Newsom returns to a defining California fight: Who pays for wildfire damage?

California Governor Gavin Newsom has been grappling with a pivotal question throughout his eight years in office: who should be responsible for the expenses resulting from wildfires sparked by utility equipment? The issue has been at the forefront during the final legislative session of his tenure. The most devastating wildfire in California's history, which claimed 85 lives and destroyed over 18,000 structures in Northern California, was ignited two days after Newsom took office in 2018.

The fire was determined to have been caused by Pacific Gas & Electric (PG&E) equipment. Facing multi-billion-dollar liability, PG&E subsequently filed for bankruptcy just weeks after Newsom's inauguration.

In response, Newsom enacted a $21 billion fund, funded by utility shareholders and ratepayers, to assist utilities in covering wildfire damages if they implement specific safety measures. As another major utility, Southern California Edison, is now facing claims from a 2025 fire that killed 19 people, Newsom is attempting to negotiate a deal with lawmakers.

The plan could limit the amount utilities must pay victims and attorneys, potentially stabilizing high electricity rates in the state, which continue to rise due to climate change and the increasing frequency of wildfires. Six of the ten most destructive wildfires in California have been attributed to utility equipment.

Newsom emphasizes the urgency of acting quickly, warning that the wildfire fund may run out soon. He states that the current system, which prioritizes utilities over fire survivors, is unsustainable. However, some fire survivors argue that the plan unfairly prioritizes the interests of utilities. Insurance companies are concerned about potentially bearing a larger portion of the costs for property damage.

A coalition of major utilities, including PG&E, Southern California Edison, and San Diego Gas & Electric, supports the proposal. The plan would also require utility CEOs to forfeit bonuses if their company causes wildfires resulting in over $1 billion in damage, and utility shareholders could face fines of up to $10 million for violating wildfire prevention requirements.

Critics, including the Personal Insurance Federation of California, argue that the proposal will result in higher insurance rates. Some survivors, like Joy Chen of Every Fire Survivor's Network, view the plan as a significant shift in liability from the utilities to taxpayers. The California Professional Firefighters have expressed support for Newsom's proposal, emphasizing the need to balance utility stability with ensuring the recovery and rebuilding of wildfire-impacted communities.