California Gov. Gavin Newsom is drawing backlash over a new wildfire liability proposal that critics say could shield privately owned utility companies from the full financial consequences of fires ignited by their own power equipment.
In a fact sheet titled “Wildfire Recovery Reform: Survivors First,” a broad alliance of insurance companies, city and county officials, wildfire survivors, attorneys and consumer protection groups called on state lawmakers to turn down the plan. The coalition argues the proposal would raise insurance costs across California while limiting how much fire victims and insurers could recover from utilities.
“Wildfire survivors should not be asked to subsidize utility shareholders. Families who have lost loved ones, homes, businesses, and livelihoods because of utility-caused fires deserve full compensation and a clear path toward recovery,” the coalition wrote in an Aug. 11 letter to the legislature.
The dispute comes as California’s wildfire liability fund is reportedly nearing exhaustion, following major payouts tied to Southern California Edison and victims of last year’s Eaton Fire. That blaze has been linked to sparks from an Edison transmission line that had sat unused for decades.
According to the coalition, utility infrastructure has been responsible for seven of the 20 costliest wildfires in the world — and all seven occurred in California.
Under California’s current wildfire liability system, power companies can be held financially responsible when their equipment starts catastrophic fires.
“The Legislature is now being asked to consider proposals that would instead transfer those costs to homeowners’ insurers, local governments, state taxpayers, and the very communities devastated by these disasters,” the groups added.
Opponents say Newsom’s approach would not erase the cost of utility-caused wildfires — it would simply shift the burden onto Californians through higher insurance premiums, increased taxes, cuts to public services or smaller recovery payments for people who lost homes, businesses and loved ones.
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In his own fact sheet, Newsom blasts a “broken system that is not working for survivors, taxpayers, or ratepayers” — and blames insurance companies and hedge funds for making survivors fight for “money they deserve to rebuild their homes.”
Joy Chen, who leads the Every Fire Survivors Network, branded the proposal a multibillion-dollar bailout for big utilities — funded by the very victims they burned.
Chen said the plan would redraw payout eligibility by carving narrow “zones of danger” along fire lines — leaving anyone outside them without a dime, even if toxic smoke wrecked their homes.
“This is through and through a bailout for utilities on the backs of victims,” Chen told KCRA.
She added the plan would drag California down to dead last — 50th among all US states — in victim restitution for utility-caused fires.
Meanwhile, state Sen. Ben Allen — a Democrat whose district includes the area torched by the Palisades Fire — fired off letters to PG&E CEO Patti Poppe and Edison CEO Pedro Pizarro after the LA Times reported that both bosses signaled on recent earnings calls that, without a state bailout, they would protect shareholders by shifting capital into stock buybacks instead of infrastructure upgrades.
Allen told the companies he was “deeply troubled” by the threats, reminding them that wildfire liability is part of their “privileged license to operate in California.”
“While these threats are unclear as to their specific implications, it is imperative that California residents and businesses are not hindered in their reliance on the electricity and natural gas utility service they require for daily life,” Allen wrote in his Aug. 11 letter.
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