Pacific Gas & Electric Corporation (NYSE: PCG) shares plunged roughly 19% on Monday, August 31, 2026, closing near $13.40 after opening around $16.60, as investors reacted to California lawmakers’ failure to shield utilities from wildfire liability costs.
The selloff followed the California Legislature’s weekend passage of an amended Senate Bill 492 that omitted key protections Governor Gavin Newsom had sought, including a $6 billion per-incident cap on wildfire fund withdrawals, a ban on insurers suing utilities to recover wildfire claims (subrogation), and a mechanism to replenish the state’s wildfire fund once depleted. The bill’s Monday deadline forced a same-day repricing of California-exposed utilities.
PG&E said in a statement the legislation “does not adequately address the financing risks created by California’s current wildfire liability framework” and lacks the “long-term durability” needed to attract investment.
The news triggered a wave of Wall Street downgrades. BMO Capital Markets cut PG&E to Market Perform from Outperform, slashing its price target to $21 from $28 and raising its estimated wildfire liability drag to $10 per share from $6. Wells Fargo moved to Equal Weight with a $24 target, while Mizuho downgraded to Neutral with a $16 target.
Rival Edison International tumbled as much as 24% on similar exposure, while Sempra fell only modestly given lighter California risk. The broader Utilities Select Sector SPDR ETF slipped just 1%, underscoring that the drop was company-specific rather than sector-wide, tied to unresolved wildfire liability and looming credit-rating concerns.
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