Newsom makes last-minute push to help California utilities facing wildfire bills

In the final few weeks of his last legislative session as California governor, Gavin Newsom is asking lawmakers to help reduce how much profit-making utility companies must pay out after wildfires.

His administration has for weeks floated to lawmakers a wide-ranging but still-vague package of bills to address the spiraling costs of wildfires that has made a slew of different interests unhappy.

Insurance companies have launched an ad campaign against what they call a potential "utility bailout," that would leave them unable to recover from the power companies the costs of paying homeowners' insurance claims. Attorneys representing fire survivors and other plaintiffs that sue utilities don't want to see their fees reduced.

Wildfire survivors worry the governor's proposal would prevent them from being made financially whole for suffering trauma. Local government leaders are demanding that they continue to be paid the full cost to rebuild incinerated infrastructure.

On the other side are the politically influential utilities, who have drawn fury for their equipment sparking several of the state's most devastating wildfires.

The state's three investor-owned utilities, Pacific Gas & Electric, Southern California Edison and San Diego Gas and Electric, aren't in imminent financial danger and last year saw profits rise. But fire costs have contributed to Californians paying the second-highest electricity rates in the country, and lawmakers and Newsom's office worry that if it becomes harder for utilities to borrow money those bills will continue to climb. The utilities together provide power for about three-quarters of the state.

Newsom and the lawmakers say utilities are held responsible for too much after a wildfire and that bad actors like hedge funds are taking advantage to get a cut. If another devastating wildfire triggers damages too high for a utility to pay, the potentially resulting bankruptcy would make it even harder for victims to collect.

"The status quo doesn't work," Newsom said at a press conference last week when asked whether his proposal is in the best interests of fire survivors. "And we're trying to balance all of those needs in a very familiar process that will unfold over the course of the next few months."

CalMatters asked the governor's office whether the timeline Newsom mentioned was correct, considering the legislative session ends in three weeks. A spokesperson said the governor meant "the next couple of months of the legislative session," and did not respond to whether Newsom will call a special session to address the issue.

As he mulls a presidential run, Newsom has political incentive to push through a deal. Opponents from the right are eager to paint California as unaffordable and lurching through disasters; further rate hikes or the specter of a utility bankruptcy wouldn't help. But backing the utilities also comes with risks: Anger at the companies remains fresh after Edison was last week found by Cal Fire and the Los Angeles County Fire Department to be responsible for the January 2025 Eaton Fire that killed 19 people in Altadena.

The chair of a key Assembly committee, Democratic Assemblymember Cottie Petrie-Norris, is generally on board with Newsom's proposals, but lawmakers in the Senate appear less certain. Fire survivors are urging them to slow down and commit to a more public debate.

"You cannot be 'there are some bad actors' and therefore we will have a secret bill," said Joy Chen, who leads a group of Los Angeles wildfire survivors. "Then your bill is the bad actor."

A familiar fight

It's a redux of a bitter fight that has bookended Newsom's time as governor.

He stepped into his role in the wake of devastating wildfires that tore through Northern California in 2017 and 2018, several of which PG&E was found to have been responsible for.

The utility was in a bind: Under California law it was strictly liable for fires that were getting more severe, partly due to climate change, and regulators were no longer letting the companies pass damages onto customers in cases where they were found careless.

Facing mounting suits from victims and insurance companies, the company in 2019 declared bankruptcy. Newsom quickly signed legislation to help buffer utilities from those claims, drawing accusations of a bailout. The state created a $21 billion wildfire fund, paid for half by utility shareholders and half by customers through a $2.50 surcharge on their monthly electricity bills, to pay victims' claims, provided the utilities follow stricter safety regulations.

Then in January 2025, during an intense windstorm, electricity arcing from a century-old out-of-service Edison tower in Southern California's Eaton Canyon set dry brush ablaze. The resulting Eaton Fire, burning at the same time as the deadly Palisades Fire, claimed 19 lives and nearly 9,500 homes and other buildings. UCLA estimated losses at between $24 billion and $45 billion.

The state wildfire fund is expected to be drained once the costs of insurance claims, Edison's multimillion-dollar voluntary settlements with survivors and numerous unsettled lawsuits are tallied. (Lawmakers extended the fund last year to address future fires, adding to electricity customers' surcharges through 2045.) Profiteering hedge funds have sought to take advantage by buying up insurance claims.

Newsom's goal is twofold: Limit who can make claims to the fund and limit how much they can get. In private briefings last week and a document outlining his package released Tuesday, his office said he would combine the cost reductions with bills to boost home hardening, help homeowners get off the state's insurer-of-last-resort and re-enter the home insurance market, tie utility executive pay to safety and require shareholders to pay down customers' rates for two summers.

Details of the package remain scant. The outline released Tuesday did not include proposed legislative language.

CalMatters contacted the state's three major utility companies. San Diego Gas & Electric did not respond. PG&E and Edison referred questions to Nathan Click, spokesperson for the utilities' campaign, which is called Wildfire Victims First and has been blanketing the state with ads telling Californians to urge their lawmakers to act.

Click, who is also a political spokesperson for Newsom, did not answer specific questions, including whether utilities are meeting directly with lawmakers. Instead, he shared statements from a handful of business groups and a powerful electrical workers' union urging lawmakers to advocate for the proposed liability reduction.

In addition, the chief executives of PG&E and Edison have said they plan to take action to protect their shareholders if California lawmakers do not pass legislation to limit their fire liability. They did not specify what they planned to do.

Over the past four years PG&E, Edison and SDG&E collectively spent $5.2 million on California political campaigns, sponsored travel for lawmakers and donations to officials' favored charities, according to CalMatters' Digital Democracy database.

PG&E also has the fifth-highest spending on lobbying in the 2025-2026 legislative session and was the top spender from April through June. In the first half of this year, the three utilities reported spending nearly $7 million to influence Newsom's administration, the Legislature and their regulators at the California Public Utilities Commission.

Limiting damages

Newsom suggests chipping away at utilities' liabilities by limiting attorneys' fees, reducing the amount of money local governments can recoup to rebuild burned infrastructure and curbing how much some victims can receive in damages.

His proposal would set up a state-administered "fast pay" program to prioritize wildfire fund payouts for survivors whose loved ones are killed, who are injured or whose properties are destroyed. To participate, claimants would likely need to give up their right to sue the utility — trading an often lengthy wait through litigation to get comprehensive damages in exchange for the relief of a quicker payout.

'If you were part of a disaster no one's going to say you can't make a claim.'

Assemblymember Cottie Petrie-Norris

For other victims "in harm's way," the Tuesday outline suggests allowing up to $150,000 in damages.

Newsom's office and Petrie-Norris, who generally supports the idea, said they do not intend to limit emotional distress claims for survivors they deem legitimate but those kinds of damages should be curbed for others.

"If you were part of a disaster no one's going to say you can't make a claim," Petrie-Norris, an Irvine Democrat who chairs the Assembly utilities committee, said. "If you did not actually experience a disaster, what non-economic damages should you be entitled to?"

Petrie-Norris and Newsom are concerned about billboard attorneys who seek clients to file lawsuits against utilities and the wildfire fund; one study has found attorneys are likely to get 30% to 40% of victims' payouts. Groups representing survivors and attorneys argue it's not so clear who should count as a victim. Residents who lost no property and stayed in their homes miles away could still be harmed by smoke inhalation, for example.

Chen said she was "stunned" after she was briefed by the governor's office last week and was told that only people who are evacuated and have their house burn down would be eligible for non-economic damages.

"Let's say someone was out of town, but their house burned down so they didn't evacuate," she said. "But they lost everything, so they have to rebuild. So you won't compensate them for pain and suffering?"

Newsom also wants to stop investors from buying claims and prioritize small business claimants over corporations, but his office has not explained how to accomplish that.

The proposed bill package has so incensed some wildfire victims that opponents of the plan have shrugged at arguments that some claimants are taking advantage of the Wildfire Fund.

"The utilities are finding a lot of creative ways to avoid responsibility. That's it," said Graham Knaus, chief executive of the California Association of Counties. "We should not be opening the door for them to escape accountability."

Shifting costs

Another component of the outline released Tuesday could affect homeowners across the state. Newsom is proposing to limit — or eliminate entirely — insurance companies' right to recoup money from utilities when a utility-caused fire forces those insurers to pay out homeowners' claims.

The process is known as subrogation. The two powerful industries have been at odds over it for years.

Utilities and insurance already clashed in 2018 when utilities unsuccessfully backed a bill to loosen a unique California legal doctrine that holds power providers strictly liable for wildfire damages near their equipment even if they aren't found responsible for the fire.

"We're a well-resourced industry, but not like (the utilities)," Rex Frazier, president of the Personal Insurance Federation of California, recalled. "Their lobbying spend was just crazy."

Denni Ritter, vice president for the American Property Casualty Insurance Association, said eliminating subrogation could impede the progress that has been made due to the regulations California adopted last year to address insurance availability problems.

"We're at this precarious time," Ritter said. Because the state now allows insurance companies to consider catastrophe modeling and reinsurance costs in pricing their premiums, some insurers have resumed writing new policies in California, and the number of policies in the last-resort FAIR Plan is growing at a slower rate, according to the state insurance department.

But if they can't recover the costs of wildfire claims, Frazier and Ritter said insurance companies will raise premiums, which would affect homeowners even in areas with low fire risk.

"We don't understand how they're not embarrassed to suggest that the answer to their problem is to shift their costs over to other people," Frazier said. "Why should a homeowners insurance customer in a dense urban environment have to pay considerably more?"

Sen. Ben Allen, the Democratic chair of the Senate utilities committee and a candidate for insurance commissioner, said he doesn't want to make that tradeoff if the package doesn't include other benefits for consumers or taxpayers.

Petrie-Norris said it could be worth it.

"If I can save you $2 on your utility bill and your insurance bill goes up by $1, that seems like a smart thing for us all to do," she said. "But we've got to make sure that's true and whether there are unintended consequences."