North American Utilities Model Updates: EIX, PCG, SRE

Research evidence excerpt

North American Utilities Model Updates: EIX, PCG, SRE

J P M O R G A N North America Equity Research

14 May 2026

North American Utilities

Model Updates: EIX, PCG, SRE

In this week’s Senate Committee hearings, several legislators acknowledged the North American Utilities

ACneed to pass supportive legislation that further socializes wildfire costs, a broadly Aidan C Kelly

reassuring touchpoint for CA IOUs, EIX, PCG, and SRE, in our view. Overall, (1-212) 622-4912

inverse condemnation carveouts, negligence standard transition, fund aidan.x.kelly@jpmchase.com

recapitalization, subrogation waivers, state administered wildfire liability Jeremy Tonet, CFA

insurance and a backstop solution all remain in the realm of possibilities, though (1-212) 622-4915

we note a few senators held a firm line against removing inverse condemnation, jeremy.b.tonet@jpmorgan.com

which did surprise us given previous key stakeholder commentary. Based on the Eli Jossen, CFA

fact pattern to date, we do not expect a bill to hit the docket until August, near the (1-212) 622-4113

eli.jossen@jpmchase.com

session end. While a state backstop for wildfire liabilities screens among the best-

Diana Nilescase scenarios, we appreciate other pathways could still clear the bar for achieving

(1-212) 622-3328

an improved IOU risk framework and driving incremental investor confidence. We diana.niles@jpmorgan.com

also believe a successful reform in this session could materially ease tensions J.P. Morgan Securities LLC

voiced in the gubernatorial election rhetoric. Our Derivatives Strategy team

recommends buying September call spreads on PCG ahead of the August summer

legislative session. We also remain OW on SRE given its stand-out PETeR

valuation, differentiated capex runway from TX growth, and lower relative