US Utilities Is There Enough Time to Solve California‘s 3-Legged Stool?

Research evidence excerpt

US Utilities Is There Enough Time to Solve California‘s 3-Legged Stool?

Global Research

9 July 2026ab

US Utilities Equities

AmericasIs There Enough Time to Solve California's 3-

Legged Stool? Utilities

Gregg Orrill

Analyst

gregg.orrill@ubs.com

What's Our Take? +1-212-713 1064

With this note we temper expectations on the likelihood of legislation passing that William Appicelli, CFA

addresses the wildfire tail risk and provide a reminder of key dates and issues. That said Analyst

our discussions with utilities and policymakers is that work continues, that it remains william.appicelli@ubs.com

important to Gov. Newsom and that we could see legislation introduced. For utilities +1-212-713 1414

addressing the liability tail risk of a fire that depletes the insurance fund represents a $5-

$10/month savings for customers for investment grade utilities as presented in

Gov. Newsom's task force CEA report However, passing legislation will require support

from the insurance industry and attorneys which may be too much to corral with the

time left. The utilities remain heavily discounted versus the Utility group on '28 P/

E including 49% for PCG, 36% for EIX and 7% for SRE.

What Are the Key Dates?

8/3. Legislature reconvenes.

8/14. Last day for fiscal committees to meet and report bills to the Floor.

8/17-8/31. Floor sessions only.

8/21. Last day to amend bills on the Floor.

What Are the Key Issues?

Wildfire Liability Tail Risk. This relates to the event that the initial $21 bln wildfire

fund and the SB 254 fund of $9 bln become exhausted and utilities and customers

have to fund the shortfall. If needed an incremental $3.9 bln could be contributed

over a 5 year period.

Inverse Condemnation. This liability measure requires a ballot initiative to erase so