Wildfire Mitigation: Wildfire Mitigation Plans, State Funding Pools and Public Safety Power Shutoffs

Key Takeaways

Introduction

Wildfires are becoming one of the nation's most destructive and disruptive phenomenon. Since 1983 over 213 million acres have burned in the United States.

Information for figure above gathered from the Environmental Protection Agency highlights the increase in wildfires since 1980-present.

Over 75.1 million acres burned from 2011-2020 up from 65.3 million from 2001-2010. In early 2025, the California Palisades Fire burned over 40,000 acres causing an estimated $95 billion to $164 billion in economic losses.

Notably, communities in the urban-wildland interface (UWI) are growing substantially, with 32% of all housing in the continental U.S. residing in the UWI as of 2020. Infrastructure in the UWI faces some of the highest wildfire risks leaving communities at higher risk of home loss, power outages, and extensive disturbances. As wildfires continue to increase in severity and frequency across the country, wildfire preparedness and mitigation aspects of local and state emergency response plans are evolving.

Since wildfires threaten human life, property, and critical energy infrastructure, it is crucial that states less accustomed to devasting wildfires develop strategies. Increasingly, electric utilities are facing questions regarding their equipment's role in igniting wildfires. If a utility is found to be at fault, enormous liability claims could threaten utilities' financial solvency. The Western United States has been at the forefront of addressing critical prevention, mitigation, and recovery needs through various approaches including mandating the development of wildfire mitigation plans, creating state funding pools for insurance and liability caps, as well as addressing public safety power shutoffs.

This brief will highlight actions taken by state legislatures, namely wildfire mitigation plans and funding pools, to address wildfire mitigation and help ensure energy supplies remain reliable and resilient in the face of changing environmental conditions such as extreme heat, wind events, and drought. This brief will also highlight the role of state legislatures in addressing public safety power shutoffs.

Wildfire Mitigation Plans

A significant action state legislators have taken to address the mitigation of wildfire risk is to require utilities, including investor-owned utilities, municipal utilities and electric cooperatives, to file wildfire mitigation plans (WMPs) with a state's public utility commission (PUC). WMPs typically outline utilities' strategies and investments towards wildfire mitigation and response with electrical infrastructure. WMPs may include vegetation management, sectionalization and reclosing measures, meteorological resources, protective equipment, public safety power shut off plans (PSPS), and/or other tools. The factors included in WMPs help to identify areas of increased wildfire risk and prepare mitigation strategies to prevent a fire from igniting. Typically, utilities are required to file plans on a regular basis, every one to three years, while some states like Wyoming require plans to be filed every five years.

Additionally, some legislation reduces utilities' legal liability or creates a presumption of non-negligence if their equipment or infrastructure is found to have caused a wildfire. Reduction of liability has been a response from many states as particularly damaging wildfires can threaten the ability of utilities to stay in business. Arizona HB 2201 finds that a public power entity acting in compliance with its WMP is deemed to meet the standard of care for a "reasonably prudent public power entity," and that a party suing the utility must prove that the utility failed to comply with the approved WMP. Several states provide similar protections for utilities operating in their states finding that if the utility is complying with their PUC-approved plan then a reasonable presumption against negligence exists for the utility.

Numerous Western states have enacted legislation that directs various utilities to file a WMP. Below are examples relevant legislation:

*New Mexico introduced SB 281 in 2025 that would require electric cooperatives to file wildfire mitigation plans but did not pass.

State Funding Pools: Utility Insurance

11 States have Introduced or Enacted Legislation to establish state wildfire funds or lessen utility liability from wildfires.

Another major issue concerning Western state legislators is the increasing risk that utilities will not be able to obtain insurance for wildfire-related claims. When a utility is found liable or negligent for a wildfire, it can face billions of dollars in legal claims. For example, an investigation of the Thomas Fire in California showed Southern California Edison's equipment was at fault. The utility faced $2.6 billion in legal claims including costs to the utility to reduce the risk of wildfires. Many utilities have struggled to obtain insurance in high-risk areas as wildfire continues to cause greater economic losses and higher litigation claims. In response, some states have created funding pools which provide state-backed insurance for utilities that safeguard their financial survivability after a wildfire.

The California Wildfire Fund was established under CA AB 1054 (2019). The bill provides a source of funds to pay eligible claims for wildfires caused by a utility company after 2019. California AB 1054 established $5 billion in funding for three participating utilities: San Diego Gas & Electric Company, Southern California Edison, and Pacific Gas & Electric Company -- for wildfire safety investments. The three utilities are required to file Wildfire Mitigation Plans every three years with the California Public Utilities Commission (PUC) detailing their preventative strategies and implementation programs to minimize risk. This fund also provides $21 billion in insurance protection for the three utility companies by helping pay for damages if the California PUC determines (1) the fire was caused by the utility or their equipment, (2) damages exceed $1 billion, (3) total damages are not covered by insurance, and (4) the utility company acted responsibly and its conduct was just and reasonable.  

Utah HB 66 (enacted 2020) provides that a utility that submits an electrical transmission fire protection plan which is approved is not considered to have negligently caused a wildfire. Utilities must present plans to inspect, maintain and repair their infrastructure, modify or upgrade facilities, construct new facilities, manage vegetation and complete preventative programs to not be found negligent and reduce their legal liability. Building off HB 66, Utah SB 224 (enacted 2024), establishes the Utah fire fund for large-scale electric utilities and serves as a resource to supplement other forms of insurance. The bill allows the utility to collect a fire surcharge from utility customers over a period of 10 years, with PUC approval. This surcharge can help utilities make settlement agreement payments or economic damages assessments in an adjudicated fire claim, thus providing additional forms of insurance for investor-owned utilities. SB 224 also places liability caps on economic loss to property and noneconomic loss for personal injuries. Subsection 3 caps economic loss to property as the lesser of (a) the cost to restore the property to the property's pre fire condition or (b) the difference between (i) the fair market value of the property immediately before the fire; and (ii) the fair market value of the property after the fire. Subsection 4 caps noneconomic loss to $100,000 for a person who is not physically injured as result of the fire and $450,000 for someone physically injured as a result of the fire (Subsection 4 does not apply to a wrongful death action). This type of action provides further liability protection for utilities in Utah found to be at fault for causing a wildfire and represents another avenue states may take to protect financial solvency of their utilities.

Like California AB 1054 and Utah SB 224, Oregon introduced legislation in 2025 that would establish a Catastrophic Wildfire Fund to help utilities pay for damages arising from wildfires ignited by utility equipment. Under HB 3917, utilities would be permitted to collect necessary funds from ratepayers to capitalize the Catastrophic Wildfire Fund. The bill establishes that supplemental funds may be collected from utilities to ensure financial solvency of the Catastrophic Wildfire Fund and that claimants may collect up to 80% of allowed property damages from the fund provided the claimant does not bring civil action against the utility.

Lastly, in 2025 Texas enacted comparable legislation relating to liability for electric utilities. Under HB 145 electric utilities may self-insure all or part of the potential liability or catastrophic property loss that could not have been reasonably anticipated. This can also include potential damages the utility may be liable for resulting from personal injury or property damage caused by wildfire. This option becomes available to utilities if commercial insurance is insufficient to cover potential liability or a utility cannot obtain commercial insurance for a reasonable premium. Like other states, HB 145 also ensures that electric utilities that file wildfire mitigation plans (that are approved by the PUC) are not liable for damages resulting from a wildfire.

State legislatures can play a significant role in ensuring utilities can remain financially solvent in the face of the escalating cost of wildfire damage. Moreover, as insurance becomes increasingly expensive or unobtainable for utilities, their ability to invest in resilience and grid hardening projects may be diminished. In an increasingly uncertain time, legislators may consider the merits of funding backstops such as those implemented by California, Utah and Texas to provide utilities with insurance, confidence and security to operate safely in wildfire prone areas.

Public Safety Power Shutoffs

"De-energizing" energy infrastructure, or intentionally shutting off electricity, is a proactive approach a utility can employ to prevent wildfire ignitions in high-risk areas when dangerous conditions are present. Public safety power shutoffs (PSPS) have become a useful tool to prevent new fire ignitions, yet they bring their own challenges as critical facilities and infrastructure often lose power in the process. In 2025, utilities located in California, New Mexico and Texas have initiated PSPS events to prevent new wildfire ignitions.

While utilities seek to protect public safety in their operations, a PSPS event can result in unintended risks to vulnerable populations including medically vulnerable individuals, infants and older adults, individuals with disabilities and people with chronic health conditions. PSPS events also affect public safety, cause economic losses and cause disruptions to communication. Because of this, they are often considered an option of last resort.

As utilities in Western states have experienced, a lack of state guidance, either from the legislature or the PUC, forces utilities to unilaterally develop and deploy their own mitigation policies and strategies with limited resources. While utilities make the decision to deenergize as a last-resort effort to prevent wildfires, it may spur investigation and litigation.

In April 2024, Xcel preemptively shut off power to 55,000 individuals in Colorado, the first time it had done so in the state. As a result the Colorado PUC opened an investigation into the PSPS event. Similarly, California's PG&E faced a class action lawsuit in 2019 for damages related to a PSPS event in the same year with the lawsuit eventually being dismissed in 2023. PacifiCorp left power lines energized in Oregon during hot and windy weather in 2020. The resulting wildfire has cost the utility $2.7 billion in settlement claims. These examples help reveal that lack of guidance for utilities can result in negative impacts on the utility and subsequently the ratepayers they serve. For many state legislatures, enabling the state's PUC to coordinate with utilities and create guidelines, including public communication protocols, could help reduce lawsuits and investigations against utilities and ensure utilities can safely exercise PSPS to minimize risk and costs for the utility and the rate payer.

Wildfire has long been an issue largely felt in the Western U.S. As wildfires increasingly threaten human life and property across the nation, lessons being learned in the West surrounding wildfire mitigation plans, state funding pools and public safety power shutoffs will become more applicable to states around the country.