Utilities lobby for shield from wildfire costs
As a criminal investigation into Southern California Edison’s actions before last year’s deadly Eaton fire continues, the state’s for-profit utilities are lobbying for legislation that would protect their shareholders from paying for future catastrophic fires they cause.
According to slides recently presented by a Pacific Gas & Electric executive to a group of state senators, the utilities are asking for a permanent cap to limit their corporate liability for a fire where they are found to have acted negligently or imprudently. The slides were reviewed by The Times.
“If ratepayers are forced to pay the lion share for fires utilities cause, there is no imperative for the for-profit utilities to take safety and fire mitigation seriously,” said Jamie Court, president of Consumer Watchdog.
The utilities say their shareholders must be shielded from wildfire costs because the risk of future fires has damaged their credit ratings. Lower credit ratings mean the companies must pay higher interest rates on borrowing, an increased cost that gets passed on to electricity customers.
“It is in our customers’ interest to have action in 2026,” Pedro Pizarro, chief executive of Edison International, told Wall Street analysts last week when asked about the utilities’ push in Sacramento for a liability cap.
Caroline Choi, Edison’s executive vice president of public policy and corporate affairs, told The Times that the proposal would not change the utilities’ focus on preventing fires. “Safety is our number one priority,” she said.
Executives at Edison and PG&E also recently told their investors that without the liability protection they may cut what they are spending on capital improvements, including to connect new housing developments and green energy projects.
PG&E recently sent letters to thousands of its customers, saying their projects could be delayed next year as it defers $2 billion in spending.
Those comments and PG&E’s letter have angered consumer advocates, wildfire survivors and some lawmakers.
On Sunday, state Sen. Sasha Renée Pérez (D-Pasadena), whose district includes Altadena, sent a letter to the California Public Utilities Commission, pointing out that both companies continue to pay millions of dollars in dividends to their shareholders, while complaining that the wildfire risk had financially weakened them.
“Their decisions to delay or reduce investments in critical projects are particularly troubling given the billions of dollars in profits reported by their parent companies in recent years,” Perez wrote. “The Legislature must not be pressured to roll back utilities’ financial accountability for wildfires through threats to withhold the investments needed to serve our communities.”
The state’s three biggest for-profit utilities, which also include San Diego Gas & Electric, have been lobbying for protection from wildfire costs since early 2025. That’s when videos emerged showing two bright flashes coming from Edison’s transmission lines, just before the Eaton fire ignited.
A government investigation released in August concluded that the devastating fire ignited when an out-of-service transmission line that Edison had not used since 1971 was briefly reenergized in the high winds, causing sparks that landed in dried brush below.
The fire killed 19 people and destroyed a wide swath of Altadena, leaving thousands of families homeless.
Last week, Pizarro told investors that executives believed the utility acted prudently before the fire. If the utilities commission agrees that the company acted prudently, Edison’s liabilities for the fire would be fully covered by a $21-billion state wildfire fund.
If the commission instead determines that Edison acted imprudently — a California regulatory standard that is similar to negligence — the company’s shareholders would still pay no more than $4.3 billion for the Eaton fire under a 2019 law known as Assembly Bill 1054.
The law was passed by Gov. Gavin Newsom and lawmakers to protect utilities from bankruptcy if their power lines spark a catastrophic fire. Since then, utility equipment has continued to spark major wildfires, even though the companies have charged customers tens of billions of dollars to prevent them.
The slides presented to state senators propose that the cap on damages — when a utility is found to have acted imprudently — be made permanent. Under current law, the cap will end when the state wildfire fund, as well as an additional $18-billion reserve created last year, are depleted, leaving shareholders exposed to greater costs of future fires.
The proposed limit on shareholder liability would be equal to 20% of each utility’s transmission and distribution equity rate base, which differs based on the size of the grid maintained by each company. This number for Edison is now $4.3 billion. For PG&E, it is $5.1 billion, according to the slides, while it is $1.5 billion for SDG&E.
The companies’ customers would have to shoulder the rest of a fire’s costs, which would be added to monthly electricity bills.
Mark Toney, executive director of the Utilities Reform Network, called the idea of permanently capping shareholders’ liabilities for fires “completely unacceptable.”
“There needs to be a cap on ratepayers’ liability,” he said.
Earlier this year, the utilities’ stock prices began to rise as executives told investors that Newsom was working on legislation to reduce the companies’ financial risks from fires.
But wildfire survivors were angered when details emerged that Newsom’s proposal would limit payments to victims for pain and suffering and cap attorney fees. Another proposed measure would have increased property insurance premiums across the state by reducing the amounts that insurers could collect after a utility-caused fire.
The utilities’ stock prices then fell when legislators agreed to a much smaller legislative package that did not have the protections the companies wanted. That bill died after the Assembly declined to vote on it.
The utilities are now asking Newsom to call a special session in which lawmakers would debate how to reduce the utilities’ fire risks, including the possible limit on what shareholders would pay.
“A predictable limitation would enable utilities to maintain investment grade credit ratings to better access capital at lower borrowing costs for customers,” Lynsey Paulo, a PG&E spokesperson, said in an e-mail.
In February, Edison disclosed that the Los Angeles County district attorney was investigating whether Edison should be criminally charged for its actions leading to the Eaton fire. And last month, an investment firm published a report claiming that there was evidence that Edison “acted with conscious and willful disregard for the rights and safety of others,” which would make its shareholders liable for all Eaton fire costs. The costs have been estimated to be tens of billions of dollars.
Pizarro told investors last week that he believed there was no evidence that Edison acted criminally before the fire. And he similarly dismissed the investment firm’s report.
“Just to be very crystal clear on this, not only do we not see any basis for felony liability, we certainly don’t see any basis for allegations of conscious or willful disregard,” Pizarro said on the conference call. “I think I said this to all of you before — that is not something I lose sleep over.”
