Shares of PG&E plunged to $14.85, extending a brutal two-day selloff that has erased roughly 19% from the stock since August 26, after California lawmakers killed the centerpiece of Governor Gavin Newsom's wildfire-liability overhaul on the final day of the legislative session. Newsom had proposed ending subrogation — the legal process that lets insurance companies sue utilities to claw back payouts made to wildfire victims when utility equipment sparks a fire.

Leaders in both the Assembly and Senate formally rejected the idea after insurers warned it would cause property-insurance premiums to surge statewide.

  • The $21 Billion Safety Net Now Looks Thinner. California's Wildfire Fund, a $21 billion reserve paid half by utility shareholders and half by customers through a $2.50 monthly surcharge, was designed to cover victims' claims.

Experts believe the original fund could be bankrupted by eventual claims from the Eaton Fire alone , and without subrogation reform, the fund remains exposed to future subrogation suits that drain it further. Every dollar insurers recover from the fund or directly from PG&E is a dollar that could otherwise support the company's balance sheet.

  • PG&E Got Crumbs, Not the Full Meal. Lawmakers did include smaller provisions favorable to utilities, such as barring hedge funds from buying up insurers' claims against electric companies and capping lawyers' fees.

They also backed banning CEO bonuses if company equipment causes a fire and creating a fast-pay victim payout framework. But the structural shield PG&E wanted — eliminating insurers' right to sue — is dead for 2026. Newsom himself called on lawmakers to "revisit the issue next year."

  • Wall Street Is Already Repricing the Risk. Jefferies downgraded PG&E to Hold from Buy, citing weakening prospects for meaningful reform. By contrast, UBS had reiterated a Buy rating with a $22 price target — now 48% above the current price, a gap that signals deep disagreement over what the stock is worth. UBS warned that without significant reform, PG&E may cut California growth spending , which would slow long-term earnings power.

  • Management Hinted It Has a Plan B. The CEOs of PG&E and Edison said they would "take action to protect their shareholders" if lawmakers failed to act, though they did not specify what they planned to do.

UBS suggested that dividend increases are more likely than share buybacks , but reducing capital investment would undercut the growth story that justified PG&E's valuation just weeks ago. The company still guides for core earnings of $1.64 to $1.66 per share in 2026 , putting today's stock at barely 9× earnings — cheap, but only if the next megafire doesn't repeat the bankruptcy playbook.