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California Governor Gavin Newsom Seeks New Wildfire Liability Deal as His Term Nears End
SACRAMENTO, Calif. – From the moment Gavin Newsom took office nearly eight years ago, one critical issue has framed his tenure as California governor: determining who should bear the financial burden when wildfires are ignited by utility company equipment.
Shortly after Newsom’s 2018 inauguration, Northern California was ravaged by the deadliest wildfire in state history, claiming 85 lives and leveling more than 18,000 structures. Investigations traced the blaze to Pacific Gas & Electric (PG&E) equipment. Confronted with potentially tens of billions of dollars in liabilities, PG&E declared bankruptcy mere weeks after Newsom assumed office.
In response, Newsom championed a $21 billion wildfire fund financed by utility shareholders and ratepayers, designed to help utilities cover wildfire damages if they implement safety protocols. Now, as his final legislative session approaches, Newsom is pressing lawmakers to approve new measures that would further shield utilities from financial strain should their equipment cause fires.
This push emerges amid fresh turmoil: Southern California Edison faces allegations that its transmission tower sparked the state’s second-most destructive wildfire in 2025, which claimed 19 lives near Los Angeles. Newsom’s proposal aims to reduce payouts utilities must make to victims and legal representatives, with the broader goal of stabilizing California’s notoriously high electricity rates.
These rates have climbed as utilities invest more in wildfire prevention and recovery, responding to fires intensified by climate change. Notably, utility equipment has been responsible for six of the state’s ten most devastating wildfires.
The governor argues the current system is unsustainable and slow, leaving victims waiting too long for compensation. “Status quo is not going to work,” Newsom told reporters recently.
“It’s not going to work for victims, who consistently are last in line. And that’s at the core of this reform.”
However, the proposal faces criticism from fire survivors and insurance companies. Survivors contend that Newsom’s plan favors utilities at their expense, while insurers worry about increased financial responsibility for property damage claims.
Meanwhile, a coalition of major utilities-including PG&E, Southern California Edison, and San Diego Gas & Electric-is lobbying heavily for the plan’s passage. The legislative showdown could prove a defining moment for Newsom as he contemplates a 2028 presidential bid.
Newsom Advocates for a Balanced Approach
Under current California law, utilities are held financially responsible for fires caused by their equipment, regardless of negligence. Insurance companies that cover rebuilding costs can seek reimbursement from these utilities.
Newsom’s proposal would shift more of the property damage costs onto insurers, while introducing new accountability measures for utilities. Among these are provisions that would deny bonuses to utility CEOs if their company causes more than $1 billion in wildfire damage and allow fines up to $10 million for shareholders if wildfire prevention rules are violated. Full details of the plan have not yet been disclosed.
The Personal Insurance Federation of California, representing property insurers, warns that insurance premiums would rise under the plan and insists that utilities should remain primarily liable. “Being responsible for your actions is something that parents tell children,” said federation president Rex Frazier. “Hopefully the Legislature will tell this to the utilities.”
Fire survivors echo these concerns. Joy Chen, executive director of Every Fire Survivor’s Network, which represents those affected by the 2025 Los Angeles-area fires, called the plan a “massive transfer of liability” favoring for-profit utility monopolies that “have continued to burn down communities across California.”
The Legislature has until August 31 to reach an agreement. If no deal is struck, Newsom may call a special session to address the issue.
Democratic leaders acknowledge the urgency but have yet to outline specifics. Last year, the Legislature approved an additional $18 billion to bolster the wildfire fund at Newsom’s request.
Expert Perspectives on Utility Liability
Meredith Fowlie, an economist at UC Berkeley’s energy institute, explains that California’s law holding utilities liable regardless of negligence stems from the fact that utilities provide a public service. However, as wildfires grow more frequent and severe due to climate change, she argues the state must reconsider how wildfire recovery costs are allocated.
“Utilities can start fires, but they don’t by themselves create catastrophe,” Fowlie said. Other factors-such as inadequate vegetation management and homes not built to withstand fires-play crucial roles. She emphasizes that determining the extent of utilities’ responsibility remains “a critical, core issue” that demands resolution.
As he nears the end of his governorship, Newsom remains determined to settle this complex challenge. “I’m not going to walk away and hand a real mess to the next governor,” he declared last week, underscoring his commitment to addressing wildfire liability before he leaves office.