Regulatory Risks Cloud Earnings Picture for California Utilities (EIX, PCG, SRE)

Citigroup is out with a research report this morning, where it noted that, while California was considered one of the most constructive regulatory jurisdictions in the Utility industry, much of that is now changing. The analysts noted increasing regulatory risks that are beginning to accelerate in 2011, including: 1. Commission decisions on PG&E's Electric & Gas, and Gas Storage & Transmission rate cases 2. Pending rate case for Edison International's regulated utility, Southern California Edison 3. Pending rate case for Sempra's regulated utilities, SDG&E and SoCalGas. As a result, the Citi analysts are downgrading Edison International EIX to Sell and PG&E Corporation PCG to Hold. Sempra Energy SRE remains the only Buy-rated name in California.