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Investing.com -- PG&E Corporation (NYSE:PCG) stock rose 4%, Edison International (NYSE:EIX) gained 1%, and Sempra (NYSE:SRE) climbed 1.5% after California lawmakers reached an initial agreement to boost the state’s wildfire utility fund by approximately $18 billion.
The agreement, expected to be filed into legislative text on Wednesday, aims to shore up the fund that has been at risk of depletion following devastating January wildfires in the Los Angeles area. According to a report from Bloomberg, citing people familiar with the negotiations, the plan will split funding equally between ratepayers and utility shareholders.
This proposal is designed to stabilize utilities’ finances and limit shareholder losses in the face of increasing wildfire liabilities. California utilities have faced significant financial pressure as potential liabilities from state wildfires have heightened risks for companies like Edison International and PG&E.
The January wildfires that ravaged parts of the Los Angeles area prompted concerns about the sustainability of the California Wildfire Fund, which was established to help utilities manage wildfire-related costs. The fund’s potential depletion threatened to create additional financial uncertainty for the state’s utility companies.
The legislative action represents an important development for California’s utility sector, which has struggled with wildfire-related challenges in recent years. PG&E, the state’s largest utility, previously filed for bankruptcy in 2019 due to wildfire liabilities before emerging in 2020.
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