California Governor Proposes $18 Billion Wildfire Fund

Firefighters working tirelessly to control a wildfire in California.

News Summary

California Governor Gavin Newsom has proposed legislation to increase the state’s wildfire fund by $18 billion, targeting funding for utility companies and victims of devastating fires. This comes after the Eaton Fire in January 2025, which caused significant loss of life and property. The proposed funding aims to stabilize and sustain the wildfire fund, ensuring rapid compensation for affected homeowners as investigations continue into the fire’s cause.

California Governor Gavin Newsom has unveiled a proposal for new legislation aimed at increasing the state’s wildfire fund by an additional $18 billion to support utilities. This ambitious plan comes as a response to the potentially devastating financial aftermath of ongoing wildfires, particularly following the January 2025 Eaton Fire in Los Angeles County, which resulted in significant loss of life and property.

The proposed infusion of funds is critical, as officials have expressed concerns that the current $21 billion California Wildfire Fund, which was established in 2019 and is managed by the California Earthquake Authority, could be depleted due to claims stemming from the Eaton Fire. This fire, which tragically began on January 7, claims 19 lives and razed approximately 9,000 homes, making it one of California’s most catastrophic wildfire incidents to date.

According to the proposal, the funding will be divided between electricity ratepayers and three major utility companies—Edison International, Pacific Gas and Electric (PG&E), and Sempra. Approximately half of the proposed $18 billion would be funded through a new monthly fee on electricity bills, while the remaining funds would come from these utility companies. This structure is intended to ensure that the wildfire fund remains robust enough to address the aftermath of future wildfires.

Governor Newsom’s office is actively collaborating with state legislators to formulate a plan that stabilizes the fund, which is increasingly deemed necessary given the severity of recent fire damage. Experts have estimated that the insured property losses from the Eaton Fire could reach as high as $15.2 billion, not accounting for uninsured damages or wrongful death claims. A separate study conducted by UCLA places total losses from the fire anywhere between $24 billion and $45 billion.

Investigations are currently underway to determine the cause of the Eaton Fire, with particular scrutiny on whether equipment from Southern California Edison played a role in igniting the blaze. Should Edison be held responsible, the financial implications could lead to damage claims that might deplete the fund entirely. Concerns have been raised about Edison’s potential lack of incentive to minimize damage claims since the fund would bear the brunt of the financial liability for settlements.

The existing structure of the wildfire fund allows Edison to settle lawsuits related to the Eaton Fire, with the fund compensating the utility for those costs. However, this system has also led to discussions among officials regarding the need to amend the 2019 law that established the fund, specifically AB 1054. Proposed amendments may include limiting excessive attorney fees, which can make up 30% to 50% of settlement amounts, ultimately impacting the fund’s sustainability, and prioritizing claims from homeowners over claims from corporate investors.

As part of the ongoing discussions, Governor Newsom and legislative leaders are considering extending the monthly surcharge on electricity bills, which would be necessary to enhance contributions to the wildfire fund. These deliberations are vital, considering that the fund is critical for providing speedy compensation for victims of wildfires that are linked to utility service equipment.

Ultimately, the proposal is still in draft form and subject to change, but it illustrates California’s commitment to addressing the fire crisis that continues to threaten communities across the state. The legislative effort seeks not only to manage current devastation but also to prepare adequately for future challenges posed by wildfires.