California lawmakers exclude Newsom's wildfire liability limits from bill

PG&E and Edison shares tumble after liability limits excluded

The California legislature introduced a bill Saturday that excludes Governor Gavin Newsom’s proposed limits on electric utilities’ wildfire liability, after weeks of lobbying by survivor advocacy groups allied with the insurance industry and trial lawyers. The bill instead limits executive compensation at utilities whose equipment starts fires, creates a “fast pay” program for victims, and bans private-equity funds from purchasing wildfire claims. Lawmakers are scheduled to vote on Tuesday before the legislative session closes.

Newsom’s office had argued in a fact sheet that when costly fires plunge utilities into bankruptcy, fire victims can end up competing with other creditors, with their compensation at risk. “The status quo is untenable in the short term, and in the long term catastrophic, potentially,” Newsom said at a press conference last week. After the bill was introduced without his proposed provisions, the governor released a statement urging the legislature to pursue “full structural reform — not a partial one.”

Lawmakers and advocates who participated in negotiations said Newsom sought to cap some damages paid to wildfire victims, eliminate the ability of insurance companies to recoup costs from utilities, curb reimbursement to local governments for destroyed infrastructure, and limit attorneys’ fees in wildfire lawsuits. Newsom’s office declined Monday to comment on those policy goals.

The exclusions drew opposition from survivor advocates. Joy Chen, an Altadena resident who leads an advocacy group for survivors of the 2025 Eaton Fire, said a mid-August briefing by one of Newsom’s advisers on the proposal left her “absolutely stunned.” Her group, Every Fire Survivors Network, organized other victims to challenge the governor’s effort. Chen found allies in the insurance industry and among trial lawyers, and the groups mounted a lobbying campaign to persuade lawmakers not to adopt what they described as a bailout for utility shareholders at the expense of victims. “For somebody who talks a lot about democracy, this has been an unbelievable subversion of democracy,” Chen said, criticizing Newsom for pushing behind closed doors for “a multibillion-dollar transfer of wealth from wildfire survivors to Wall Street.”

State Sen. Sasha Renée Pérez, whose district includes Altadena, said she believed Newsom was trying to better prepare California for the next major fire. But she wanted more focus on accountability for utilities that spark the infernos, such as bans on stock buybacks, and objected to limiting damages for survivors without more public debate. “This idea that we’re going to cap noneconomic damages and somehow try to come up with an amount for all of the various situations that people go through when they are experiencing a wildfire, it just, to me, was not right,” Pérez said in an interview. “It wasn’t appropriate for us to have that conversation, and I just frankly think it’s unfair to survivors.”

Investors were caught on the back foot by the absence of such provisions. Shares of PG&E and Edison International, two major investor-owned utility companies, tumbled sharply on Monday. PG&E said the legislation “does not adequately address the financing risks created by California’s current wildfire liability framework.” Edison said it “would not address the stable financing framework utilities need to support California’s climate goals and deliver affordable, reliable electricity in a time of increasing demand.”

California’s strict-liability framework makes utilities responsible for damage from fires their equipment starts. Over the past two decades, equipment owned and maintained by investor-owned utilities has started at least seven wildfires that each destroyed more than 1,000 structures, including the 2018 Camp Fire, sparked by PG&E Corp. power lines, and last year’s Eaton Fire, which the Los Angeles County Fire Department recently attributed to an out-of-service Edison International transmission tower. PG&E filed for bankruptcy protection in 2019 amid mounting liability claims. Los Angeles County communities devastated by the 2025 Eaton and Palisades fires remain in recovery.