In summary
Gov. Gavin Newsom backed off his plans to ease costs for utilities following wildfires they cause, striking a narrower deal with Democratic lawmakers.
Gov. Gavin Newsom on Saturday backed off his proposal to reduce costs for electrical utilities after their equipment sparks wildfires, agreeing instead to a narrower deal after homeowners, insurers and fire survivors argued his original plan would have shifted those costs onto them.
Instead, Newsom and Senate and Assembly leaders agreed on a narrower package of wildfire policies, including prohibiting private equity groups from investing in wildfire claims and denying utility CEO bonuses in the years their companies cause fatal fires.
The deal is a victory for lawmakers who refused to reduce damages to victims and shift costs away from utilities. Opponents included insurance companies, consumer advocates and survivors of the January 2025 Eaton Fire caused by Southern California Edison equipment that killed 19 people in Altadena.
Under the agreement announced Saturday, the state would create a “fast-pay” program for survivors’ property loss, pain and suffering in the wake of a utility-caused fire. It would include deadlines for determining which claims are valid within 60 days of receipt, and settlement offers within 30 days after that, but survivors could still pursue the long process of suing utilities if they choose.
The state also commits to improving its local wildfire mitigation efforts and sharing more data on insurance coverage in areas with fire risk.
The final agreement, which lawmakers will vote on next week in Senate Bill 492, caps a contentious series of closed-door negotiations between Newsom’s office and legislative leaders on how much utility companies should pay after fires.
Newsom wanted utilities to have to pay less to insurance companies, some wildfire survivors, local governments and corporations claiming damages after a fire. His administration is concerned the mounting costs threaten investor confidence in the state’s three major for-profit utilities: Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric. He said that could lead to higher borrowing costs for the companies and higher electricity bills for Californians.
Newsom also argued his plan would prioritize paying survivors who lose their homes. In past fires, investors have funded lawsuits or claims have been sold to hedge funds, increasing the number of third parties seeking to profit from wildfire payouts, Newsom’s office has said.
SB 492 does not include most of the proposals Newsom wanted and does not substantially change how much utilities must pay after fires they cause. California’s $18 billion wildfire fund that utilities draw from to pay fire damages — and which would fund claims in the fast-pay program — is funded 50-50 by utility customers and shareholders. Proponents of Newsom’s proposals remain concerned that another catastrophic fire could drain that money, leaving utilities facing a mountain of costs and another round of potential bankruptcies.
Nine of the state’s 20 most destructive wildfires were caused by electrical equipment or power lines.
“This system needs full structural reform — not a partial one,” Newsom said in a statement Saturday morning. “I urge the Legislature to build on this progress next year and finish the work we started to secure the Wildfire Fund’s long-term durability, stabilize electricity rates, and ensure fire victims are never again turned into unsecured creditors in a bankruptcy proceeding.”
Negotiations may resume next year
Sen. Josh Becker, a Menlo Park Democrat who was closely involved in the negotiations, acknowledged that lawmakers would likely have to return to the issue of utility liabilities under a future governor.
“What I heard very clearly, certainly from senators, from the Assembly and even from all the stakeholders was that they’re willing to do that,” he said. “They’re willing to start getting around the table and looking at some of those structural issues. But that takes time. We ran out of time in this session.”
“We certainly stood with fire survivors,” said Sen. Ben Allen, a Democrat who represents Palisades Fire survivors. “Challenges with affordability of electricity (remain). That’s not going away.”
The utilities agreed and said there needs to be a long-term solution.
“While we appreciate the efforts made, we are disappointed that the state couldn’t develop comprehensive wildfire reform,” said Southern California Edison spokesperson David Eisenhauer.
San Diego Gas & Electric would not comment and referred questions to Wildfire Victims First, the utility-backed campaign whose priorities aligned with the governor’s wish list.
Campaign spokesperson Nathan Click said the state still needs to make urgent structural reforms “to ensure a fair recovery system.”
PG&E spokesperson Lynsey Paulo said the company is reviewing the bill and is “focused on helping wildfire survivors recover faster, making communities safer, and protecting customer utility bills.” Company stocks tumbled Friday after reports of a potential agreement that did not include any utility cost-shifts.
Senate President Pro Tem Monique Limón, the Santa Barbara Democrat whose caucus opposed Newsom’s cost-shifting proposals, said in a statement the agreement “supports survivors in their recovery, curbs Wall Street practices that increase costs on consumers, and mitigates the destruction of these wildfires in the first place.”
Assemblymember Cottie Petrie-Norris, an Irvine Democrat who led negotiations for the Assembly, in a statement called the deal “an important step forward.”
“We held the line to protect the people who needed it most,” she said.
The biggest sticking point was the governor’s insistence on eliminating subrogation, which allows insurance companies to sue utilities to recoup their costs for wildfire claims. Lawmakers were staunchly opposed to eliminating that avenue out of concern that it would disrupt the state’s fragile insurance market, raise premiums and cause insurers to flee the state, and they rejected it.
“This outcome keeps costs with the parties responsible for wildfires and helps protect the progress California is making in stabilizing its insurance market,” said Denni Ritter, a vice president at the American Property Casualty Insurance Association.
While the deal is a win for the insurance industry, a senator who represents Eaton Fire survivors said it’s important to also hold insurers accountable.
“We know that in many cases, insurance companies delayed and denied fire survivors’ claims and payments, delaying recovery,” said Democratic Sen. Sasha Renée Pérez. “We need all industries to come to the table in a real way.”
State lawmakers also resisted the governor’s effort to limit survivors’ non-economic damages, an important victory for the Eaton Fire survivors who relentlessly campaigned against the proposal.
Fire survivors and consumer advocates credited the Senate, especially Limón, for pushing back on Newsom.
“In the face of extraordinary pressure from some of the most powerful interests in our state, they centered survivors and California families,” said Joy Chen, executive director of Every Fire Survivor’s Network.
Advocacy group Consumer Watchdog, which worked in concert with fire survivors, called the negotiations “an exercise in the democratic process.”
“(The Legislature) told (Newsom) they wouldn’t bend in closed-door negotiations,” said Jamie Court, president of the group.
Pérez commended survivors for pressuring lawmakers over the past couple of weeks.
“The fire survivors have shaped this entire conversation,” Pérez said. “They made a tremendous impact.”
