California Lawmakers Reject Wildfire Insurance Reform, PG&E Shares Drop Sharply

PG&E Corp. shares moved lower Friday afternoon. The stock faced selling pressure following reports that state lawmakers rejected legislative efforts by Governor Gavin Newsom aimed at shielding utilities from subrogation claims by insurers.

PG&E shares are sliding. What is dragging down PCG stock?

Lawmakers Reject Plan to Ban Subrogation Claims Against Utilities

Friday's decline came directly from a legislative standstill in Sacramento ahead of the August 31 deadline. Governor Newsom had proposed ending subrogation, a legal process that allows insurance companies to recover losses from utilities when power equipment ignites wildfires.

After insurance industry executives warned that shifting liability to insurers would drive up property insurance premiums statewide, legislative leaders in both chambers formally voted down the proposal.

Wildfire Fund Vulnerability and Remaining Proposals

The rejection maintains the status quo, leaving utility balance sheets and the state's $21 billion wildfire fund funded by ratepayers exposed to future subrogation litigation risk. Investors had hoped a liability cap would protect shareholder equity and cash reserves in the event of major catastrophic fires.

An internal memo from the governor's office acknowledged that broader structural liability reform had no viable path forward before the end of the current legislative session.

Lawmakers still support narrower provisions, including banning utility CEOs from receiving bonuses when company equipment starts fires, establishing a framework for rapid victim compensation, and prohibiting hedge funds from speculating on wildfire claims.

PCG Shares Fall Friday

PCG price action: As of Friday's close, PG&E shares were down 7.63% at $16.58.