California’s Wildfire Fund and the Bigger Question for Utilities
Newsom’s Wildfire Fund expansion is necessary, but it is not sufficient. It is a short-term financial hedge for an industry facing a long-term structural threat.
The path forward requires utilities to demonstrate leadership by pairing financial protections with prevention. That means integrating advanced wildfire risk profiling into everyday decision-making, sharing results transparently with regulators, and investing in mitigation before the next spark.
Wildfires don’t have to bankrupt utilities. But ignoring the data will.
In California, wildfire season is no longer seasonal. It’s year-round, intensifying, and reshaping the financial and operational realities of the utility sector. The core question is no longer whether fires will happen, but how their costs — human, financial, and infrastructural — will be managed. For utilities, the stakes are existential: who pays for the next wildfire?
Governor Gavin Newsom’s proposal to add $18 billion to the California Wildfire Fund is the latest attempt to stabilize this equation. The plan would double the fund’s assets and extend its life through 2045, with costs split equally between customers and the three large IOUs — PG&E, Sempra, and Edison. It also aims to curb insurance subrogation claims, which have ballooned as hedge funds purchase and litigate recovery rights against utilities.
The urgency is clear. Fires like Eaton and Palisades, which killed 30 people and destroyed more than 16,000 structures this January, highlight the liability utilities face. Total economic damages from just those events could exceed $130 billion.
But while the Wildfire Fund buys time, it does not change fundamentals. It is a reactive financial backstop triggered only after billions in losses, not a prevention strategy.
Shifting Liability, Shifting Risk
Across the western U.S., utilities are watching closely as the legal landscape evolves. PacifiCorp, a Berkshire Hathaway utility subsidiary, faces multibillion-dollar liabilities and has spurred legislative efforts to cap utility responsibility for wildfire damages. Utah has already enacted liability limits coupled with a state wildfire pool, and similar legislation is advancing in other states.
For executives, this represents both relief and risk. Liability caps may protect balance sheets in the short term, but they also transfer costs onto the public, smaller insurers, and local governments. Without parallel investments in prevention, utilities risk losing trust — and may see regulators, communities, and insurers push back hard.
Why Prevention Still Matters
Utilities know the economics: prevention is cheaper than rebuilding. Vegetation management, infrastructure hardening, and smarter operations reduce fire exposure. Yet prevention rarely commands the same political attention as post-disaster relief.
FEMA and USFS programs that once emphasized mitigation have seen funding shrink, leaving states like California to improvise financial stopgaps. Meanwhile, insurance markets are contracting. Coverage in fire-prone areas is becoming unaffordable or unavailable, threatening real estate transactions and long-term regional investment. As Allianz warned, the climate crisis risks eroding the foundations of capitalism by rendering whole regions “uninsurable and unfinanceable.”
Wildfire is unlike hurricanes or earthquakes. They are largely preventable — provided utilities and communities use the tools and data now available to anticipate where fires are most likely to start.
A Data-Driven Path Forward
Utilities already operate at the intersection of infrastructure, environment, and risk. What has been missing is granular, defensible, forward-looking data to guide wildfire mitigation strategies.
Athena Intelligence provides geospatial profiling tools that integrate terrain, vegetation, ignition history, and infrastructure exposure into actionable intelligence. This approach allows utilities to see not just where fires have happened, but where they are most likely to happen — months in advance.
Armed with this intelligence, executives and community leaders can:
Prioritize vegetation management where the risk profile is highest.
Target capital upgrades and equipment hardening in ignition-prone corridors.
Improve the defensibility of wildfire mitigation plans before regulators and PUCs.
Strengthen financial positioning with insurers and investors by demonstrating data-driven risk reduction.
The opportunity is to shift wildfire from a liability question to an operational and investment strategy — one that utilities control, rather than react to.
Summary:
Newsom’s Wildfire Fund expansion is necessary, but it is not sufficient. It is a short-term financial hedge for an industry facing a long-term structural threat.
The path forward requires utilities to demonstrate leadership by pairing financial protections with prevention. That means integrating advanced wildfire risk profiling into everyday decision-making, sharing results transparently with regulators, and investing in mitigation before the next spark.
Wildfires don’t have to bankrupt utilities. But ignoring the data will.