With just six days left in the legislative session, California lawmakers are pushing back against key portions of Governor Gavin Newsom’s plan to overhaul how utility companies are held financially responsible for wildfires they cause.
According to legislative sources and internal memos obtained by CalMatters, members of both the Assembly and Senate are resisting proposals from the governor that would cap pain-and-suffering payouts to wildfire survivors, limit insurance companies’ ability to recoup what they pay homeowners after power line-sparked fires, and restrict how much local governments can recover for destroyed public infrastructure.
Those provisions are among the most contentious pieces of a sweeping wildfire policy package Newsom has been hammering out behind closed doors during the final legislative session of his governorship.
Neither Newsom’s office nor legislative leaders in the Senate and Assembly have released the actual bill language under negotiation, raising concerns that a complex overhaul of utility liability law could be passed with little public input before the session ends August 31.
Newsom’s office did not respond to questions about lawmakers’ resistance to parts of his plan. If a deal isn’t reached by Friday — the deadline for bills to be in print before a floor vote — the issue of expanding utility wildfire liability will be left for the next governor to tackle.
At a press conference last week, Newsom said he remains open to revisions but insisted some reforms must move forward this year.
“I feel very strongly that we need to make progress on this,” he said.
Aides to the governor say his goal is to speed up payouts to wildfire victims while shielding utilities from additional lawsuits that could rattle investor confidence and drive up electricity bills. But opponents — including local governments, wildfire survivors, consumer advocates and insurance companies — argue the plan lets utilities off the hook too easily.
Although any changes would apply only to future wildfires, the negotiations have angered a group of Eaton Fire survivors who traveled to Sacramento this week to protest the proposals. Earlier this month, state and Los Angeles fire investigators concluded that Southern California Edison was responsible for the January 2025 blaze, which ignited beneath a decades-old, out-of-service transmission tower. The fire killed 19 people and destroyed roughly 9,400 structures.
“My job is not to make sure we pad the profits of these companies’ shareholders,” said Senator Sasha Renee Perez, a Democrat representing Altadena, at a Tuesday rally with the group. “And we as a Legislature are certainly not going to negotiate with companies that are acting like terrorists.”
Where lawmakers diverge
Perez was referring to a report that executives from Pacific Gas & Electric and Edison have told Wall Street analysts the utilities plan to take unspecified action to protect shareholders if lawmakers fail to pass legislation this year reducing their financial exposure after wildfires.
Newsom and Democratic legislators agree on a proposal that would limit bonuses for utility executives following a catastrophic fire and increase fines for companies that violate safety rules. Sources close to the negotiations say a Senate proposal would go further, directing regulators to scrutinize utility spending more closely and consider capping rate increases in line with inflation.
Lawmakers also agree with Newsom on the need to strengthen community wildfire mitigation projects and use future insurance taxes to help fund home hardening efforts. There is broad agreement, too, on limiting attorney fees for lawyers representing fire victims and other plaintiffs in damage suits against utilities — though the Senate’s version would also cap fees for utility companies’ own attorneys.
Where the Senate and Assembly leadership break from Newsom is on eliminating subrogation — the right of insurance companies to recover costs from utilities or other parties found responsible for a fire — according to Assembly counterproposal memos and Senate sources familiar with the talks.
The insurance industry has been especially vocal in opposing that change, warning it would drive up insurers’ costs and, in turn, premiums for policyholders.
A massive new strain
State Senator Ben Allen, a Democrat running for insurance commissioner whose district includes Pacific Palisades — also devastated by a fire last January — said eliminating subrogation to address one problem, high electricity rates, risks creating another: even higher insurance premiums.
“I’m worried we’re going to create a massive new strain on the insurance system that could really call into question affordability for Californians,” Allen told CalMatters. He added that the move could deepen problems in the state’s already strained insurance market.
Lawmakers do agree with the governor on limiting the number of middlemen who can profit after a disaster, or at least capping how much they can earn. Legislators in both chambers want to prohibit insurers from selling their claims and subrogation rights to investment funds. The Senate’s version would still allow such sales with approval from the insurance commissioner — an option smaller insurers might need if they require quick cash to pay claims after a major fire.
Assembly leaders are also pushing back on Newsom’s proposal to reduce how much local governments can recover from utilities after a wildfire by limiting claims to the depreciated value of destroyed infrastructure rather than the full cost of rebuilding it. That proposal has drawn strong objections from the California State Association of Counties, the League of California Cities and groups representing school districts.
Facing pressure from the state’s influential firefighters’ union, Newsom appears to be softening his stance on that front.
On Monday, the union sent Newsom a letter expressing support for his broader plan while thanking him for adjustments meant to ensure local governments aren’t unfairly shortchanged. Newsom spokesperson Anthony Martinez did not respond to a request for further details on that provision.
A fraught proposal
Newsom’s office, lawmakers and the utility industry — through its “Wildfire Victims First” campaign, which includes relatively few actual victims — say their shared goal is ensuring survivors’ compensation takes precedence over other claims. But determining which survivors are most deserving of payment has proven to be one of the thorniest and most controversial pieces of Newsom’s plan.
The governor’s proposal would limit pain-and-suffering payments to survivors who lost a family member or suffered physical injuries. Other survivors could only seek non-economic damages if they were within the fire’s perimeter and were forced to flee, with payouts capped at $150,000 per person to avoid overwhelming the state’s wildfire fund, which is financed by both utility customers and shareholders.
In response to survivor objections, the Assembly’s version would expand eligibility for those non-economic damages without a cap, while the Senate’s plan would not limit eligibility but would raise the legal bar for survivors outside the fire perimeter to prove the blaze caused their trauma.
Still, a month of protests by Eaton Fire survivors opposed to Newsom’s plan shows how fraught the effort to rank victims has become. Their group, Every Fire Survivors Network, opposes any attempt to draw distinctions among fire victims.
“We are the real wildfire survivors,” several dozen protesters chanted outside the governor’s mansion Monday evening, where Newsom was hosting state lawmakers at an end-of-session reception.
Gayle Nicholls-Ali’s home in Altadena burned to the ground, and she’s now beginning to rebuild. Her son’s house around the corner survived the fire but sustained smoke damage. He and his wife have been living in a donated trailer on the property while they wait for their insurance company to approve claims so repairs can begin.
Under Newsom’s proposal, Nicholls-Ali isn’t sure whether her son would even qualify for non-economic damages, since he evacuated but didn’t suffer physical injury or lose his home.
“The mental stress alone has been enormous,” she said. Nicholls-Ali, a retired public school teacher, and her husband have lived in Altadena for more than 30 years. Her son had dreamed of buying a home in the same town.
“He wanted to live close to home,” she said.
Original source: CalMatters
