Governor Gavin Newsom’s recent proposal could potentially relieve private utility companies from liability for wildfires that result from their equipment, a move that’s being met with support from fire survivor groups.
However, a coalition consisting of insurance firms, local governments, fire survivors, lawyers, and consumer advocates has urged the state Legislature to reject the proposal. They argue, in a fact sheet titled “Wildfire recovery reform: Survivors first,” that it would limit the compensation available to fire victims and insurance companies, possibly leading to increased insurance costs statewide.
The coalition’s letter emphasized that wildfire survivors shouldn’t bear the financial burden of utility shareholders. They believe that families who have experienced devastating losses due to utility-related fires deserve full compensation and a straightforward recovery process.
This proposal arises as California’s wildfire liability fund is running low, primarily due to payments made by Southern California Edison to victims of last year’s Eaton fire, which was caused by sparks from a long-dormant power line.
According to the coalition, seven out of the world’s twenty most expensive wildfires have been caused by utility equipment, all of which are in California.
Currently, power companies face significant risks for damages caused by their equipment under existing liability laws.
The group highlighted that Congress is being asked to consider shifting these costs onto homeowners’ insurance companies, local governments, state taxpayers, and affected communities.
The coalition expressed concern that Newsom’s plan would mean Californians still bear the financial brunt of utility fires via higher insurance premiums, taxes, reduced public services, or decreased coverage for wildfire losses.
In his fact sheet, Newsom criticized the “broken system” that fails families, taxpayers, and ratepayers, suggesting that insurance companies and hedge funds leave survivors struggling to obtain the funds necessary for rebuilding their lives.
Joy Chen, who leads the Every Fire Survivors Network, accused the proposal of essentially being a multibillion-dollar bailout for major utility companies, arguing that this assistance would predominantly come from fire victims themselves.
Chen also noted that the proposal would create a very limited “danger zone” along fire lines and restrict eligibility for benefits, leaving those outside this area without any support, even if their homes were destroyed by smoke.
He indicated that under the new system, California could fall to the lowest rank nationwide in terms of compensation for victims of public works fires.
Democratic state Senator Ben Allen, representing areas affected by the Palisades fire, expressed his concerns in letters to PG&E and Edison executives post-fire. He pointed out that these leaders signaled intentions to prioritize shareholder protections through stock buybacks, rather than investing in infrastructure development, in the absence of a federal bailout.
Allen expressed that while the specific impacts of these threats remain unclear, it is crucial that both Californians and businesses maintain reliable access to electricity and natural gas services essential for daily life.
