs but potentially limiting future growth. Management maintained 2027 core earnings guidance of $1.78-$1.82 per share. The stock's movement outpaced peers Edison International (EIX) and Sempra (SRE).

California lawmakers failed to pass wildfire reform legislation (S.B. 492) by the Aug. 31 deadline, leaving utilities PG&E and SCE exposed to unlimited liability for wildfire damages. The bill's failure caused a $20B market value drop for the utilities, as investors reacted to the lack of liability caps and subrogation limits. PG&E and SCE have been linked to multiple devastating wildfires in the past decade, with critics arguing they prioritize dividends over infrastructure upgrades.