California legislative leaders, Gov. Gavin Newsom announce utility wildfire deal

California legislative leaders and Gov. Gavin Newsom announced a deal Saturday morning to change how the state responds to wildfires sparked by utility companies, ending weeks of speculation and lengthy negotiations.

The agreement, reflected in Senate Bill 492, would create a program to try and more quickly pay claims for damages, deny short-term bonuses for utility CEOs for a year if the company starts a fire that kills at least one person and put requirements on attorneys seeking to represent victims.

But it did not go as far as Newsom was originally hoping for. The deal does not bar, or wind down, the ability of insurance companies to recover money from a utility after a fire, which Newsom had advocated for, but Assembly and Senate leaders had resisted.

Newsom had leaned on legislators for weeks in largely behind-the-scenes negotiations, urging them to deliver what he saw as a series of urgent changes, which he said would prevent wildfire survivors from getting elbowed out of payouts by insurance companies and hedge funds, and support the future of a state fund used to reimburse claims after a utility-caused blaze. In a statement, Newsom called the agreement partial but not “full structural reform.”

“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,” he said.

The debate among California lawmakers became more than just about wildfires, but also the future of property insurance premiums, utility bills and who was eligible for claims after a disaster. It was also a test of Newsom’s political strength in his final months as governor.

Insurance industry, consumer and wildfire victim groups labeled the governor’s effort a bailout for utility companies, and waged a public campaign against it. Every Fire Survivor’s Network, a group formed after last year’s Eaton Fire in Los Angeles County, was one of the leading critics.

Joy Chen, the organization’s executive director, celebrated the deal Saturday.

“Our legislators showed Californians what representative democracy can look like when elected leaders listen to the people they serve,” she said in a statement. “This is an enormous victory for every Californian who could become the victim of the next utility-caused fire.”

Insurance executives had warned Newsom and legislative leaders that taking away or reducing the ability to recover losses after a utility-caused wildfire would lead to price increases for homeowners across the state.

Denni Ritter, a lobbyist for the American Property Casualty Insurance Association, said in a statement the plan “protects Californians and preserves the affordability and availability of insurance.”

Major utility companies, including Pacific Gas and Electric Co., had tried their own campaign helping to fund a group called Wildfire Victims First that called on the Legislature to make the changes Newsom was pushing for.

Nathan Click, a spokesperson for the group, said in a statement that more urgent work was still needed to “ensure a fair recovery system. We will continue advocating for systemic change to make sure victims are never again at the back of the line in wildfire cases.”

The agreement does still include a series of changes, including preventing any attorney or company from selling the rights to recover a wildfire claim to a private equity group, a practice seen after the Eaton Fire. It would also require the California Department of Forestry and Fire Protection to submit reports annually to the Legislature on wildfire prevention and preparedness efforts. And state officials would also need to come up with a wildfire preparedness strategy every five years.

“After months of conversations on how we can advance the priorities of Californians, we have come to an agreement that 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,” said Senate President pro Tem Monique Limón, D-Santa Barbara, in a statement.

Negotiations over the deal took so long that the Legislature has to wait until Tuesday morning to act on the bill — a day after it was supposed to finish its work for the year — to comply with a state rule that requires measures to be in print for 72 hours before they are voted on. The bill now needs two-thirds support from both the Assembly and Senate to pass, which allows legislators to consider it beyond the original deadline.

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