California Assembly kills wildfire liability plan Gov. Newsom agreed to with legislators
PG&E and Southern California Edison’s stocks rise after the development.
California’s Assembly on Tuesday killed a wildfire liability plan that lawmakers and Gov. Gavin Newsom agreed to days ago.
Assembly Speaker Robert Rivas did not bring the legislation up for a vote.
Facing pressure from the stock market and investor-owned utility companies, Newsom on Monday did not rule out the possibility that he would call a special legislative session on how much those companies should pay when they cause a catastrophic wildfire.
“The markets, they bat last and bat a thousand,” Newsom told reporters at the Capitol Monday night. “This is a consequential moment and you’re seeing the consequences play out in real time. We’ve got work to do.”
On Tuesday, PG&E and Southern California Edison‘s stocks were up as investors cheered the decision.
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Lawmakers in the California Assembly have killed a wildfire liability plan after facing pressure from the state’s two biggest electric companies that recently caused catastrophic wildfires.
Gov. Newsom may call a special session to try to help them: https://t.co/2d074w7FCP
— Ashley Zavala (@ZavalaA) September 1, 2026
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Stocks for the investor-owned utilities had fallen on Monday after California lawmakers blocked Newsom’s push to shift some costs of a future fire onto insurance companies. Both of those companies caused recent, catastrophic fires. Southern California Edison has been blamed for the Eaton Fire in Altadena last year. PG&E caused the Camp Fire in Paradise in 2018.
The wildfire liability issue revolves around the possibility one of the state’s three investor-owned utility companies causes another catastrophic fire soon. Newsom has worried the state’s wildfire liability fund could be drained as it pays out claims from the Eaton Fire, and that a future fire caused by any of the investor-owned utilities could send the company that causes it into bankruptcy.
For weeks, the governor has been pushing to limit or eliminate the insurance companies’ right to sue the utility companies to recoup losses, a process known as subrogation. Democrats in the state legislature have refused.
California’s legislative session technically ended Monday night, but lawmakers were set to vote on a bill Tuesday morning that changed some parts of the state’s wildfire liability system when one of the utilities causes a fire. Among many things, it would have set limits on some attorney fees and utility CEO bonuses if they start a wildfire. The legislation did not limit subrogation.
Lawmakers were able to vote on the proposal hours after the deadline because the legislation would go into effect immediately. It would require a 2/3 vote from both the State Senate and Assembly.
Multiple sources close to the negotiations told KCRA 3 Monday PG&E and Southern California Edison were pushing state lawmakers and the governor to extend the legislative session to limit subrogation. The CEOs of the two companies sent a letter to lawmakers, noting their companies have lost $20 billion in value since Thursday. The two threatened higher utility bills, job losses, and less investment in California.
A source with direct knowledge of the situation told KCRA 3 activist investors on Monday night had been reaching out to PG&E and the company’s board to push them to make significant changes because of the legislature’s inaction on subrogation.
It could be the first step in a possible corporate takeover, the source said.
“I’m concerned across the board,” Newsom said. “This is not an issue that’s going away.”
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