CA cost of capital PD strikes hard, Wells sees little room for CPUC improvement

Wells Fargo notes CPUC issued a PD on cost of capital, recommending another 35bp ROE cut for Edison International (EIX), PG&E (PCG) and Sempra Energy (SRE) utilities; affordability again cited as a factor. The firm sees broadly negative headlines for CA utilities with a 35bp ROE cut. Wells notes some companies may be more conservative in planning assumptions. The PD provides “ranges” of ROEs that could be used to tweak final decision, but the firm doesn’t see significant probability or magnitude of offsets. In the absence of an alternate PD, Wells turns attention to the 2026 legislative process to normalize the utility constructs in CA.