Dive Brief:

• California Gov. Jerry Brown (D) and with legislative leaders on Wednesday issued a plan to "protect all Californians from the threat of natural disasters and climate change."

• The plan includes updates to liability rules and regulations for utility services "in light of changing climate and the increased severity and frequency of weather events."

• Share prices of PG&E Corp., parent of Pacific Gas and Electric and Edison International, parent of Southern California Edison (SCE), rose 7.2% and 3.3%, respectively, on the news.

Dive Insight:

Share prices of PG&E and Edison International have plummeted since last year's floods, mudslides and deadly wildfires.

Edison International's share price dropped from about $82 in November to a low of $58 in February before rebounding to a recent price of about $64. PG&E has gone from about $52 in September to a low of about $38 in February and has since rebounded to about $45.

The declines are related to the potential liabilities the utilities face from the wildfires.

PG&E and SCE came under investigation in the wake of the deadly fires that swept through California last fall. CAL FIRE, other fire agencies and the California Public Utilities Commission are investigating the causes of the fire, including the possible role of SCE equipment.

In a separate investigation, California officials are investigating PG&E's role in the fires that devastated the state's wine country. Some reports indicate that PG&E power lines burst into flames in the early hours of those fires.

The shares of the two companies rebounded somewhat on the announcement by Brown. PG&E shares jumped from about $42 to about $45, but have since backed off. Edison International shares jumped from about $59 to about $64 before backing off to about $63.

"A lot of the downside is already priced into the stocks," Travis Miller, director of utilities research with Morningstar, told Utility Dive. Regarding the governor's announcement, he said, "Anything that reduces the potential burden on investors is a positive for all California utility stocks."

The liability could be very large, particularly for PG&E, which Miller estimates is in the range of $10 billion to $12 billion. He didn't have a comparable figure for Edison International, but said it "is fairly minimal" and not nearly as much as PG&E's liability.

Investors' concerns were stoked by a November California Public Utilities Commission ruling that rejected a request by San Diego Gas & Electric seeking to pass on to ratepayers around $379 million in costs related to wildfires in 2007.

A similar denial regarding the 2017 wildfires could have a devastating effect on PG&E and SCE. Brown's announcement, though still more of an idea than action, gave hope for investors.

Brown has said his administration would work closely with legislators to update utility liability rules and regulations.

"We believe it's already assumed by many investors that there was positive momentum in the legislature to address wildfire liabilities and see the Governor's office latest press release reaffirming this potential," analyst Julien Dumoulin-Smith at Bank of America Merrill Lynch, said.

But there are still many unknowns, such as whether or not solutions would be retroactive. There is also a question of timing, with the possibility that potential legislation might not be introduced until sometime towards the end of the 2018 summer legislative session.