‘I don’t trust it, and I won’t support it.’ Opposition mounts to Newsom-backed bailout for private electric utilities

By Brian Hendershot, Cal Cities Advocate managing editor, and Melissa Sparks-Kranz, legislative advocate

Over 130 cities, counties, and local leaders have signed a Cal Cities letter urging lawmakers to reject a Newsom-backed bailout for private electric utility giants that cause wildfires. The letter is part of a broader opposition campaign from local government, wildfire survivors, insurance, and consumer groups.

“I don’t trust it, and I won’t support it,” Steve “Woody” Culleton, the vice mayor of Paradise, told Cal Cities Advocate. “[PG&E] destroyed our entire town.”

In 2018, the Camp Fire burned down Paradise and several nearby communities after poorly maintained hardware on a transmission line snapped. The fire killed 85 people and caused an estimated $15 billion in damages, making it the state’s deadliest and most destructive wildfire.

The proposal is not yet in print — even though the last day to introduce new measures is Aug. 28, three days before the session ends. However, some details that would have consequential impacts on the cities, counties, and public agencies tasked with rebuilding their communities after these catastrophic wildfires are being floated through the Capitol.

1. The proposal caps infrastructure repairs at depreciated value

First, the proposal could limit damage claims on public property and infrastructure to the depreciated value of the asset. This change alone would create a cascading, multimillion-dollar impact. For example, Paradise’s water system had a depreciated value of $31.6 million in 2017. The total cost to repair it after the Camp Fire exceeded $130 million.

The change would affect not just basic infrastructure, but parks, libraries, schools, and fire stations — the things that make communities, communities. (Cal Cities and its partners in the public sector made that message clear in a separate letter.) The average cost to build a new high school is $125 million. Nearly half of the state’s schools are over 70 years old. 

2. The proposal disincentivizes emergency response and mutual aid

Eliminating emergency response and mutual aid as recoverable costs from the negligent utilities would also be included in the proposal. This would completely disincentivize local agencies, which are typically the first responders, from participating in mutual aid and emergency response.

Mutual aid is a vital but costly part of the state’s wildfire response strategy that isn’t always eligible for federal reimbursement. Roseville spent over $630,000 to send a fire engine and firefighters to combat the 2021 Dixie Fire. Ventura spent over $1 million responding to the 2017 Thomas Fire, another large and destructive wildfire.

In theory, the Federal Emergency Management Agency could reimburse cities for mutual aid costs. However, FEMA is far from a reliable source of funding; multiyear delays and disputes are common. In fact, the Governor has asked the federal government to provide recovery funding for the 2025 Eaton Fire at least 15 times. The federal government has still not approved over half of the Eaton Fire requests for support.

3. The proposal eliminates property tax loss revenue claims

The package could also eliminate lost property tax revenue as a recoverable cost. This loss is typically baked into any claims that a city brings forward and would impact cities’ bottom line until new homes are built, which could take years.

The Camp Fire destroyed more than 10,000 homes in Paradise — over 80% of the town’s property tax base. The estimated cost to repair the town was $15 billion. Insurance has paid about $13 million. The rest of the loss was partially addressed through the 3-year backfill by the state and a $13.5 billion settlement, but there was no backfill for the lost sales tax.

“We still have not yet been paid out completely,” said Culleton, noting that slow settlement payouts have delayed rebuilding efforts. “When it’s all said and done, maybe this year, 8 years after the fire, we will be compensated for 70% of our claims.”

Bottom line: The proposal leaves everyone but private utilities holding the bag

Losing this money — 4% of the total wildfire claims that utilities paid from 2017 to 2024 — would make it hard, if not impossible, for communities to recover. When asked if his town would be able to rebuild if a second fire happened and these changes went there, Culleton offered a simple answer: No.

If public agencies cannot recover costs from negligent utilities, the very survivors whose community burned will likely foot the bill instead. Cal Cities is urging all city officials and cities to call or text their assembly member and senator to express their opposition to the bailout. To learn more, contact your regional public affairs manager.