California lawmakers passed a series of energy bills this week while rejecting an attempt by Gov. Gavin Newsom to limit utilities' wildfire liability, according to legislative actions reported by Utility Dive. The decision sent utility stock prices tumbling on Monday, with PG&E Corp. dropping 20% and Edison International falling 23% in what marked Edison's largest single-day decline in more than a quarter century. As written, Senate Bill 492 maintains the right for wildfire survivors, local governments, and insurers to pursue wildfire-related claims against utilities without capping damages, preserving existing liability structures that utility companies say threaten future infrastructure investment.
Among the notable bills headed to Newsom's desk are proposals to legalize balcony solar panels and allow remote inspections for certain home energy projects. SB 868 legalizes portable solar generation devices, often called balcony or plug-in solar, while AB 1738 permits remote inspections for energy projects on one- or two-family homes, including heat pump water heaters, solar systems rated at 15 KW or less, and energy storage systems. AB 1813 revises the customer renewable energy subscription program to boost low-income participation and caps participating projects at 5 MW of generation capacity and 5 MW of storage. Additional legislation requires the California Public Utility Commission to assess rate structures for data centers and evaluate how federal laws like the One Big Beautiful Bill Act affect utility expenses and tax liabilities. By Tuesday morning, utility stock prices had not recovered from Monday's losses.
In a joint letter to the Legislature, PG&E and Edison International warned that SB 492 puts California "at risk of constrained investment, higher utility bills, less spending, and fewer jobs." The utilities argued they must attract tens of billions of dollars in private investment annually to reduce wildfire risk, strengthen the electric grid, and achieve the state's clean energy goals, but that investors now "face risks in California unlike in any other state" and therefore "demand a higher return or invest elsewhere." Bank of America downgraded Edison International from "buy" to "neutral" on Tuesday, slashing its price target to $51 from $81, with analysts writing that "with wildfire risk elevated and no policy clarity likely for another year, uncertainty should continue to weigh" on the company. Brandon Garcia, California director at Advanced Energy United, told Utility Dive the organization supported bills like SB 905 for "general good governance utility reforms" and AB 2493 because "we're really interested in reducing the interconnection delays for different kinds of large scale projects."
The wildfire liability debate reflects a tension between protecting victims' rights to compensation and ensuring utilities can secure affordable capital for infrastructure projects. The utilities contend that elevated financial risks make essential infrastructure more expensive and place additional pressure on electricity rates, with cascading impacts on the state's economy and climate ambitions. Meanwhile, advocates praised other legislative victories, including AB 1813, which they say could position California to build the nation's largest community solar and storage program after the state's 2022 community solar law produced "a program built to fail, and not a single community solar project has come online under it," according to Californians for Local Affordable Solar and Storage. One disappointment for clean energy advocates was the state's decision not to fund its Demand Side Grid Support program in 2027, though the legislature rejected proposals to eliminate it entirely, leaving the program in limbo as California faces what some expect to be a severe El Niño weather event later this year.