ncpipeline.substack.com · Steve Puterski · September 6, 2026
Wildlife liability reform collapses in final hours of legislative session
### A contentious effort to overhaul California’s wildfire compensation system died exposing deep divisions over utility liability, insurance claims, wildfire victims and future electricity costs
Steve Puterski
Sep 06, 2026
Note: A statement from SDG&E has been included in this story.
SACRAMENTO — It was a frantic and intense ending to the state Legislature’s 2026 session, capped by a battle over wildfire compensation.
A high-stakes effort to overhaul California’s wildfire compensation system collapsed in the final hours of the session after lawmakers, Gov. Gavin Newsom, utilities, insurers and wildfire survivors spent weeks fighting over one of the state’s most consequential policy questions: Who should pay when utility equipment sparks a catastrophic wildfire?
The legislation, Senate Bill 492, died Tuesday when Assembly Speaker Robert Rivas (D-Salinas) declined to bring it up for a floor vote, despite a weekend agreement between Newsom and legislative leaders initially viewed as a breakthrough, according to reports. The legislative session ended Tuesday.
The bill’s death marked a rare political setback for Newsom, who terms out this year, and underscores deep divisions over utility liability, insurance markets, electricity rates and the future of California’s wildfire compensation system. Newsom, though, has indicated he may call a special session to address the issue.
> “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. “It also establishes a Statewide Community Wildfire Strategy to better coordinate prevention and preparedness efforts across the state. This is all real progress for future fire survivors.”
The announcement of SB 492’s passage in the Senate triggered a massive financial loss for the state’s publicly traded utilities, wiping out more than $20 billion in market cap between Pacific Gas & Electric, Edison International (Southern California Edison) and Sempra (San Diego Gas & Electric). PG&E and Edison each saw losses of 20% in their stock prices, while Sempra dropped by 3%, according to reports.
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The companies slightly rebounded when the bill died. The three combined to regain between $5 billion and $6 billion in market cap, which media reports indicated reflected how investors viewed the legislation as materially increasing shareholder exposure to future wildfire claims.
According to a report from KCRA in Sacramento, PG&E and Southern California Edison sent a letter to lawmakers about their stock market losses, warning it could result in higher electricity rates and job losses. Less than 24 hours later, the Assembly killed the bill.
Rivas denied the market losses were related to the bill’s demise.
> “None at all,” he told reporters on Tuesday. “We’re committed to finding an appropriate solution going forward. We want to get this right.”
Inside the bill
Described as a wildfire-liability bill, SB 492 functioned as a wildfire recovery and finance measure, according to reports and an analysis of the bill.
Among its most significant provisions was the creation of a California Wildfire Relief Fast-Pay Program. The program would have established a structured process for reviewing claims and issuing settlement offers following qualifying utility-caused fires.
A look inside SB 492, which died in the Assembly on Tuesday. Steve Puterski graphic/AI
Supporters said wildfire victims frequently wait years for litigation to conclude and argued the new system would provide compensation more quickly. Also, victims would have generally retained the right to reject settlement offers and continue pursuing litigation.
The bill also contained extensive provisions aimed at preventing outside investors from profiting from wildfire claims. Those provisions restricted the involvement of private equity firms and the transfer of certain wildfire-related claims.
> “I know we all hate utilities, so no one wants to defend a utility, but you’ve got to deal with reality,” Newsom told reporters. “This thing’s not going to get better on its own. The reforms in this bill, while important, did not address the underlying structural problems driving this crisis, as the initial market reaction this week demonstrates. The only solution is to return to fix the entire problem, not part of it.”
The bill also prohibited the chief executive, chief operating and chief financial officers, among other senior utility company leaders, from receiving bonuses if a utility-caused wildfire damaged more than 500 structures.
Meanwhile, the bill did not address electricity rates. Supporters argued the bill could reduce financial uncertainty and potentially ease future cost pressures associated with wildfire claims.
Electricity rates are a complex structure with numerous factors, which also include wildfire mitigation investments, infrastructure improvements, past investments, undergrounding projects, financing costs, and regulatory decisions, to name a few.
The bill’s final days
What ultimately died in the Assembly was not Newsom’s original proposal.
The governor entered negotiations seeking broad changes to California’s wildfire-liability framework, arguing that mounting wildfire costs threaten utility finances, increase borrowing costs and contribute to what are the second-highest electricity rates in the country. Newsom’s proposal would have significantly reduced utilities’ financial exposure after major fires by limiting or eliminating insurance-company subrogation claims, restricting certain categories of damages and reducing payments to some classes of claimants.
Insurance companies, wildfire survivors, trial lawyers and consumer advocates mobilized against the proposal, labeling it a utility bailout. As negotiations progressed, lawmakers stripped out many of Newsom’s most controversial provisions.
> “Senate Bill 492 fails to provide a durable, long-term solution for compensating wildfire victims, sustaining the Wildfire Fund, and managing the financial risk created by California’s wildfire liability framework, which worsens affordability for utility customers and challenges the State’s clean energy goals,” PG&E CEO Patti Poppe and Edison International CEO Pedro Pizarro wrote in an Aug. 31 letter to legislative leaders. “By leaving these fundamental problems unresolved, the bill creates continued uncertainty for wildfire victims and exposes utility customers to higher costs and California’s economy to continued risk.”
The resulting compromise focused less on reducing utility liability and more on changing how wildfire claims are financed and paid.
Rivas said the bill didn’t provide enough “relief, accountability or meaningful reform.” However, it only captures part of the debate over the bill.
The proposal was caught between competing interests, each with different objectives.
A look into wildfire recovery funding and two proposals under SB 492. Steve Puterski graphic/AI
Consumer groups and wildfire survivors spent weeks fighting Newsom’s original effort to reduce liability. Utilities, meanwhile, were upset the protections they lobbied for were rejected.
Assembly members were also asked to consider a highly complex bill during the final days of the session after the measure had been substantially amended, a process frustrating some rank-and-file lawmakers, according to media reports.
The final blow appears to have come after utilities publicly objected to the compromise. Political reporters and others said the bill appeared to mostly target PG&E and Edison, as lawmakers specifically discussed the deadly Camp and Eaton fires. The Camp Fire killed 85 res