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Investing.com -- PG&E Corporation (NYSE:PCG) stock fell 3% on Monday following a proposed California legislation that would overhaul utility regulation and financing in the state.
The bill, which was originally aimed at addressing affordability issues due to rising consumer power bills, has evolved to focus on an "expansive utility regulation overhaul," according to a report from Jefferies. PG&E shares have declined more than 15% this month amid growing concerns about the legislation’s impact.
The current version of the bill would create a new regulatory authority and excludes utility shareholders from earning profits from as much as $15 billion in capital spending on fire mitigation and infrastructure. Jefferies noted that "the risk of cost shifting seems apparent" in the proposed legislation.
The California Senate approved the SB 254 bill last week. It still requires approval from the state assembly and could be passed before the summer recess begins in July.
The legislation also appears to include provisions for improving the state’s utility wildfire insurance fund, which would require ongoing contributions from utilities, according to Jefferies.
Edison International (NYSE:EIX), owner of Southern California Edison utility, has also been affected by the proposed regulatory changes, with its shares down more than 10% this month.
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