California lawmakers let a closely watched wildfire liability bill collapse on the final day of the legislative session, dealing a setback to Gov. Gavin Newsom’s effort to shield the state’s investor-owned utilities from crushing financial exposure after major fires.
The Assembly never brought the measure, Senate Bill 492, up for a vote Tuesday, effectively ending weeks of tense, closed-door negotiations between the governor’s office, legislative leaders, utility companies, insurers and wildfire survivor groups.
Newsom and utility executives had pushed hard to limit the companies’ liability in wildfire lawsuits, warning that without changes, California risked another utility bankruptcy and continued spikes in electricity rates. Last week, the governor reached a compromise with legislative leaders that stopped short of capping compensation for fire victims or limiting attorneys’ contingency fees. It also would have preserved insurers’ ability to sue utilities to recover claims costs and blocked private equity firms from investing in wildfire claims.
That compromise, however, triggered a sharp drop in utility stocks — and ultimately went nowhere.
“The proposal before us does not yet deliver the relief, accountability or meaningful reform that Californians deserve,” Assembly Speaker Robert Rivas said in a statement Tuesday, noting that lawmakers had spent “hundreds of hours” trying to reach a workable deal.
Newsom had hoped the legislation would help address rising electric bills and reduce the odds of another utility collapse tied to catastrophic wildfires. Speaking to reporters Monday night at the Capitol, he signaled he wasn’t giving up on the issue, noting he’ll be in Sacramento “until January.”
“I know we all hate utilities, so no one wants to defend a utility, but you’ve got to deal with reality,” Newsom said. “This thing’s not going to get better on its own.”
In a statement issued after the bill died, Newsom said the proposal, while well-intentioned, didn’t go far enough. “The reforms in this bill, while important, did not address the underlying structural problems driving this crisis, as the initial market reaction this week demonstrates,” he said. “The only solution is to return to fix the entire problem, not part of it.”
Wall Street had already reacted harshly to the emerging deal. Shares of Pacific Gas & Electric and Southern California Edison tumbled in recent days, with San Diego Gas & Electric also taking a hit as investors absorbed what some analysts described as a legislative defeat for the utilities.
In a letter sent Monday to Senate President Pro Tem Monique Limón and Speaker Rivas, the chief executives of PG&E and Edison said the companies had collectively lost roughly $20 billion in market value since the previous Thursday. They warned that shaken investor confidence could lead to higher borrowing costs, reduced infrastructure investment and, ultimately, higher rates for customers.
Sen. Sasha Renée Pérez, a Democrat whose district includes Eaton Fire survivors, said she was troubled that stock market jitters appeared to influence the outcome.
“We as a legislature do not write legislation in response to how the stock market is performing,” Pérez said. “Our focus and our priority needs to be on the safety of Californians, on protecting fire survivors when they’re impacted by these devastating events.”
For consumer advocates and wildfire survivor groups, the bill’s failure was seen as a win, even as they criticized how it unfolded. Groups including Consumer Watchdog and insurance industry representatives had lobbied hard against any deal viewed as a “bailout” that would shift financial risk away from utilities and onto ratepayers or insurers.
“It’s tragic the way this all played out,” said Jamie Court, president of Consumer Watchdog. “They negotiated a deal, and renege when the utilities didn’t like it.”
Joy Chen, executive director of the Every Fire Survivors Network, said advocates had invested enormous effort fighting provisions they viewed as harmful to fire victims. “We have invested hundreds of hours to fight back the utility bailout and the attacks on victims’ rights,” Chen said. “If the speaker says his focus is on survivors, then we would expect that those attacks don’t come back in any legislation that comes out of any special session.”
Some senators said they were blindsided by how quickly the deal unraveled after clearing the upper chamber. “I think for our house, the votes and the members were there,” said Limón, a Santa Barbara Democrat. “So there certainly is a sense of disappointment.”
Sen. Ben Allen, whose district includes Palisades Fire survivors, said he didn’t expect the Assembly to abandon the compromise. “I think everyone agrees the package could have been more comprehensive,” Allen said, adding that lawmakers were trying to balance competing interests without a simple solution. “This negotiation forced the Legislature to balance competing forces, like the long-term success of our electricity grid, how it impacts the insurance market, fire survivors (and) communities.”
Assembly leaders say they plan to hold hearings this fall to continue shaping wildfire policy. Assemblymember Cottie Petrie-Norris, an Irvine Democrat, said while the bill included provisions meant to speed up payouts to fire victims and reduce wildfire risk, lawmakers wanted more time to get the details right.
“We don’t want to get it wrong and have unintended consequences that are going to hurt the people that we are here to represent,” Petrie-Norris said. “I don’t know why (the governor’s office) came to us in August with the proposal. You’ll have to ask them.”
PG&E and SDG&E did not immediately respond to requests for comment after the bill’s collapse. A spokesperson for Edison, David Eisenhauer, said the company remains focused on long-term solutions. “Californians need a durable, comprehensive policy that puts wildfire survivors first, protects communities and strengthens the safety, resilience and reliability of the energy system,” Eisenhauer said.
Warning signs emerged Monday night, as lobbyists and lawmakers raised concerns that eroding investor confidence could translate into job losses and reduced spending on grid improvements. Scott Wetch, a lobbyist representing utility labor groups including the California Coalition of Utility Employees, was blunt in his assessment during an Assembly Utilities and Energy Committee hearing before the bill’s demise.
“Workers got screwed, ratepayers got screwed, lawyers and insurance companies win,” Wetch said.
Assemblymember Jacqui Irwin, a Thousand Oaks Democrat, called the outcome disappointing. “It is a big disaster that we were not able to come up with that structural reform,” she said.
Assemblymember John Harabedian, a Pasadena Democrat, dismissed the stock sell-off as overblown, calling it “hysteria” driven by unrealistic expectations about what lawmakers could accomplish in the final stretch of session. By Tuesday, though, he acknowledged the deal had lost support across the board.
“No one seemed to be happy” with the bill, Harabedian said. “So why are we doing this?”
Original source: CalMatters
