California Legislature to vote on wildfire reforms after blocking key parts of Newsom’s plan

SACRAMENTO, Calif. (AP) — California lawmakers are expected to vote Tuesday on a bill aimed at supporting wildfire survivors after rejecting an ambitious proposal by Gov. Gavin Newsom that would have limited electric companies’ financial liability for blazes sparked by their equipment.

The Democratic governor said the last-minute compromise he made with lawmakers will have some benefits for wildfire survivors, such as getting paid faster, but fails to make necessary, sweeping reforms to tackle the question of who covers the cost of fires ignited by utility equipment.

His plan, which didn’t rack up enough support in the Legislature’s final days, would have reduced the amount utilities had to pay some victims and barred insurance companies from suing electrical companies to get reimbursed for damages paid out to homeowners.

Newsom acknowledged the bill made some progress to address the contentious, high-stakes issue.

“I could have easily walked away from it,” he told reporters at the Capitol on Monday. “And that would have been a disservice to you and the people of this state.”

Who pays for wildfires is a contentious issue

Newsom’s failure to get his full plan passed marked a rare loss for the governor who has often found support for his policy wishes in the Democratic-led Legislature. It comes as he wraps his final session before leaving office in January.

Fire survivors heavily criticized his proposal, even protesting outside the governor’s mansion in Sacramento last week. They argued Newsom’s plan would have placed the needs of utilities over victims, while insurance companies said shifting more of the cost of damage onto them would have required them to raise rates for policyholders.

Joy Chen, executive director of Every Fire Survivor’s Network, a group of survivors of the 2025 Los Angeles-area fires, said the deal was a win for them.

“Survivors from across California came to Sacramento and asked our elected representatives to stand with the people whose homes, communities and lives have been devastated,” she said in a statement. “They listened.”

Newsom hoped his plan would help stabilize the state’s notoriously high electricity rates by protecting utilities from the full financial impacts of wildfires. Utilities have raised rates to pay for wildfire prevention and recovery as climate change has made the blazes more intense and frequent. Under California law, utilities have to pay damages for fires ignited by their equipment, even if a judge doesn’t find them negligent.

The question of who should cover the cost of utility-sparked fires has persisted throughout Newsom’s tenure, which began in the wake of the most destructive wildfire in state history. He signed a law in 2019 — his first year in office — that created a $21 billion fund, paid for by utility shareholders and ratepayers, to help utilities pay for wildfire damages if they take certain safety measures. He and lawmakers agreed last year to supplement the pot of money with another $18 billion fund.

Newsom unveiled his latest proposal as Southern California Edison faces claims from the state’s second-most destructive blaze, a 2025 fire that killed 19 people outside of Los Angeles.

Compromise aims to pay victims faster

The bill lawmakers are slated to vote on would create a program to ensure that fire victims get paid more quickly, ban hedge funds from profiting off of wildfire claims and bar utility executives from receiving bonuses if their company’s equipment sparked a blaze that ends up damaging or destroying more than 500 buildings.

The California Catastrophe Response Council, which oversees the wildfire fund, would appoint an administrator to create a process to resolve survivor claims more quickly.

The American Property Casualty Insurance Association said the deal “protects Californians and preserves the affordability and availability of insurance.”

“This outcome keeps costs with the parties responsible for wildfires and helps protect the progress California is making in stabilizing its insurance market,” the trade association wrote.

PG&E and some lawmakers criticize the bill

Pacific Gas & Electric, which filed for bankruptcy in 2019 after being on the hook for claims from a devastating Northern California blaze started by the utility’s equipment, was disappointed with the deal. The company, which is one of the nation’s largest utilities, said in a letter to lawmakers that the bill will fail to stabilize rates for Californians. The letter further said the bill doesn’t provide “durable, long-term solutions” for compensating victims, sustaining the state’s wildfire fund, or managing utilities’ financial risk.

Assemblymember Rick Zbur, a Democrat, called it a “disaster” that lawmakers couldn’t agree on making more sweeping reforms.

“We’re nibbling around the edges, and we’re not dealing with the structural issues,” he said at a hearing on the bill.

Katelyn Roedner Sutter of the Environmental Defense fund was also underwhelmed with the proposal, saying it doesn’t go far enough to lower the risk of fires and stabilize electric and insurance rates.

“The best I can say about this bill is it’s fine,” she said after the hearing.

The Legislature typically has until Aug. 31 to pass bills for the second of a two-year session, but lawmakers and Newsom couldn’t agree to a deal in time to vote Monday. They circumvented the end-of-session deadline by adding what’s known as an urgency clause to the bill. That means it needs approval from two-thirds of the Legislature and will take effect immediately after it’s signed into law.