Stock Market Today, Aug. 28: PG&E Falls 8% on Wildfire-Liability Uncertainty Ahead of Aug. 31 Deadline
PG&E (NYSE:PCG), a California-regulated utility delivering electric and gas service, closed at $16.61, down 7.44%. California Governor Gavin Newsom's plan to protect utilities from insurers in the case of a catastrophic wildfire has been blocked by California lawmakers. Investors are watching wildfire liability legislation before the Aug. 31 deadline. Trading volume reached 109.0M shares, coming in about 387% above its three-month average of 22.4M shares.
How the markets moved today
The S&P 500 (SNPINDEX:^GSPC) fell 0.27% to 7,710, and the Nasdaq Composite (NASDAQINDEX:^IXIC) lost 0.52% to 26,402. Among regulated electric and natural gas utility peers, Southern (NYSE:SO) closed at $88.24, down 0.91%, while Edison International (NYSE:EIX) fell 4.79% to $70.15 as wildfire-liability concerns stayed in focus.
What this means for investors
California lawmakers have blocked a plan by Gavin Newsom to prevent insurers from recouping losses from utilities (such as PG&E) when their equipment causes a wildfire. This development takes a major layer of potential protection away from PG&E, which is likely why its shares tumbled 8% on the news today.
While this is a highly polarizing political topic in the state, it is nonetheless a bad outcome for PG&E, regardless of what solution may be best for the state. Newsom previously suggested the idea since a potential wildfire could drain California's wildfire liability fund, raise energy rates, and further harm investors in PCG stock if the company were to struggle or go bankrupt afterward.
I'm far from a specialist in the energy investing world -- and a utility that operates in California ups the degree of complexity to a whole new level as well -- so I am just staying on the sidelines with this new information.
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Josh Kohn-Lindquist has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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