I'm Watching PG&E Closely, but Here's Why I Haven't Bought the Dip
Utilities are usually seen as low-risk bets, but due to its California footprint, risk abounds with PG&E.
As a Californian, many residents dislike insurance providers and utilities. With wildfire reform legislation on the table, those industries are currently at odds. PG&E, one of California's four major investor-owned utilities, isn't popular with state residents due to the state's high utility rates. In 2009, Nvidia flashed a promising signal, but a similar signal now shines on PG&E.
While other stocks face public disdain, PG&E's risk lies in Sacramento. The California State Assembly altered Senate Bill 492 (SB 492) in late August, removing protections for insurance companies suing utilities over wildfire claims. PG&E's shares fell 18% on the first day of trading and lost over a quarter of their value in the past month.
PG&E acknowledges the bill fails to adequately address wildfire financing risks, making it less attractive for long-term investment. Fitch Ratings lowered its outlook on PG&E to negative from stable, acknowledging the increasingly challenging regulatory environment in California. For investors, this pullback may be too tough to embrace, as PG&E isn't included in the Motley Fool Stock Advisor's top 10 list of recommended stocks.
Written by urgent.news from Yahoo Finance's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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