(Bloomberg) — California Governor Gavin Newsom’s push to shield publicly traded utilities from some wildfire liabilities has been blocked by state lawmakers, according to people familiar with the negotiations.
Newsom and legislators who are part of the state’s wildfire-liability working group are trying to finalize a broader overhaul of California’s wildfire response before a Friday legislative deadline. KCRA 3, Sacramento’s NBC affiliate, reported that the talks for a wider deal had broken down late Thursday, citing four unidentified people familiar with the talks.
Shares of PG&E Corp. fell as much as 11.75% Friday afternoon — the sharpest drop since March 2020 for the state’s largest utility — while Edison International sagged by as much as 6.4%, the biggest decline since July 31.
Newsom’s administration had sought to bar insurers from suing utilities to recover payouts to policyholders after a fire, known as subrogation. The measure would have helped protect PG&E, Edison and Sempra from potentially massive liabilities if downed power lines or other equipment causes fires.
An official in the governor’s office said the Senate blocked the subrogation plan backed by Newsom.
Top legislators have concerns that such a move would have led insurers to further raise premiums across a state where homeowners are already stinging from recent rate increases.
Lawmakers would have to finalize the details of any policy changes on Friday before a vote on Monday, when the legislature adjourns for the year.
Newsom’s office acknowledged there was no legislative path for broader changes aimed at containing utility costs, according to a memo obtained by KCRA 3.
The governor will still support accelerating victim payments, bar bonuses for utility executives whose companies start wildfires and outlaw speculative investing in wildfire claims by hedge funds and private equity. All other issues were dropped, the memo said.
–With assistance from Lauren Rosenthal.
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