PG&E Corporation shares fell nearly 20% on Monday after California lawmakers significantly altered Governor Gavin Newsom’s proposed overhaul of wildfire liability rules. The legislative action dealt a blow to the governor's plan, which had aimed to shield utilities from lawsuits by insurance companies seeking to recover wildfire losses.
Instead of blocking insurers from suing, the legislature opted for a more limited compromise. This new measure includes provisions to prevent utility CEOs from receiving bonuses if their companies spark wildfires and to expedite payments to victims of these fires. The outcome led to a sharp decline in PG&E's stock value.
The utility has been implicated in numerous significant California wildfires in recent years. These include the 2018 Camp Fire, the 2019 Kincade Fire, the 2020 Zogg Fire, and the 2021 Dixie Fire, all of which resulted in substantial liability for PG&E.
The original proposal by Governor Newsom sought to change the financial responsibility for wildfires ignited by utility equipment. However, it faced strong opposition from insurance companies, hedge funds, and trial lawyers, prompting lawmakers to pursue a revised approach.
The California Post has reached out to PG&E for comment on the legislative developments and their impact on the company.