California lawmakers set to vote on scaled-back wildfire liability deal after Newsom proposal stalls

By Richard Ramos

California lawmakers are set to vote during a special session Tuesday on a scaled-back wildfire liability package after Gov. Gavin Newsom’s push to shield utilities from some of the costs associated with fires sparked by their equipment failed to gain enough support.

The latest proposal, Senate Bill 492, focuses largely on speeding up payments to wildfire survivors and limiting some practices surrounding wildfire claims, while leaving in place insurers’ ability to pursue utilities for losses tied to fires.

The measure is expected to come before lawmakers for a final vote Tuesday morning, after the Legislature’s scheduled end-of-session deadline Monday. Because SB 492 includes an urgency clause, lawmakers can vote on it after the regular session concludes.

The developments mark a significant change from the proposal Newsom was pushing last week.

His administration sought to reduce utilities’ exposure to wildfire claims, including by limiting or ending insurers’ ability to sue utilities to recover money they paid to policyholders after fires. The governor argued the changes were necessary to protect the state’s utilities from potentially crippling liabilities and help stabilize electricity rates.

But the proposal faced fierce opposition from wildfire survivors, consumer advocates, insurers and lawmakers who argued it could shift more costs onto people who lost their homes and businesses.

That provision is not included in the latest version of SB 492. The bill instead preserves survivors’ ability to pursue lawsuits and does not impose the proposed cap on damages that had been part of Newsom’s broader plan.

One of the biggest changes would be the creation of a “Fast Pay” program intended to get money to wildfire survivors more quickly.

The measure also would restrict the ability to sell or transfer wildfire claims to third parties, including private-equity firms.

It also addresses utility executive compensation, prohibiting certain bonuses for utility CEOs and senior executives when their company is responsible for a wildfire that damages or destroys at least 500 structures.

Newsom acknowledged the compromise on the legislative package Saturday, calling it progress while making clear he does not believe it goes far enough.

“We reached a compromise that blocks hedge funds from profiteering off wildfire survivors, bars utility executives from taking bonuses when their company ignites a fire, and gets money into survivors’ hands faster,” Newsom said in a statement released by his office.

But the governor also said California still needs broader changes to the system, particularly to strengthen the long-term stability of the state’s Wildfire Fund and address electricity rates.

“This system needs full structural reform — not a partial one,” Newsom said. 

The state’s insurance commissioner on Monday also weighed in on the compromise.

Insurance Commissioner Ricardo Lara said SB 492 advances efforts to improve wildfire preparedness, accountability, insurance availability and community resilience.

“This year’s compromise reflects the complexity of the challenges before us. It advances important efforts to strengthen wildfire preparedness, improve community resilience, increase accountability, and support wildfire survivors, while ensuring more time is taken to think thoughtfully and critically in order to ensure reliable, clean, affordable energy by utilities and increased insurance options offered by more insurance carriers in our state’s wildfire-distressed regions,” Lara said.