By Stephen Hobbs, THE SACRAMENTO BEE
https://www.sacbee.com/news/politics-government/capitol-alert/article317942727.html#storylink=cpy
California’s system of handling wildfire liability will make electric bills more expensive and hurt the financial rating of power companies, the state’s utility regulator warned in a recent report.
The California Public Utilities Commission said the current system requires significant changes.
“Until the whole-of-society steps needed to meaningfully reduce wildfire risk occur, the existing system that places tens of billions of dollars in wildfire costs on utilities and utility ratepayers and threatens further tens of billions of dollars in costs is not sustainable and increasingly harms the state’s ability to provide safe, clean, reliable, and affordable electricity service,” the report said.
Those conclusions are the latest wrinkle in an ongoing fight over how state legislators should handle blazes caused by utilities. The issue came to a head over the summer when Gov. Gavin Newsom and major power companies pressured lawmakers to revamp the system in the final weeks of their legislative session. Insurance industry lobbyists and other groups called the effort a utility bailout and state legislators ultimately resisted key parts of Newsom’s demands. A potential deal fell through.
The governor, on Sept. 1, requested the agency produce a report on the effect of the failed negotiations within two months. The agency released it last week.
“The CPUC report highlights what Governor Newsom has repeatedly stated: the system needs full structural reform,” said Anthony Martinez, a spokesperson for the governor, in a statement. “This report continues to underscore what remains at stake. The state must work to secure long-term durable solutions, stabilize electricity rates and ensure fire victims are never again turned into unsecured creditors in a bankruptcy proceeding.”
It is unclear what will happen next. Newsom has fewer than two months left in office and would need to call lawmakers back for a special session if he wanted them to pass something before his term ends.
Representatives for the state’s biggest investor-owned utilities, including Pacific Gas and Electric Co. and Southern California Edison, want state legislators to act now. PG&E recently announced it was delaying $2 billion in spending — for dozens of renewable energy projects and new customers to service — due to the Legislature failing to reach a deal that it was happy with. That will allow the company save money on interest payments.
The report notes that the risk of severe wildfires in the future is dragging down the credit ratings of the state’s largest utilities, which increases those borrowing costs. One of the reasons for the concern is that a state fund designed to support utilities and prevent bankruptcies won’t have enough money to cover claims from future fires.
Under current law, companies must pay the full cost of a wildfire started by their equipment, even if the utility acted reasonably and followed its wildfire plan, which the report said is unusual among states. Those companies can also be on the hook for payouts to insurance companies for claims due to the utility-sparked wildfires. Newsom wanted to limit or eliminate the insurance company recoupment process, known as subrogation.
Jamie Court, president of the organization Consumer Watchdog, disagreed with the report.
“When utilities’ negligence causes wildfires, shareholders need to be responsible and deterring the wildfires in the first place should be the principal goal not limiting liability for utility-caused wildfires,” he said in a statement. “The PUC’s failure to oversee the three for-profit utilities and punish them when their negligence causes a loss of lives is a big reason the utilities don’t feel the need to do better.”
The report ends by recommending potential next steps: Change the liability system, provide better support to large and small utilities and help reinforce the creditworthiness of the investor-owned companies.
“Without reform, even this status quo is likely unsustainable,” the report said. “Future fires may bankrupt and further downgrade electric utilities, further increasing rates and threatening the state’s ability to provide safe, reliable electric service.”
Consumer Watchdog · November 10, 2026
https://consumerwatchdog.org/in-the-news/the-sacramento-bee-california-utility-regulator-calls-wildfire-liability-unsustainable-in-report/
© 2026 Consumer Watchdog. Printed November 10, 2026.
