Newsom plan could bolster fund threatened by Eaton wildfire claims

California Gov. Gavin Newsom speaks at a February press conference outlining efforts to remove toxic debris from houses burned during Los Angeles' Palisades fire.
California Gov. Gavin Newsom speaks at a February press conference outlining efforts to remove toxic debris from houses burned during Los Angeles' Palisades fire.
Bloomberg News

California Gov. Newsom floated a proposal to nearly double the $21 billion wildfire fund created to protect the state's major investor-owned electric utilities.

Newsom's proposal would add $18 billion to the fund and split the burden equally between shareholders of the three utilities that participate in the fund and its ratepayers.

Customers of Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric already pay a surcharge on their bills to help support the fund.

"We continue to work with the Legislature on policy that will stabilize California's Wildfire Fund to support the recovery of wildfire survivors and to protect California utility consumers — even as wildfires become bigger and more destructive due to climate change," Daniel Villasenor, a spokesman for the governor, said in a statement.

The governor proposed the plan after staff for the Catastrophe Response Council, which manages the fund, warned it could be drained by damage claims from Los Angeles County's Eaton fire.

The eastside fire, one of two devastating wildfires that struck the Los Angeles region in January, has been classified by the California Department of Fire and Forestry as the state's second most destructive in history.

Half the seed money for the $21 billion wildfire fund, established in 2019 through Assembly Bill 1054 — $10.5 billion — came from shareholders. They provided $7.5 billion in contributions when they joined the fund, and the balance of $3 billion is paid in annual installments of $300 million over 10 years.

That was matched by $10.5 billion from ratepayers, which is being collected over 15 years beginning in 2020 through a $3 monthly surcharge.

As of January 2025, the fund has $12.5 billion in liquid assets.

Should the fund need more liquidity to pay eligible claims, AB1054 allows for the issuance of revenue bonds by the state's Department of Water Resources.

Newsom's plan was floated to legislative leaders in Sacramento, but it has yet to be introduced as a bill and would require approval of the state Senate and Assembly, which are now in recess.

The proposal would create a continuation Wildfire Fund that would be capitalized at $18 billion with equal contributions from IOU shareholders and customers.

Customer contributions would come from a 10-year extension of an existing $3 surcharge on electric bills that expires in 2035. Shareholders of the three utilities would be required to immediately commit to collectively contribute an additional $9 billion to the new fund.

For reprint and licensing requests for this article, click here.
Wildfires California Politics and policy Public finance
MORE FROM BOND BUYER