PG&E Slumps on Report of Proposed Wildfire Fund Contribution

PG&E shares fell 1.1% after Bloomberg reported a proposal by California Governor Gavin Newsom to require the company's shareholders to contribute to a wildfire fund. The proposal would help PG&E pay for damages from past wildfires and potentially mitigate future liabilities.

California Governor Gavin Newsom has introduced a legislative proposal to bolster the state's wildfire fund, which could significantly impact PG&E Corp. (NYSE: PCG) stock. The plan aims to channel an additional $18 billion into the fund, almost doubling the current commitments, with electricity ratepayers contributing half through a monthly fee and the other half coming from three utility companies, including PG&E, Edison International, and Sempra [1].

The proposal seeks to address the uncertainty over liability linked to the deadly wildfires that struck Los Angeles County in January. The existing wildfire fund, established in 2019, is at risk of being depleted due to the high claims from these fires. The fund currently has over $13 billion in assets, but claims from the Eaton fire, one of the conflagrations, could exhaust the fund if Edison International is found responsible [1].

Under Newsom's plan, the fund's new sunset date would be extended to 2045, and state agencies would conduct a study on how to spread the cost of utilities' wildfire risks across a broad swath of California taxpayers. Additionally, the proposal aims to cap the amount insurers can obtain from the fund through subrogation claims, which give them the right to compensation from a utility found liable for fire damage [1].

The proposal has faced opposition from utility executives, who have called for replenishing the fund to fall on California ratepayers, not company shareholders. Insurers may also contend that capping the amount of money they can obtain from the fund through subrogation claims will force them to raise rates or limit policies in the state [1].

PG&E shares fell 1.1% after Bloomberg reported Newsom's plan, with equity analysts noting that the requirement for shareholders to contribute to the fund will weigh on the company's stock. Analysts at Jefferies and Barclays expressed concern that the plan could be unpalatable to shareholders and negatively impact shares [2].

Newsom's proposal is still in draft form and could be subject to change. The legislature reconvenes from summer recess on Aug. 18, and it's unclear when the proposal would be introduced by a lawmaker. The governor's office believes that utilities are contributing to the rapid depletion of the wildfire fund by agreeing to overly high settlements of subrogation claims [1].

References:
[1] https://www.claimsjournal.com/news/national/2025/07/31/332120.htm
[2] https://www.bloomberg.com/news/articles/2025-07-31/pg-e-falls-on-newsom-plan-for-investors-payment-into-fire-fund