California Adds $18 Billion to Its Wildfire Fund, Split Between Utility Shareholders and Customers
California Governor Gavin Newsom signed SB 254 on September 19, 2025. The bill, authored by state Senator Josh Becker, is a broad energy affordability package. Its most consequential provision for utility investors is the creation of an $18 billion continuation account within the state's Wildfire Fund, the mechanism that pays eligible wildfire claims against the state's investor-owned utilities. According to the Assembly floor analysis and the senator's office, the continuation account will be funded equally by utility shareholders and ratepayers.
The Wildfire Fund was created in 2019 under AB 1054, after the 2017 and 2018 wildfires drove PG&E into bankruptcy. The January 2025 Eaton fire in Los Angeles County exposed the limits of that design. The split of the $18 billion between shareholders and customers was the most contentious element of the debate. Beyond the Wildfire Fund, SB 254 includes measures aimed at reducing electricity costs. The bill also directs a study of alternatives to the current liability framework, including inverse condemnation, under which utilities can be held liable for property damage caused by their equipment regardless of negligence.
The governor also signed an executive order directing state agencies to consider further reforms to wildfire liability and the fund. Shares of Edison International and PG&E rose as the bill advanced through the legislature in September, reflecting reduced uncertainty about the fund's capacity. For bondholders, the continuation account reduces the risk that a utility would face uncovered claims large enough to threaten its solvency. For customers of PG&E, SCE and San Diego Gas & Electric, the immediate effect is the extension of the existing Wildfire Fund charge for an additional period.
When a covered utility faces wildfire claims above a threshold, it can draw on the fund to pay them. Utilities must maintain an annual safety certification from the state's Office of Energy Infrastructure Safety to remain eligible. Wildfire liability is now a significant issue for utilities across the western United States.