California lawmakers are poised to vote on legislation designed to expedite compensation for victims of utility-sparked wildfires, following the rejection of a broader proposal by Gov. Gavin Newsom that sought to cap utility companies' financial responsibility for blazes ignited by their equipment.
The bill, expected to be considered Tuesday, aims to provide benefits to wildfire survivors, including quicker payouts, though Newsom stated it falls short of the comprehensive reforms needed to address the allocation of costs for utility-caused fires.
Newsom's rejected proposal would have reduced the financial obligations of utilities and prevented insurance companies from recouping wildfire damage payouts from electrical companies. The governor acknowledged that his plan's failure to gain legislative traction represented an infrequent setback in the typically supportive Democratic-led Legislature as he approaches the end of his term.
Wildfire survivors had strongly opposed Newsom's plan, arguing it prioritized utility interests over victims. Insurance companies also raised concerns that shifting more costs to them would lead to increased policyholder rates.
Joy Chen, executive director of the Every Fire Survivor’s Network, characterized the compromise as a victory for survivors, stating that legislators listened to their pleas.
Newsom had put forward his initiative with the goal of stabilizing California's high electricity rates by shielding utilities from the full financial consequences of wildfires. As climate change intensifies fire risks, utilities have increased rates to fund wildfire prevention and recovery efforts. California law holds utilities responsible for damages from fires caused by their equipment, regardless of negligence.
This issue has been a persistent challenge throughout Newsom's governorship, which began shortly after the state experienced its most destructive wildfire. In 2019, his first year in office, he signed legislation establishing a $21 billion fund, financed by utility shareholders and ratepayers, to assist utilities in covering wildfire damages contingent on their adoption of safety measures. An additional $18 billion fund was agreed upon last year.
Newsom introduced his latest proposal as Southern California Edison confronts claims related to a 2025 fire that resulted in 19 fatalities and was the state's second-deadliest wildfire.
The bill scheduled for a vote would establish a program to accelerate payments to fire victims. It would also prohibit hedge funds from profiting from wildfire claims and bar utility executives from receiving bonuses if their company's equipment is found to have caused a fire that damages or destroys over 500 buildings. The California Catastrophe Response Council would oversee the appointment of an administrator responsible for streamlining the claims resolution process.
The American Property Casualty Insurance Association endorsed the compromise, asserting it protects Californians and maintains the affordability and availability of insurance, while holding responsible parties accountable and supporting the stabilization of the state's insurance market.
Pacific Gas & Electric, which faced bankruptcy in 2019 after significant liabilities from a Northern California wildfire attributed to its equipment, expressed disappointment. The utility argued in a letter to lawmakers that the bill would not stabilize rates for Californians, nor provide lasting solutions for victim compensation, wildfire fund sustainability, or utility financial risk management.
Some lawmakers and environmental advocates expressed reservations. Assemblymember Rick Zbur called the inability to enact more substantial reforms a "disaster," while Katelyn Roedner Sutter of the Environmental Defense Fund described the bill as "fine" but insufficient for reducing fire risk or stabilizing utility and insurance rates.
The Legislature, typically adhering to an August 31 deadline for passing bills in the second year of a two-year session, bypassed the end-of-session deadline by including an urgency clause in the bill. This requires a two-thirds majority vote for passage and allows the bill to take effect immediately upon being signed into law.