California Wildfires Heat Up Legal Risks for Electric Utilities

As the harm caused by wildfires has grown, so has the legal exposure for electric utilities. For decades, California suffered disastrous wildfires and consequently was at the forefront of wildfire litigation.

In the last decade, California has responded by enacting the nation’s first laws requiring electric utilities to implement wildfire management plans and public safety power shutoff protocols, which encourage utilities to voluntarily de-energize their lines during high-risk conditions.

As extreme weather and dry conditions have become more common, the risk of wildfires is no longer confined to California. Rather, many states are grappling with the reality of wildfires. As such, more than a dozen states have followed California’s lead in implementing legislation to mitigate wildfire risks and enhance utility protocols.

Plaintiffs’ counsel have noticed this legislative trend. Even when state legislation doesn’t specifically require WMPs and PSPS protocols, plaintiffs increasingly argue that a utility’s failure to implement a PSPS is a breach of the common law duty of care.

And because every state allows negligence claims, this theory has allowed plaintiffs to obtain billion-dollar recoveries, even absent PSPS legislation.

To avoid these situations, electric utilities should implement WMPs and PSPS protocols, regardless of their location.

Legislation

Until 2012, utilities in California weren’t permitted to de-energize power lines solely to reduce the risk of wildfires. For example, in 2009, the California Public Utilities Commission denied San Diego Gas & Electric Co.’s request for permission to de-energize its lines during high fire conditions, finding that the utility had “not met its burden to demonstrate that the benefits of shutting off power outweigh the significant costs, burdens, and risks that would be imposed on customers and communities in the areas where power is shut off.”

However, in 2012, the CPUC issued a new decision allowing SDG&E to begin implementing PSPS events during high fire conditions. In 2018, the CPUC started letting other investor-owned utilities begin implementing PSPS events.

That same year, the California Legislature passed SB 901, which mandated that all investor-owned utilities develop comprehensive WMPs and PSPS protocols with components regarding system hardening, vegetation management, inspections, situational awareness, customer notification, and coordination with government first responders.

Following California’s lead, more states passed legislation requiring WMPs and PSPS protocols, beginning with Nevada and Utah in 2020, Oregon in 2021, Hawaii in 2023, and Washington in 2024. This year, six states—Arizona, Idaho, Montana, North Dakota, Texas, and Wyoming—have done so, following the devastating Eaton and Palisades wildfires in Los Angeles.

These new state statutes share several common features intended to reduce the risk of wildfire. Motivated by PG&E’s bankruptcy in 2019, which resulted from allegations regarding numerous wildfires, several recent statutes have also included provisions intended to reduce the risk of legal exposure to electric utilities implementing their PSPS protocols.

Key Components

The new states passing wildfire legislation require utilities to develop comprehensive WMPs with components such as:

• Identification of high-risk areas
• Vegetation management and infrastructure inspections
• Situational awareness
• De-energization protocols
• Community outreach
• Service restoration

One of the most noticeable statutory requirements, from a customer’s perspective, was the development of PSPS protocols. These protocols require proactive monitoring for windstorms and other periods of heightened concern, along with specific criteria (such as windspeeds and humidity), and identifying when employees should proactively de-energize lines. PSPS protocols also require customer notification (both before and after PSPS events) and coordination with government first responders.

In addition to prior approval of both WMPs and PSPS protocols, regulators have begun penalizing utilities for failure to follow their plans.

Most recent state statutes now provide liability protections for utilities that comply with approved WMPs. The notable statutes passed in 2025 include combinations of:

• A rebuttable presumption of reasonableness for utilities following their WMPs
• Elimination of strict liability theories
• Caps on noneconomic damages
• Defenses regarding wildfires caused by external factors

For example, statutes in Arizona, Wyoming, Montana, and Texas now presume that utilities acting in compliance with an approved WMP have met their standard of care. As a result, utilities in these jurisdictions may only be liable if they acted with gross negligence, recklessness, or intent. Still, despite the new protections, no state prohibits all claims against utilities implementing WMPs and PSPS events.

Recommendations

No matter where they are located, utilities should consider implementing WMPs and PSPS protocols. Utilities have incurred billions of dollars in losses regarding a failure to de-energize their lines. The most prominent examples include:

• Oregon Fires: Following the loss of 11 lives and more than 4,000 homes in 2020, plaintiffs alleged PacifiCorp “unreasonably failed to … de-energize power lines” hit by “trees and brush” in high winds. After class certification and bifurcation, a jury found the failure to de-energize was “gross negligence” justifying punitive damages. Although litigation is still pending, plaintiffs have already recovered more than $1 billion in initial judgments and settlements, with PacifiCorp estimating $6 billion of possible exposure.
  
• Maui Fires: After the loss of more than 100 lives and $5.5 billion of damage in 2023, plaintiffs alleged that Hawaiian Electric Co. entities “inexcusably kept their power lines energized during forecasted high fire danger conditions.” The defendants ultimately settled for $4 billion.

Following these recoveries, plaintiffs now argue that a “reasonable” utility—even in eastern states such as West Virginia—should de-energize during a high risk of fire.

Despite requiring large investments of time and money, WMPs and PSPS protocols can yield substantial savings to utilities that would otherwise confront the high cost of wildfire litigation.

Because WMPs comprise multiple interrelated components and demand meticulous, data-driven risk assessments, they often take several years to implement. Utilities should begin formulating these plans well before their respective states enact legislation mandating them.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Whitney Cloud is partner, Jahi Jenkins is associate, and David Freeburg is of counsel at DLA Piper.

Tanya Greene and Chas Hamilton contributed to this piece.

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