California Governor proposes limits on utility liability for wildfire damages

California Governor Gavin Newsom is seeking legislative approval for a plan that would restrict the financial liability of electric and gas utilities when their equipment triggers wildfires. The proposal, presented as the state’s final legislative session draws to a close, would cap payments to fire victims and attorneys, accelerate compensation from utilities, and impose penalties on utility executives and shareholders for severe fire-related losses.

Newsom argues the existing system is unsustainable, noting that the state’s $21 billion wildfire fund could be depleted soon. He said, "Status quo is not going to work. It’s not going to work for victims, who consistently are last in line. And that’s at the core of this reform."

The plan would also shift a larger share of property-damage costs to home insurers, prompting the Personal Insurance Federation of California to warn that insurance rates could rise. Its president, Rex Frazier, said, "Being responsible for your actions is something that parents tell children. Hopefully the Legislature will tell this to the utilities."

Fire-survivor groups have expressed opposition, contending that the caps would reduce compensation for those affected by recent blazes, including the 2025 Southern California fire linked to Southern California Edison. Joy Chen, executive director of Every Fire Survivor’s Network, described the proposal as a "massive transfer of liability" for the utilities.

Support for the measure also comes from the California Professional Firefighters union, which wrote that the stability of utilities, insurance plans, and recovery funds must be balanced with the needs of wildfire victims.

Legislators have until Aug. 31 to act; otherwise, Newsom may convene a special session. The governor has previously secured an $18 billion addition to the wildfire fund and says he will not leave the issue unresolved for his successor.