This is Why You Don't Do Bailouts

Gavin Newsom's bailout of PG&E following the Camp Fire in 2018, which created the California Wildfire Fund.

The alternative would have been bankruptcy and the likely public takeover of what is arguably one of the worst utilities in the nation.

Now, it looks like the damage from the Los Angeles fires could exhaust this fund.

This is what happens when you bail out a bad actor because they are, "Too big to fail." 

Insurance claims from the Eaton wildfire could “fully exhaust” a state fund that was set up to protect customers when a wildfire is caused by a utility company.

The devastating wildfire in Los Angeles killed 17 people and destroyed more than 9,000 structures in January. One leading theory is that ageing equipment belonging to Southern California Edison, the primary electricity provider in the region, ignited the fire.

If the utility company is found to have been responsible for igniting the devastating January blaze, then the “financial health of the fund could be strained”, according to documents published by California’s Catastrophe Response Council, a group of lawmakers and members of the public who oversee the state’s wildfire fund.

California lawmakers established the state’s $21bn wildfire fund in 2019 in an effort to prevent the state’s largest utility companies from declaring bankruptcy if their equipment caused a fire. The fund is made up of money the utility companies contribute and a surcharge on customers’ utility bills.

Power lines and other utility equipment are a top cause of wildfires in drought-ridden California – and have sparked some of the state’s most devastating blazes, including the 2018 Camp fire that killed more than 80 people. Although investigators are still determining the cause of the Eaton fire, the utility company has been under scrutiny since the blaze broke out.

(emphasis mine)

PG&E should have been liquidated, and its assets taken over by the state of California, or it should have been reconstituted as a customer owned utility.

It was bad politics and bad policy.