Why PG&E Stock Just Crashed

California electric utility stock PG&E Corporation (PCG -18.62%) crashed 19.6% through 11:50 a.m. ET Monday after a legislative effort in Sacramento to limit utilities’ exposure to lawsuits from insurance companies fell apart over the weekend.

Image source: Getty Images.

What’s happening in California today

As Sacramento NBC affiliate KCRA 3 reports, Gov. Gavin Newsom was working to secure legislation that would partially insulate PG&E and similar utilities from liability for wildfires caused when their equipment malfunctions. When homes are destroyed in a wildfire, for example, homeowners claim compensation from their insurance companies — which in turn try to mitigate their own losses by suing the electric utility they deem responsible for the fire. (Legally, the route used to do this is called “subrogation.”)

The legislation in question would have prevented insurance companies from suing utilities, resulting in the insurers — not the utilities — bearing the cost of wildfires. Problem is, the insurers point out that if they’re required to bear the full cost of wildfires that result from circumstances out of their control (and more within the control of utilities), they’ll need to raise their insurance premiums, or drop insurance for homeowners in high-risk areas.

Ultimately, this argument prevailed, and legislators refused to go along with the Governor’s proposal.

Today’s Change

(-18.62%) $-3.09

Current Price

$13.51

Key Data Points

Market Cap

$37BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day’s Range

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$13.09 – $13.70

52wk Range

$13.09 – $19.16

Volume

99.7M

Avg Vol

22.6M

Gross Margin

20.13%

Dividend Yield

1.05%