California Wildfire Fund — An Overview

California established the $21 billion Wildfire Fund last year to finance third party liability claims arising from wildfires caused by electrical transmission wires and equipment operated by the state’s three largest investor-owned utilities.

Photo by Joanne Francis on Unsplash

The attached presentation and short video explore:

· How the Wildfire Fund is funded;

· How the Wildfire Fund encourages utilities to make wildfire safety a top priority; and

· How the Wildfire Fund is used to settle claims.

The California Wildfire Fund spreads and smooths the potential cost of more than $20 billion in future wildfire claims across the state’s three largest investor owned utilities, the customers of those utilities and, to a certain extent, homeowners insurers. In doing so, the scheme firmly guides California’s major utilities toward an aggressive commitment to wildfire safety through:

· A mandatory $5 billion shareholder funded investment in risk mitigation;

· Submission of annual risk mitigation plans;

· Standards for safety culture, governance, and executive compensation;

· Additional financial obligations to the Wildfire fund for imprudent actions causing losses; and

· Mandatory liability insurance.