California Will Decide Utility Wildfire Liability Bill

Proposed legislation would bar utilities from shifting wildfire compensation costs to customers.

Updated on Sept. 25, 2026 in Utilities

Bold flat-color editorial illustration of a high-voltage power tower on a dry hill, representing utility liability policy. — Governor Gavin Newsom faces a September 30 deadline to sign legislation preventing California utilities from shifting wildfire restitution costs onto customers. AI Illustration. Upload story photo >

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Should utility companies be legally required to fully compensate wildfire victims for their losses?

Governor Gavin Newsom must sign or veto AB 2700 by September 30, 2026, a bill requiring utilities to fully compensate wildfire survivors. The legislation mandates that utilities fill the financial gap between victim losses and prior settlement amounts without passing those expenses to utility customers.

Why it matters

The bill aims to hold utilities fully accountable for wildfire damages while protecting ratepayers from the financial burden of future settlements. It marks a significant shift in how California utilities, which have previously navigated bankruptcy due to fire-related liabilities, must manage their compensation obligations.

The legislation addresses historical liabilities dating back to utility-caused wildfires between 2015 and 2018, following the 2020 formation of the Fire Victim Trust. The bill requires utilities to bridge the gap between actual losses and prior settlement amounts.

The players

Gavin Newsom

The Governor of California who holds authority to sign or veto legislation impacting state utility regulation.

California Public Utilities Commission

The state agency responsible for utility regulation and the proposed implementation of the wildfire compensation plan.

PG&E

A major investor-owned utility that previously entered bankruptcy following extensive wildfire liability claims.

The details

AB 2700 directs the California Public Utilities Commission to establish a compensation plan ensuring that wildfire survivors receive full restitution. By prohibiting utilities from recovering these specific compensation costs through customer rate hikes, the bill places the entire financial obligation on utility shareholders and capital structures. This prevents utilities from insulating themselves from the full cost of negligence claims by offloading expenses onto the public utility rate base.

2015-2018: Utility-caused wildfires occurred in Northern California.
2020: The Fire Victim Trust was formed to manage survivor claims.
September 15, 2026: AB 2700 was presented to the Governor.
September 30, 2026: Deadline for the Governor to sign or veto the bill.

Market Landscape

This legislation builds upon the settlement framework established by the 2020 Fire Victim Trust in response to years of utility-linked catastrophes. It marks a departure from historical utility practices by explicitly restricting the use of ratepayer funds to settle liability gaps.

Operators in the state should monitor the September 30, 2026, deadline as it dictates whether utilities will be required to absorb full wildfire liability costs internally. Businesses reliant on local grid stability should observe if this mandate impacts utility capital expenditure or future rate structures.

The takeaway

The bill shifts the financial burden of wildfire negligence squarely onto utility balance sheets. Owners should track the Governor's decision on AB 2700 by September 30, 2026, as a signal of future utility pricing risk and regulatory oversight intensity.