Gov. Newsom's wildfire liability push stalls, leaving future utility reforms uncertain

Governor Gavin Newsom abandoned his broad plan to shift wildfire costs onto insurers and victims after failing to secure legislative support, opting for a modest bill that limits attorney fees and speeds insurer payouts.

In the final stretch of the 2026 legislative session, Governor Gavin Newsom sought to overhaul how wildfire liabilities are allocated, aiming to protect investor-owned utilities by shifting more costs onto victims and insurers. After failing to gather sufficient backing, he dropped the ambitious proposal and backed Senate Bill 492, a narrower package that limits attorney fees for insurers, prohibits speculative trading on fire-related claims, and expedites payments to affected policyholders.

Newsom hailed the bill as a step forward for future fire victims, though it stops well short of the comprehensive liability shield he envisioned to stabilize utility rates. He called on the Legislature to reconsider the broader issue after his term concludes in January, suggesting a possible special session post-election or action in the December biennial session. Pacific Gas and Electric CEO Patty Poppe expressed optimism that upcoming hearings and a Public Utilities Commission report could revive the original plan, while Consumer Watchdog’s Jamie Court criticized PG&E’s decision to pause new power hookups until the dispute is resolved, labeling it as “bailout blackmail.” The stalemate reflects the utilities’ tarnished reputation, insurers’ political influence, and the governor’s lame-duck status.