Despite lame duck status, Newsom could take a final shot at utilities’ liability for wildfires

When the California Legislature adjourned for the year nearly two months ago, it left a big issue on the table — or maybe not.

During the final weeks of the 2026 session, Gov. Gavin Newsom and legislative leaders engaged in a mostly behind-the-scenes battle over his efforts to reduce the financial impact of wildfires on three investor-owned electric utilities.

Ultimately Newsom dropped his plan, which would have made wildfire victims and their insurers shoulder larger shares of the burden, because he was unable to amass the votes needed.

Instead he settled for a token measure, Senate Bill 492, which would cap the fees of attorneys who represent insurers, block speculators from trading on insurance claims and speed up insurance payments to fire victims.

Newsom hailed SB 492 as “real progress for future fire victims,” but it fell far short of the massive overhaul of liability he had sought to protect utilities’ bottom lines and — he said — to stabilize utility costs for ratepayers. He urged the Legislature to revisit the issue after his governorship ends next January.

That, it would appear, was that. Newsom would leave it an unsettled conflict involving many billions of dollars and multiple stakeholders for his successor — almost certainly former Attorney General Xavier Becerra — and the next legislative session.

Or maybe not.

Ever since the Legislature left town, there has been an undercurrent of speculation that Newsom might call a special session after the Nov. 3 election to take another swipe at resolving the conflict, or seek a deal after the Legislature convenes a new biennial session in December — when Newsom still has a month left in office.

Patty Poppe, CEO of Pacific Gas and Electric Co., last week told a conference call of investment analysts that she’s optimistic hearings being staged this month by the state Assembly’s Utilities and Energy Committee and a report the state Public Utilities Commission will issue this week will make the case for Newsom’s proposal.

Consumer Watchdog, one of the most vociferous opponents of Newsom’s plan, released a transcript of Poppe’s remarks, saying they suggest there’s movement toward a special legislative session.

Jamie Court, Consumer Watchdog’s president, also criticized PG&E’s announcement that it would stall new power hookups until the issue is settled. He called it “bailout blackmail” that violates the utility’s duty to provide service.

PG&E is the largest of the three major utilities, which include Southern California Edison and San Diego Gas & Electric. It has the greatest financial exposure to damages if its power lines cause fires, as they have in the past.

Newsom’s proposal is grounded in the belief that if utilities remain fully liable, it will drive consumer power bills — already among the nation’s highest — upward, and make it more difficult for utilities to draw investors and borrow money to meet power demands.

The difficulty Newsom has faced in selling his plan to the Legislature reflects the utilities’ poor image, insurers’ political clout and his lame duck status. The stalemate also reflects uncertainty about whether the many legislative measures passed since the danger first arose have been effective.

As a background paper prepared for one of this month’s hearings put it: “Seven years and tens of billions of dollars into the safety regime, the central question for this committee is whether California is actually safer from utility-ignited catastrophic fire … Utilities add modeled estimates of how much risk their work has removed.”

It added: “Yet, each measure of success has limits. Weather drives yearly totals, catastrophic fires are too rare to show a statistical trend, risk models change from one filing to the next and overlapping mitigations make it hard to credit any single program.”

In other words, politicians like Newsom are shooting in the dark as they attempt to rationalize and respond to something that is inherently unpredictable.