California’s biggest for-profit utilities are pressing lawmakers for a permanent cap on what they would owe if they are found negligent or imprudent in future catastrophic wildfires, a move that would shield shareholders from the full cost of fires they may help cause. The push is building around legislation in 2026, and it comes as Southern California Edison faces a criminal investigation tied to last year’s deadly Eaton fire.
The urgency is easy to see in the utilities’ own pitch. Pedro Pizarro said last week that “it is in our customers’ interest to have action in 2026,” while Caroline Choi said, “Safety is our number one priority.” Those lines are aimed at Wall Street and Sacramento at once, but they sit alongside a far more direct warning to investors: executives at Edison and PG&E have said they may cut spending on capital improvements if they do not get liability protection.
According to slides reviewed by The Times, the companies are asking for a permanent cap that would limit their corporate liability even in fires where negligence or imprudence is found. The state’s three biggest for-profit utilities, including San Diego Gas & Electric, have been lobbying for wildfire-cost protection since early 2025, and the fight has sharpened as new evidence from government investigators and court filings has raised fresh questions about Edison’s claim that it operated its electrical system safely before the Eaton fire.
That history matters because the companies are not arguing from a clean slate. Videos emerged in early 2025 showing two bright flashes coming from Edison’s transmission lines just before the Eaton fire ignited, and the utility now sits under criminal scrutiny over what it did before the blaze. Jamie Court, who has long criticized the companies’ approach to wildfire costs, has argued that if ratepayers are forced to pay most of the bill for fires utilities cause, the companies lose any real reason to take fire mitigation seriously.
The financial pressure point is what makes this fight more than a legal technicality. The utilities say wildfire risk has hurt their credit ratings, raising borrowing costs that are ultimately passed on to electricity customers, and Edison and PG&E have told investors they may reduce spending on housing connections and green energy projects without the shield they want. PG&E has already told thousands of its customers that projects could be delayed next year as it defers $2 billion in spending.
But that argument now runs into a hard political obstacle. State Sen. Sasha Renée Pérez sent a letter to the California Public Utilities Commission on Sunday warning against rolling back financial accountability while the companies continue paying billions of dollars in dividends and asking for relief from wildfire risk. “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,” she wrote.
The stakes are straightforward: if lawmakers approve the cap, more of the cost of future wildfires could be shifted away from shareholders and onto electricity customers through higher borrowing and deferred investment. If they reject it, the utilities will have to absorb more of the damage themselves. Either way, the decision in 2026 will shape not just how much the companies can recover after the next fire, but how much pressure they have to prevent it.
