With just days remaining before California’s legislative session closes, Gov. Gavin Newsom is running into stiff resistance from state lawmakers over his push to shield utility companies from some of the financial fallout tied to wildfires.
Members of the Assembly and Senate have balked at several of the governor’s proposed changes, including limits on compensation for pain and suffering, restrictions on how much insurance companies can recover after paying out claims tied to utility-caused fires, and caps on what local governments can collect for destroyed public infrastructure. That’s according to internal legislative memos and sources familiar with the closed-door talks, which CalMatters obtained.
The proposals are part of a broader wildfire liability package Newsom has been quietly hammering out as he nears the end of his final term. Neither his office nor legislative leaders have made the actual bill language public, raising concerns that a sweeping and consequential set of policies could be rushed through with little opportunity for public input before the session ends Aug. 31.
If no deal is reached by Friday — the deadline for publishing bill text ahead of a vote — the contentious issue of utility liability could be left for the next governor to sort out.
Speaking to reporters last week, Newsom acknowledged he’s willing to adjust his plan but said the state can’t afford to wait.
“I feel very strongly that we need to move on this,” he said.
According to his staff, Newsom’s goal is twofold: speed up payouts to wildfire victims while protecting utilities from lawsuits that could rattle investors and potentially drive up customer rates. But critics — including local governments, insurers, consumer groups and wildfire survivors — say the plan lets utilities off the hook too easily.
Although any resulting changes would only apply to future fires, the negotiations have angered a group of Eaton Fire survivors who traveled to Sacramento this week to voice their opposition. Earlier this month, investigators determined that Southern California Edison equipment sparked the January 2025 Eaton Fire, which killed 19 people and destroyed more than 9,400 structures in the Altadena area.
“My job is not to ensure that we’re increasing profits for shareholders for these companies,” state Sen. Sasha Renee Perez, a Democrat representing Altadena, told a crowd of protesters Tuesday. “And we certainly, as a Legislature, are not going to negotiate with companies that want to act like terrorists.”
Points of Disagreement
Perez’s comments referenced recent reporting that executives from Pacific Gas & Electric and Edison have signaled to Wall Street that they may take unspecified steps to protect shareholders if the Legislature doesn’t act this year to reduce their wildfire liability exposure.
There is some common ground. Newsom and legislative Democrats agree on curbing executive bonuses at utilities following major fires and increasing penalties for safety violations. Senate negotiators, according to sources, want to go further by pushing regulators to more closely scrutinize utility spending and potentially tie rate hikes to inflation.
Lawmakers and the governor also generally agree on funding wildfire mitigation efforts and using future insurance-related tax revenue to help homeowners fireproof their properties. There’s also broad support for limiting attorney fees for those representing fire victims in litigation, though the Senate version would extend that cap to utility attorneys as well.
Where the sides split sharply is on Newsom’s proposal to eliminate subrogation — the legal mechanism that allows insurance companies to seek reimbursement from utilities after paying out fire-related claims. Neither Assembly nor Senate leaders support scrapping that right, according to internal counterproposals and Senate sources.
Insurance industry representatives have warned that eliminating subrogation would drive up their costs and, in turn, homeowners’ premiums.
Insurance Concerns Loom Large
State Sen. Ben Allen, a Democrat running for insurance commissioner whose district includes the fire-ravaged Pacific Palisades, warned that solving the utility rate problem by gutting subrogation could backfire by making insurance even less affordable.
“I fear we will create a massive new strain on the insurance system that could break basic questions of affordability for Californians,” Allen said, adding that it could worsen an already fragile insurance market statewide.
Lawmakers do appear aligned with Newsom on restricting the number of financial intermediaries — such as hedge funds — that can profit from wildfire claims. Both chambers want to prevent insurers from selling subrogation rights to outside investors, though the Senate’s version would allow exceptions with approval from the state insurance commissioner, a provision that could help smaller insurers needing quick cash after a major fire.
Assembly leaders are also resisting Newsom’s push to limit how much local governments can recover for destroyed infrastructure by tying reimbursement to depreciated value rather than full rebuilding costs. That proposal drew sharp criticism from the California State Association of Counties, the League of California Cities, and school district advocacy groups.
Facing pressure from the California Professional Firefighters union, Newsom appears to be softening his stance. In a letter sent Monday, the union thanked the governor for what it described as adjustments meant to protect local governments from the proposal’s impact, while still voicing overall support for his broader wildfire package. A Newsom spokesperson did not respond to questions about the change.
Who Counts as a Survivor?
Perhaps the most emotionally charged part of the debate centers on how to determine which wildfire survivors deserve compensation for pain and suffering — and how much.
Newsom’s original plan would limit noneconomic damages to those who lost a family member or suffered physical injury. Others could qualify only if they were within the fire’s burn perimeter and forced to evacuate, with payouts capped at $150,000 per person to protect the state’s wildfire fund, which draws money from both utility shareholders and ratepayers.
In response to backlash, the Assembly has proposed expanding who qualifies for those damages and removing the cap altogether, while the Senate’s version would keep eligibility broad but require survivors outside the burn zone to provide stronger proof that the fire caused their trauma.
Even so, weeks of protests by Eaton Fire survivors suggest there’s no easy way to satisfy everyone. Members of the Every Fire Survivors Network argue that any effort to rank or categorize victims is fundamentally unfair.
“We are the real wildfire survivors,” several dozen protesters chanted outside the Governor’s Mansion in Sacramento on Monday night, timed to coincide with an end-of-session reception Newsom was hosting for lawmakers.
Among them was Gayle Nicholls-Ali, whose Altadena home burned to the ground in the fire and who is now in the process of rebuilding. Her son’s house nearby survived structurally but suffered extensive smoke damage. He and his wife have been living in a donated RV parked on the property while they wait for insurance approval to begin repairs.
Under Newsom’s plan, it’s unclear whether her son would even qualify for noneconomic damages, since he evacuated but didn’t lose his home or suffer physical injury.
“The mental stress alone” has taken a heavy toll on the family, Nicholls-Ali said. A retired public school teacher, she and her husband have called Altadena home for more than three decades. Her son, she said, had always dreamed of settling down in the same community.
“He wanted to live near home,” she said.
Original source: CalMatters
