Lloyd Dixon and Jamie Morikawa are researchers at RAND and co-authors of "Southern California Edison's Wildfire Recovery Compensation Program: A Look at Performance to Date."
Editor's note: Edison provided data for the study but neither paid for it nor commissioned it.
When power lines spark a wildfire in California, the utility company is liable for property damage and more, if found negligent. But the typical compensation process — survivors pursuing litigation against the utility for losses insurance doesn't cover — can drag on for years.
After the January 2025 Eaton fire, Southern California Edison set up a direct-payment alternative: the Wildfire Recovery Compensation Program. Whether it is speeding payments is an important test. A system that provides compensation rapidly and with lower legal costs would benefit survivors as well as the electricity ratepayers who ultimately bear some of the burden of large payouts.
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The Edison compensation program is accepting claims through Nov. 30, and we recently reviewed how it's going. So far it has paid claimants much faster, but it hasn't become a broad substitute for lawsuits.
As of Oct. 1, the Edison program received 5,000 claims and made 2,900 offers. Approximately 80% of the offers were accepted. The average calculated compensation due per claim through September was $1.95 million for destroyed homes, with just over $850,000 paid by Edison after available insurance had been deducted.
Once claims were substantially complete, Edison made offers in 36 days on average. That speed is a striking contrast with going to court. Following the Thomas and Woolsey fires, both caused by Edison equipment, it took more than two years to establish mediation protocols and then additional years to work though the claims. Eaton fire cases are on a similar timetable, with the first trial scheduled for January 2027.
The Wildfire Recovery Compensation Program also appears to reduce legal costs: About 60% of claims submitted do not involve an attorney. Of course legal advice can be essential in assessing an offer, and the program provides help to pay an attorney. But it has also demonstrated that, at least in some cases, claimants are able to navigate the claims process and obtain compensation without retaining counsel.
Golden State staff
Those are meaningful achievements. However, the reach is modest. We estimate that with only two months left in the program, compensation-program claims have been submitted for 25% of the nearly 6,000 properties with a destroyed structure. Meanwhile, tens of thousands of parties are pursuing claims in court.
Why has participation so far been limited? We interviewed a broad range of stakeholders about the program's initial "fast pay" offers. Some found them reasonable; others perceived shortfalls in rebuilding costs, loss-of-use payments or noneconomic losses compared with what might be achieved through litigation — despite how difficult that can be to project. Claimants who find the fast pay offer inadequate can request a more lengthy and document-intensive "detailed review" of their claim. This detailed review may address some shortcomings of the fast pay offer, but it's too soon to tell.
Another obstacle is that the program only pays to cover the gap between survivors' available insurance and their calculated loss. In litigation, by contrast, what Edison pays generally reflects actual insurance compensation, not a policy's limits. The difference can leave those in an insurance-settlement dispute in the lurch.
Trust matters too. Edison designed and administers the alternative compensation program, which understandably raises questions among survivors about objectivity and conflicts. And because the program opened nearly 10 months after the fire, many people already had retained counsel and begun pursuing litigation.
All this suggests modifications that should be considered in designing future fire compensation programs: Launch quickly. Have a neutral program administrator. Base insurance offsets on actual payouts as opposed to available coverage (or something in between). And offer advances on expected settlements.
Mariel Garza
Other changes would require action by the courts or state legislature. Settlements involving children require court approval to protect minors' financial interests, which takes time and is hard to navigate without a lawyer. Streamlining this process by, for example, assigning a single judge to handle all minors within the same family or expediting the hearing process could get payments out faster. Courts also might consider encouraging survivors to pursue program offers during litigation.
And it is worth weighing whether it makes sense to cap noneconomic damages in wildfire property claims. A cap could temper open-ended expectations of judgments available through litigation, but it could also shrink some survivors' compensation and have implications for how quickly a community rebounds.
The state Legislature considered a package of utility liability and survivor compensation reforms — including a fast-pay process — in the recently completed session. Senate Bill 492 did not pass, but lessons from Edison's program should inform future legislation.
Yearslong litigation after a major fire puts enormous strain on survivors, utilities, their ratepayers and the courts. Even though the Wildfire Recovery Compensation Program so far falls short of replacing lawsuits entirely, it shows that a faster, cheaper alternative is possible.
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