Shares of California utilities climbed on Wednesday after state lawmakers reached an early deal to strengthen the state’s wildfire utility fund with roughly $18 billion in fresh support. PG&E Corporation rose 4%, Edison International gained 1%, and Sempra climbed 1.5% on the news.
According to Bloomberg, which cited people familiar with the talks, the agreement is set to be filed into legislative text this week. The plan would split funding evenly between utility shareholders and ratepayers, providing a financial backstop against future wildfire-related costs.
The move comes at a critical time for California’s power providers. The wildfire fund, originally created to help utilities absorb the financial hit from catastrophic blazes, has been under strain. A series of wildfires in January devastated parts of the Los Angeles area, raising fears that the fund could be depleted more quickly than expected. Without additional support, utilities faced mounting uncertainty over how they would cover future liabilities.
For investors, the proposal offers some reassurance that the state is committed to maintaining stability in the utility sector. By sharing costs between customers and shareholders, the plan is designed to limit steep financial losses for companies while ensuring utilities can continue operating reliably. Analysts have noted that without such measures, the risk of massive wildfire claims could once again force utilities into severe financial distress.
PG&E, the state’s largest utility, has been at the center of wildfire-related financial turmoil before. The company filed for bankruptcy protection in 2019 after facing billions of dollars in liability claims linked to deadly fires. It emerged from bankruptcy in 2020 but has remained under pressure from investors and regulators as wildfire risks continue to mount. Edison International and Sempra have also carried heightened risk premiums tied to their exposure to wildfire-prone regions.
The legislative step marks an important shift in California’s ongoing effort to balance the realities of climate-driven disasters with the financial health of its energy sector. Extreme heat, drought, and aging infrastructure have made the state particularly vulnerable to destructive wildfires, which not only threaten communities but also place huge costs on utilities responsible for maintaining power lines and equipment.
Market reaction on Wednesday showed cautious optimism. PG&E’s sharp gain reflected investor relief that lawmakers are taking steps to stabilize the sector, while Edison International and Sempra also moved higher on expectations that the deal could ease pressure across the industry.
The agreement still needs to make its way through the legislative process, but if passed, it would represent one of the largest infusions of support into the wildfire fund since its creation. For utilities and investors alike, it signals that California is looking to share the burden of wildfire risks more evenly while reducing the chances of another financial crisis in the sector.