California legislators introduced a bill Saturday that would update the state’s wildfire response without shifting liability away from publicly traded utilities.
The move comes after extended negotiations with Gov. Gavin Newsom’s administration, which had been advocating for measures that would bar insurers from suing utilities to recover payouts for property policyholders.
The legislation is the result of a compromise with Newsom and is intended to bolster the state’s wildfire recovery response amid a rapidly warming climate. Ne
wsom said the legislation will also speed up payouts to survivors, put new limits on hedge funds pursuing wildfire-related lawsuits against utilities and tighten safety accountability for utility executives.
“Nonetheless, this system needs full structural reform — not a partial one,” Newsom said in a statement, calling on lawmakers to revisit the issue next year, after he leaves office due to term limits.
Lawmakers snubbed Newsom’s push to bar insurance companies from suing utilities for wildfire-related claims through a process known as subrogation. Insur
ers had warned that such a move would drive up premiums, stinging homeowners and businesses already frustrated with rising rates for coverage in recent years.
Reports Friday morning that negotiations had broken down on that point led to a sell-off in the
shares of the state’s major investor-owned utilities, with PG&E Corp. closing 7.5% down for the day.
Lawmakers, however, did include provisions favorable to utilities, such as barring hedge funds from buying up insurers’ claims against electric companies and backing new limits on the fees lawyers can receive for handling such cases.
“We have come to an agreement that supports survivors in their recovery, curbs Wall Street practices that increase costs on consumers, and mitigat
es the destruction of these wildfires in the first place,” state Senate President Pro Tempore Monique Limón, a Democrat, said in a statement.
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PG&E said in a statement that it is reviewing the measure. Southern California Edison pointed to a statement from advocacy group Wildfire Victims First, which is funded in part by Edison and PG&E.
“Urgent action remains for full structural reform to ensure a fair recovery system,” spokesperson Nathan Click said. “We will continue advocating for systemic change to make sure victims are never again at the back of the line in wildfire cases.”
The proposed overhaul comes after the Los Angeles County Fire Department said in a report released in early August that Edison equipment ignited one of t
he most destructive fires in the state’s history. The Eaton Fire killed at least 19 people and destroyed more than 9,400 structures in Altadena in January 2025.
The company, which has denied wrongdoing, faces thousands of claims by survivors in state court and a judge has scheduled trials to begin in January. Edison, w
hich has been blamed for sparking several catastrophic wildfires in Southern California in recent years, could potentially reach a settlement with Eaton Fire victims, as it has done in other cases.
As climate change increases wildfire risk across California and the West, utilities like Edison have sought to contain their mounting liabilities, pitting them again
st wildfire survivors seeking compensation, insurance companies trying to recover claims, and cities and counties battling mounting firefighting and infrastructure rebuilding costs.
