PG&E Plunges Up to 19% After California Wildfire Bill Omits Utility Liability Protections

PG&E Corporation shares fell as much as 19% in premarket trading on August 31 and continued sharply lower through the session after the California State Assembly advanced wildfire legislation that stopped short of the liability protections utility investors had been expecting. The bill was described by analysts as more focused on victim protections without introducing any new investor protections, leaving utilities including PG&E exposed to the same wildfire liability risks that have long weighed on the sector.

The selloff triggered a wave of analyst downgrades. BMO Capital Markets cut PG&E from Outperform to Market Perform and slashed its price target to $21 from $28. Wells Fargo downgraded the stock from Overweight to Equal Weight with a $24 target. Mizuho moved its rating from Outperform to Neutral and cut its target to $16 from $21. The downgrades reflect a reassessment of the regulatory risk profile that utility investors had hoped the legislation would materially reduce.

The damage extended across the California utility sector. Edison International fell roughly 23% by late morning, with Mizuho also cutting EIX to Neutral from Outperform with a target of $70 down from $86. Sempra Energy dropped more than 2%, and Mizuho similarly downgraded SRE to Neutral from Outperform, cutting its target to $84 from $104. Options implied volatility on PG&E rose sharply alongside the price decline, reflecting elevated uncertainty about the company's wildfire exposure going forward.