Newsom Pushes California Wildfire Liability Overhaul as Utility Fund Runs Low/ TezzBuzz/ WASHINGTON/ J. Mansour/ California Gov. Gavin Newsom is seeking a deal that would reduce utilities’ financial exposure when their equipment sparks destructive wildfires. The proposal could shift more property losses to insurers, limit some victim and attorney payments and require utilities to compensate survivors faster.
Fire survivors and insurers say the plan favors utility companies, while Newsom argues reform is essential to stabilize electricity rates and preserve the wildfire fund.
Quick Look
- Newsom is seeking a wildfire liability agreement before lawmakers adjourn.
- California’s current wildfire fund contains $21 billion.
- The fund is financed by utility shareholders and electricity customers.
- Newsom expects the fund to run out soon.
- His plan could limit payments made by utilities to victims and attorneys.
- Property insurers could be required to cover more wildfire losses.
- Utility CEOs could lose bonuses after fires causing more than $1 billion in damage.
- Shareholders could face fines of up to $10 million for safety violations.
- Six of California’s 10 most destructive wildfires were caused by utility equipment.
- Survivors say the proposal transfers liability away from utility companies.
- Insurers warn it could increase homeowners’ insurance premiums.
- The Legislature has until Aug. 31 to reach an agreement.
- Newsom could call a special session if lawmakers fail to act.
- The debate could shape Newsom’s legacy before a possible 2028 presidential campaign.
Deep Look
Wildfire liability again defines Newsom’s governorship
SACRAMENTO, Calif. — California Gov. Gavin Newsom is returning to one of the central questions that has defined his nearly eight years in office: Who should pay when utility equipment sparks a catastrophic wildfire?
Newsom entered office amid the financial and human consequences of California’s most destructive wildfire.
The Camp Fire began two days after he won the 2018 gubernatorial election. It killed 85 people and destroyed more than 18,000 buildings in Northern California.
Investigators determined that equipment owned by Pacific Gas & Electric started the fire.
Facing tens of billions of dollars in potential liability, PG&E filed for bankruptcy only weeks after Newsom’s inauguration.
California created a $21 billion wildfire fund
Several months later, Newsom signed legislation establishing a $21 billion fund to help utilities pay wildfire claims.
Utility shareholders and ratepayers financed the fund.
Companies can access it if they comply with specified wildfire prevention and safety requirements.
Now, as the final legislative session of Newsom’s governorship approaches its conclusion, the governor says the fund is at risk of being depleted.
He is attempting to negotiate a new agreement that would further protect utilities from financial collapse while changing how victims receive compensation.
Edison faces claims from deadly 2025 fire
The debate has gained urgency because Southern California Edison faces extensive claims stemming from a destructive 2025 wildfire near Los Angeles.
The blaze killed 19 people and became the second-most destructive fire in California history.
State investigators concluded in August that the fire was ignited by one of Edison’s transmission towers.
The findings have renewed concerns that a single catastrophic wildfire could overwhelm a major utility and exhaust the state’s compensation fund.
Newsom seeks to limit utility exposure
Newsom’s proposal could limit how much electric and gas companies must pay to wildfire survivors and attorneys.
The administration says one objective is to stabilize California’s electricity rates, which are among the highest in the United States.
Utility companies have repeatedly increased rates to finance wildfire prevention, system upgrades and recovery costs.
Climate change has contributed to increasingly frequent and intense fires, adding further financial pressure.
Six of California’s 10 most destructive wildfires were caused by utility equipment.
Governor says current system fails victims
Newsom argues that the state must act quickly because the wildfire fund could soon run out.
His proposal would also require utility companies to compensate survivors more rapidly.
“Status quo is not going to work,” Newsom told reporters. “It’s not going to work for victims, who consistently are last in line. And that’s at the core of this reform.”
The governor says the plan would balance faster payments for victims with financial protections intended to prevent utility bankruptcies and sharp electricity-rate increases.
Survivors say utilities are being protected
Some wildfire survivors strongly oppose the proposal.
They argue that Newsom is prioritizing the financial health of investor-owned utilities over people who lost homes, businesses and family members.
Joy Chenexecutive director of Every Fire Survivor’s Network, criticized the plan during an online town hall.
“This is overall a massive transfer of liability for the three for-profit utility monopolies that have continued to burn down communities across California,” Chen said.
The network represents survivors of the 2025 Los Angeles-area fires.
Insurers could carry more property losses
Under existing California law, utilities can be required to pay damages when their equipment causes a wildfire even if a court does not find them negligent.
Property insurers that pay policyholders’ rebuilding expenses can later seek reimbursement from the utility responsible for the fire.
Newsom’s proposal could change that system by requiring insurance companies to absorb a larger share of property losses.
Insurers warn that shifting additional costs onto them would result in higher premiums for California homeowners.
Insurance industry says utilities should remain responsible
The Personal Insurance Federation of California, which represents property insurers, said the proposal would increase insurance rates.
Federation President Rex Frazier argued that utilities should continue bearing responsibility for damage linked to their equipment.
“Being responsible for your actions is something that parents tell children,” Frazier said in a statement. “Hopefully the Legislature will tell this to the utilities.”
California’s insurance market is already under pressure as carriers reduce coverage or leave high-risk areas because of growing wildfire losses.
CEOs could lose bonuses after catastrophic fires
Newsom’s proposal includes financial penalties intended to hold utility executives and shareholders accountable.
Utility chief executives could be required to forfeit bonuses if their company’s equipment starts a wildfire causing more than $1 billion in damage.
Utility shareholders could face fines of up to $10 million if companies violate wildfire prevention requirements.
The governor’s office has not released the proposal’s complete details, leaving uncertainty over payment limits, insurer obligations and enforcement.
Utilities urge lawmakers to approve reforms
California’s three major investor-owned utilities — PG&E, Southern California Edison and San Diego Gas & Electric — are part of a coalition urging lawmakers to pass Newsom’s plan.
The companies argue that unlimited liability could undermine their financial stability and eventually raise electricity prices.
The legislative fight could influence Newsom’s political legacy as he considers seeking the presidency in 2028.
The Legislature has until Aug. 31 to approve a plan. Newsom could summon lawmakers into a special session if they adjourn without reaching an agreement.
Legislative leaders acknowledge need for action
Democratic legislative leaders agree that California must address wildfire liability but have not specified what they would accept in a final agreement.
Newsom proposed adding another $18 billion to the wildfire fund the previous year.
The Legislature approved that supplement, but the governor says broader structural reforms are still necessary.
The remaining negotiations will determine how costs are divided among utilities, shareholders, ratepayers, insurers and survivors.
Economist calls for broader distribution of costs
Meredith Fowlie, an economist and co-director of an energy institute at the University of California, Berkeley, said California should reconsider its liability system.
The state’s requirement that utilities cover wildfire losses regardless of negligence is based on their role as providers of an essential public service.
But climate change has increased the frequency and severity of wildfires, causing recovery costs to grow dramatically.
“Utilities can start fires, but they don’t by themselves create catastrophe,” Fowlie said.
Vegetation and home safety also affect damage
Fowlie said catastrophic losses are influenced by factors beyond utility equipment.
Failure to clear vegetation can allow flames to spread rapidly, while older buildings that have not been upgraded for wildfire resistance are more vulnerable to embers and heat.
Those factors raise questions about how liability should be divided among utilities, government agencies, insurers, property owners and communities.
The question of who is responsible, and to what extent, is “a critical, core issue that we have not dealt with and is not going away,” Fowlie said.
Newsom vows not to leave problem for successor
Newsom says he intends to resolve the issue before leaving office.
“I’m not going to walk away and hand a real mess to the next governor,” he said.
The final agreement, if one emerges, could determine whether wildfire victims receive compensation more quickly, how much insurers and utilities must pay and whether electricity and insurance rates continue climbing.
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