California lawmakers are expected to vote on Tuesday on a bill to help wildfire victims, after rejecting a bold proposal by Gov. Gavin Newsom that would have limited electric companies' financial liability for fires caused by their equipment.

The Democratic governor acknowledged that the eleventh-hour compromise with lawmakers would speed up payments for wildfire victims, but it does not bring about the broad, fundamental changes needed to settle who should pay for fires caused by utility equipment.

His proposal, which failed to gain sufficient support in the Legislature's final days, would have reduced the amount utilities had to pay some victims and barred insurance companies from suing electrical companies to recover damages paid to homeowners.

Newsom acknowledged that the bill had achieved some headway in addressing the contentious, high-stakes issue.

“I could have readily distanced myself from it,” he informed reporters at the Capitol on Monday.

“Yet doing so would have been a profound disservice to you and the citizens of this state.”

Newsom's failure to get his full plan passed marked a rare loss for the governor, who has often found support for his policy wishes in the Democratic-led Legislature.

This comes as he wraps his final session before leaving office in January.

Fire victims strongly criticized his proposal, staging protests outside the governor's mansion in Sacramento last week.

They argued that Newsom's plan would have favored utility companies over victims, while insurers said that shifting more of the damage costs onto them would have forced them to raise rates for policyholders.

Joy Chen, executive director of Every Fire Survivor’s Network, an organization representing victims of the 2025 Los Angeles-area fires, characterized the agreement as a significant victory for their cause.

“Survivors from across California converged on Sacramento, urging our elected representatives to stand in solidarity with those whose homes, communities, and lives have been shattered,” she stated.

“They heeded the call.”

Newsom hoped his plan would help stabilize the state's notoriously high electricity rates by protecting utilities from the full financial impact of wildfires.

Utilities have raised rates to pay for wildfire prevention and recovery as climate change has made the blazes more intense and frequent.

Under California law, utilities are required to pay damages for fires caused by their equipment, even if a judge does not find them negligent.

The question of who should bear the costs of utility-triggered fires has persisted throughout Newsom's tenure, which began after the most destructive wildfire in state history.

In 2019, his first year in office, he signed a law creating a $21 billion fund, financed by utility shareholders and ratepayers, to help utilities pay for wildfire damages if they adopt certain safety measures.

Last year, he and lawmakers agreed to supplement this fund with an additional $18 billion.

Newsom unveiled his latest proposal as Southern California Edison confronts claims stemming from the state’s second-most destructive blaze, a 2025 fire that claimed 19 lives outside of Los Angeles.

The legislation lawmakers are set to vote on would create a program to speed up compensation for fire victims, stop hedge funds from making money off wildfire claims, and prevent utility executives from getting bonuses if their company's equipment caused a fire that damaged or destroyed more than 500 buildings.

The California Catastrophe Response Council, which oversees the wildfire fund, would designate an administrator tasked with establishing a procedure to expedite the resolution of survivor claims.

The American Property Casualty Insurance Association stated that the agreement "protects Californians and preserves the affordability and availability of insurance."

"This outcome keeps costs with those responsible for wildfires and helps protect the progress California is making in stabilizing its insurance market," the trade association wrote.

Pacific Gas & Electric, which sought bankruptcy protection in 2019 after facing claims from a devastating Northern California wildfire started by its equipment, and Edison International, the parent company of Southern California Edison, expressed disappointment with the deal.

In a letter to lawmakers, they argued that the bill would fail to stabilize rates for Californians and would not offer "durable, long-term solutions" for compensating victims, sustaining the state's wildfire fund, or managing utilities' financial risk.

Assemblymember Rick Zbur, a Democrat, described the failure of lawmakers to reach a consensus on more sweeping reforms as a “disaster.”

“We’re merely scratching the surface, and we’re failing to address the underlying structural problems,” he remarked during the committee hearing on the bill.

Katelyn Roedner Sutter of the Environmental Defense Fund was equally unimpressed by the proposal, arguing that it failed to sufficiently reduce wildfire risks and stabilize electricity and insurance costs.

"The most favorable assessment I can offer of this bill is that it is adequate," she remarked following the hearing.

The Legislature typically has until Aug. 31 to pass bills at the end of a two-year session, but lawmakers and Newsom couldn’t agree to a deal in time to vote Monday.

They circumvented the end-of-session deadline by adding what’s known as an urgency clause to the bill.

That means it needs approval from two-thirds of the Legislature and will take effect immediately after it’s signed into law.

Lawmakers also passed a bill on Monday that would set the nation's first standards for testing and cleaning up lead, asbestos, and other toxic contaminants inside homes after a wildfire.

Assemblymember John Harabedian, a Democrat who authored the legislation, said it was inspired by the deadly 2025 Eaton Fire that swept through Altadena, the district he represents.

He stressed that lawmakers need to "figure out very quickly how to protect wildfire survivors and rebuild communities," and the bill is one way to achieve that.