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Private providers have started returning to the fire-ravaged state, but its insurer of last resort still has huge and growing exposure.

The massive wildfires in Pacific Palisades and Altadena in Southern California may deal a devastating blow to the state’s fragile home insurance market, which is in the midst of large-scale reforms as part of an effort to lure private insurers back to the state.
In the years running up to yesterday’s, today’s, and likely tomorrow’s fires, several home insurers announced plans to stop writing new policies in California, or even leave the state entirely. The industry and many analysts blamed not just California’s famously hostile mix of dry vegetation, high winds, and scarce rains, but also a rise in construction and reinsurance costs and a regulatory system that made it difficult for insurers to raise rates or think prospectively about risk when setting rates.
In other words, it was simply easier for insurers to not renew policies than it was for them to increase rates to better adjust for risk. Some of these non-renewals occurred in the area now affected by the Eaton Fire in Altadena, though they were most prevalent in the Bay Area and the Sierra Nevada foothills.
In response, California’s insurance commissioner Ricardo Lara rolled out a set of reforms last year that tried to both expand insurance in wildfire prone areas and lure insurers back to the state. The new rules would allow insurers to use models to determine risk (not just historical data, as the law had previously been interpreted to allow) while also mandating that insurance companies operating in the state write policies in fire-prone areas as well as in those that are relatively safe. Lara then issued another rule late last year allowing insurers to use the cost of reinsurance in determining their rates, which insurers in the rest of the country are allowed to do.
Allstate, which announced in November, 2022 that it would stop writing new home insurance policies in California, said last spring that it was considering a return to the state based on the possibility of models being allowed for ratemaking. At the end of last year, partly in response to the reforms, Farmers also said that it would restart writing new policies for some lines of business in California, and that it would increase the number of new homeowners insurance policies it writes every month after instituting limits in 2023. Last week, Verisk submitted a model to project wildfire risk to the state for regulatory agency review for use in rate-setting.
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Consumer advocates have warned that these rules would lead to increases in insurance rates. So has Lara’s predecessor, Dave Jones, who has been skeptical of trying to grow the private insurance market by giving it more flexibility to set rates without addressing the core issues of climate change and fire management policy.
“In the long term, we’re not going to be able to ‘rate increase’ ourselves out of this problem,” he said in an interview with the University of California, pointing to Florida’s insurance problems as an example, despite the flexibility that insurers have in setting rates there. “In the short-and mid-term for California, giving insurers proposed higher rates will get them to start writing new insurance again — although many homes in the wildland urban interface will continue to face challenges. But in the longer term, higher rates alone are likely to be overwhelmed by the higher risks and losses from climate change — just like in Florida.”
Like Florida, California has a backup for the private market, an insurer of last resort. And, like Florida, it’s been trying to make it smaller, to little avail. It may now be so large as to place the rest of the state at financial risk.
California’s FAIR Plan is a fire insurance pool that all property and casualty insurers operating in the state contribute to in proportion to how much business they have in the state; homeowners turn to FAIR when they can’t get insurance otherwise. As the state has experienced massive wildfires and insurers have pulled out, the size of the FAIR Plan has ballooned, with exposure rising to $458 billion in 2024 from $153 billion in 2020, even as it explicitly says that its “goal is attrition” (i.e. getting customers back on normal insurance plans).
“It’s a socialized cost,” Kate Gordon, the chief executive of California Forward, a policy nonprofit, and former advisor to Secretary of Energy Jennifer Granholm, told me. “We see more and more people switching to the FAIR plan. It’s getting massively oversubscribed. It’s going to hit some kind of wall at some point.”
The communities with the most wildfire exposure for the insurer include vacation areas throughout the state such as Lake Arrowhead, Truckee, and Big Bear Lake, and affluent residential communities including Berkeley and the San Francisco suburb Orinda. They also include Pacific Palisades, the fifth most wildfire-exposed market for FAIR in Southern California, with some $5.9 billion of exposure.
While the fires have yet to be substantially contained, let alone extinguished, and the damage has not yet been calculated, the still-raging fires will likely constitute a major hit to the FAIR Plan and California insurers. The number of residential FAIR policies in the Pacific Palisades zip code grew by over 80% between 2023 and 2024, and has quadrupled since 2020. The total financial exposure for residential insurance in Pacific Palisades doubled in the past year, growing to almost $3 billion. In one zipcode affected by the fire in Altadena, residential FAIR plan policies grew by over 40% since 2020, with around $950 million of total exposure.
“As the risk of more climate change-intensified wildfires increases in California, a major wildfire in one geographical area concentrated with FAIR Plan-insured properties could overwhelm the FAIR Plan’s reserves and its capacity to quickly and fully pay consumers’ claims,” Lara wrote in a bulletin in September.
Like other states with insurers of last resort, the FAIR Plan can seek cash from insurers — which could, if the losses are large enough, extract “temporary supplemental fees from their own policyholders,” according to new California insurance regulations. This would mean that Californians who were able to buy private insurance — because they don’t live in a region of the state that insurers have abandoned — could be on the hook for massive wildfire losses. While such an assessment has not occurred since 1994, Victoria Roach, the FAIR Plan’s president, warned in a hearing before the State Assembly last March that a major fire could knock out the plan’s reserves and force it to go to insurers — and their policyholders — to shell out for the difference.
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With a permitting deal seemingly on the horizon, Republican Gabe Evans and Democrat Scott Peters may be about to see their partnership pay off.
The fate of permitting reform legislation that could smooth the way to all kinds of new and improved energy infrastructure — including transmission lines and renewables — is currently hostage to opaque discussions between Senate committee chairs. Rhode Island Senator Sheldon Whitehouse, the Democratic ranking member of the Senate Environment and Public Works Committee, told a Rhode Island business group earlier this week that “we’re actually in a pretty good place on permitting reform,” and that there was “maybe another week of negotiations.” Whitehouse’s Republican counterpart on the EPW committee, West Virginia Senator Shelly Moore-Capito, told Semafor on Friday that any bill has “got to pop out of here in the next 48 hours.”
If that’s going to happen, it will be because Republicans and Democrats have decided it’s worth it to get along. Any deal will eventually have to be voted on by the House, which has already produced several bills on a bipartisan basis, and even passed one — the SPEED Act — late last year.
Two of the busier House members on this issue are Scott Peters, a Democratic former environmental lawyer from San Diego, and Gabe Evans, a first term Colorado Republican representing a suburban and rural district north of Denver that includes wind farms and crude oil production. “The district that I represent truly is an all of the above energy district,” Evans told me.
Their latest effort is a bill aimed at smoothing out permitting for transmission development, especially interregional transmission. Last week, the two congressmen unveiled the CLEAR Act, seeking to apply a stricter set of standards for lawsuits against transmission projects that aligned with how natural gas and hydropower projects are treated under the Federal Power Act (it’s much harder to sue to stop these projects). Earlier this year, the two also sponsored the CERTAIN Act, a more comprehensive streamlining of federal permitting for energy infrastructure projects.
“We’re proud to have a lot of our work as the foundation for this, and I think if they send us over something that includes this, it’s got a really good chance of passing in the House,” Peters told me. Evans added that bringing forward bipartisan bills “gives a little bit more impetus to the Senate to know that the House is looking for these things.”
While the Senate’s deal will be up to the senators, Peters told me he envisions a broad permitting package that could include reforms to the National Environmental Policy Act to shorten permitting timelines, preventing the president from nixing individual projects, and reform Section 401 of the Clean Water Act which effectively devolves power to tribes and states to block a variety of interstate projects. “I think it’s coming together pretty well,” Peters said. “Obviously, we’re waiting for white smoke from the Senate.”
A permitting reform package may be one of the last major bills several bipartisan-minded House members get to vote on.
Election day is about six weeks off, and while Peters will likely have an easy time getting reelected for this eighth term, Evans is in a tough race. His purple-hued district is a target for the House Democratic campaign arm, which is hoping to flip it to former Colorado House of Representatives member Manny Rutinel, who worked as a lawyer at the environmental group Earthjustice. The Cook Political Report rates the race as toss-up, and Nate Silver gives Rutinel a roughly 75% to win.
But Rutinel won’t be getting any campaign help from Peters.
When I asked Peters about the timing of releasing a bill that could boost an endangered Republican’s bipartisan bona fides less than two months before an election, Peters told me that he and Evans had been working on it “for a while,” and that “my colleagues know that I’ve worked with Republicans to get problems solved.”
He said he wasn’t “participating in Gabe’s election” and wasn’t giving any money to his campaign, but also that he wouldn’t campaign Evans’ challenger, despite the opportunity to bolster his own caucus.
Peters is not shy about praising Evans. “What I appreciate about Gabe is that it takes a little bit of initiative to separate yourself from the majority — particularly when you’re in the trifecta — and do your own thing. He’s been a good partner in helping find ways to reduce process and make things go faster,” he told me.
Evans told me that he and Peters met early in this Congress, as Evans was getting settled into his new office in the Longworth building. “We’ve built the relationship over the last two years with a lot of the different areas that we’ve collaborated on.”
“I always try to meet the members of my committee and find out who will work with me. And I was fortunate to find Gabe,” Peters said.
“I do want to win the majority in the next Congress,” Peters went on, but “the norm should be that we figure out ways to work together to solve problems, and, you know, we’ll let the voters of Colorado 8 decide who to send me.”
Evans, for his part, told me that he had to work with Democrats to get anything passed as a member of a minuscule Republican minority in the Colorado statehouse, and that the 40-plus members of the bipartisan Problem Solvers Caucus have agreed not to campaign against each other. “There’s 385 other members that you can go pick fights with,” he said.
A new analysis by a one-time atomic energy opponent makes a bull case for big reactors.
If you know anything about the cost of nuclear energy in America, you probably are aware that the most recent reactors built — the only two new ones designed, planned, and constructed since the 1990s — were budget busters. Units 3 and 4 of Southern Company’s Alvin W. Vogtle Generating Station in eastern Georgia were the first of a new generation of reactor technology ever to be deployed in the U.S. Construction delays, changes to the design, and corporate bankruptcies ultimately sent the price of the pair of Westinghouse AP1000s — the Ford Mustang of American nuclear technology, with safety features that essentially make them not just powerful but also meltdown-proof — to nearly $40 billion, or about $16,350 per kilowatt.
But the U.S. once built reactors for half that — and it did so in the chaotic aftermath of the nation’s worst civilian nuclear accident, when mounting regulations made atomic power construction more onerous than ever before.
That’s the landmark finding of a new report by a veteran nuclear researcher, who quantified and broke down the cost of constructing nearly every civilian atomic power station the U.S. built in the 20th century. Adjusting the dollar figures using the Handy-Whitman Index, a specialized formula for calculating inflation in the utility sector’s construction costs, the analysis — shared exclusively with Heatmap — concluded that 47 reactors built in the U.S. between the 1979 partial meltdown at Pennsylvania’s Three Mile Island nuclear plant and the turn of the millennium came in at an average of $8,200 per kilowatt.
“Costs are only going to come down from that,” Charles Komanoff, the economist and energy policy analyst whose consultancy conducted the study on behalf of the Clean Air Task Force, told me.
The paper carves out a pathway down the cost curve that runs counter to the industry’s broader consensus at the moment on the best way to make nuclear less of a luxury choice compared to other generating sources. Billions of dollars have flooded into companies promising to commercialize small modular reactors that generate 300 megawatts or less. The concept is a bet on what Komanoff calls the economies of duplication, meaning that if customers need more individual reactors, developers can ride that repetition to lower prices. But the paper suggests that the way developers have historically reduced nuclear costs — through economies of scale — achieves the same per-kilowatt savings with one gigawatt-sized, water-cooled reactor as 20 smaller reactors would net.
Some small and microreactor developers say that using alternative coolants — molten salt, liquid sodium, high-temperature gases such as helium — could further raise the efficiency of their technologies, allowing them to make up for whatever they lose on economies of scale. But large, traditional reactors such as the AP1000 are “a proven technology” that, unlike next-generation reactors with far less operating experience, won’t have to overcome “teething problems” to reach maximum efficiency levels, Komanoff told me.
There are other options to the AP1000, such as the ABWR that the parent companies of GE Vernova Hitachi Nuclear Energy built in Japan and Taiwan in the 1990s. One was planned for Texas, but abandoned a decade ago amid declining interest in nuclear power post-Fukushima. The technology is approved by the NRC, but GE-Hitachi has since turned its attention to its 300-megawatt BWRX-300. Given that no ABWR was built in the U.S., James Boucher, the former Deloitte nuclear consultant who co-authored the paper, said the AP1000 is the reactor best positioned to replicate the country’s successful buildout of the 1980s.
“We have two AP1000s. They're fully built. They’re operating. They’re doing, as far as I can tell, quite well. And they are like these reactors in our sample,” Boucher told me. “If we wanted to build 20, 30, 50 more AP1000s, I think we’d have a good shot.”
The Nuclear Company, a startup developer that hired much of the team behind the Vogtle buildout in a bid to become the go-to project manager for future AP1000s, called Komanoff’s report “promising because it demonstrates how cost can come down when we don’t focus on building first-of-a-kind projects.”
“There was a 30% overnight capital cost reduction just moving from Unit 3 to Unit 4 on the Vogtle project — there is no reason we can’t continue down the learning curve on the next AP1000s built in this country,” Joe Klecha, The Nuclear Company’s chief nuclear officer and president, told me after reviewing the report I sent him. “Especially with our mix of experience building these reactors and advancements in technology we’re leveraging to scale, achieving below $10,000 per kilowatt is just the beginning for us. We believe we can execute safer, faster, and at lower cost than we’ve achieved in the past.”
Back in the 1980s, the military-like regimentation common at nuclear plants and construction sites wasn’t yet as ingrained in the industry. The Nuclear Regulatory Commission had replaced the Atomic Energy Commission, which was seen as too deferential to the companies it oversaw, and spent the decade tightening rules on constructing and operating nuclear plants. New accident scenarios were being discovered, requiring new plants and existing ones up for relicensing to change operating protocols, upgrade equipment, and conduct additional research.
Komanoff was among those pushing for the changes. In reports he authored on behalf of Greenpeace, an arch opponent of nuclear power, he dissected the fiscal woes atomic energy developers faced, making the economic case for shutting down electrical stations that his fellow activists battled on ecological or moral grounds. Eventually, Komanoff moved on to advocating for a carbon tax as the fairest and clearest way to guide the economy away from fossil fuels and toward decarbonization. While serving as director of the Carbon Tax Center, which he co-founded, he noticed a trend among nuclear plants: They were getting better at operating.
The regulatory changes that followed Three Mile Island succeeded in raising the operating efficiencies of nuclear plants. In the 1970s, reactors had a capacity factor — a measure of how frequently a generating source actually produces electricity — of about 50%. Yet by 1991, that number had risen to 70%, putting atomic energy on par with the most efficient fossil fuel and hydroelectric plants. In 2002, that national average hit 90%. In 2019, it rose to 94%. When the final reactor at Indian Point, the nuclear station that served Komanoff’s native New York City, closed in 2021 due to political opposition to its relicensing, it had just set a world record for an uninterrupted 753-day run of electricity production.
Gradually, Komanoff came to see nuclear power as a vital tool for decarbonization. But, ensconced in the climate movement through his carbon tax advocacy, he found it easier to stay mum on his conversion, lest he ruffle the feathers of fellow activists who remained stalwart anti-nuclearists. After all, he thought, if a carbon tax passes, nuclear plants will benefit, so why bother speaking up specifically for atomic energy? Indian Point’s early shutdown, however, caused Komanoff pangs of regret.
“It just forced me to confront the consequences of not advocating for nuclear power,” he said. “I felt the way I imagined I would feel if a climbing partner — I used to be a sort of mountaineer — had died because of some negligence on my part. I really took personal responsibility because I imagined that — and maybe I’m just in a complete fantasy about my shamanistic power — as someone who had argued 40 years ago for shutting Indian Point, that if I had gone public say ‘Don’t do it,’ that I might have been able to begin turning the tide.”
While $8,200 per kilowatt is half of what Vogtle cost, it’s still nearly four times the cost of building a new natural gas-burning power plant with combined-cycle turbines, which itself rose to $2,157 per kilowatt last year from less than $1,500 in 2023. But the “regulatory churn” that kept the price of nuclear high, Komanoff said, is unlikely to return for new nuclear plants using proven designs such as the AP1000.
“Part of my optimism about nuclear being less subject to regulatory churn going forward is because it’s not a whipping boy,” he said. “It’s really hard to overstate the aura of incompetence that surrounded the nuclear power sector in the United States in the ‘70s into the ‘80s. But when you’ve got plants that are averaging 90% or higher capacity factors, things change.”
Current conditions: Oman’s Ayn Athum Waterfalls burst to life this week as rain battered the Gulf nation’s southwestern Dhofar governorate • Severe monsoon flooding has deluged parts of the American Southwest, including Navajo Nation, where at least three people have died • Tropical Storm Dujuan is barreling toward Japan, where it threatens flooding and landslides in Tokyo and Chiba.
When the Houthis stormed Yemen’s Red Sea coast last week, the Iran-backed rebels gained new ground from which to attack boats passing through the vital shipping lane, extending Tehran’s reach from the Persian Gulf’s hotly contested Strait of Hormuz to the waterway on the opposite side of the Arabian peninsula. In response, oil prices surged. But the price per barrel of crude is slipping again as the United States has rebuked Saudi Arabia’s requests for help routing the militants, instead seeking a deal that keeps the Bab al-Mandab Strait open to American and Israeli ships. Over the weekend, U.S. diplomats met with Houthi officials in neutral Oman, Reuters reported. Following the talks, the Times of Israel reported that Houthis promised not to attack any Israeli or commercial ships of any kind, only those linked to Saudi Arabia, which has funded the Yemeni government’s campaign against the rebels.
Satellite images published by the investigative site Hunterbrook showed workers building a bypass on Saudi Arabia’s East-West Pipeline, its main conduit for circumventing oil exports around the Strait of Hormuz, to get around the pumping station damaged by a Houthi attack. But the promise of free movement through the Red Sea sent the price of oil down by between 1% and 4% on Thursday.
Just yesterday, I told you that the Trump administration had moved to drastically change how the government interprets the Endangered Species Act to only consider deaths of protected animals illegal if the creatures were intentionally targeted. Such a shift would exclude the vast majority of deaths linked to energy companies, such as when birds land in toxic oil ponds or collide with wind turbines. Whether federal enforcement ultimately reflects that interpretation depends on the outcome of a forthcoming lawsuit. Already, Earthjustice has vowed to file litigation challenging the Trump administration’s legal memo directing federal agencies on its new view of the nation’s bedrock conservation law. “The government’s new legal position is a prescription for extinction. It says that as long as you claim you didn’t mean to kill an endangered species, the law can’t and won’t stop you,” Earthjustice attorney Ben Levitan said in a press release. “That’s ridiculous — and a totally illegal, active misreading of the Endangered Species Act. We’ll see the Trump administration in court about this.”
The toll wind turbines take on migratory birds is a favorite talking point of the energy source’s opponents. But relief from the responsibility to avoid killing birds would be cold comfort to the wind industry as developers wait for the Trump administration to follow a court ruling requiring it to continue processing applications for turbines. As my colleague Jael Holzman wrote yesterday, the administration has continued delaying. At least one other legal fight within the offshore wind industry has, meanwhile, come to a conclusion. Vineyard Wind and its turbine supplier GE Vernova, announced an “amicable settlement” this week that resolves “all outstanding litigation,” the New Bedford Light reported. The developer sued the supplier in April, accusing GE Vernova of an $800 million breach of contract following a blade failure in 2024.

The U.S. needs more long-term energy storage, and few technologies are better tested by time than using excess electricity to pump water into a reservoir, where it can be released downhill and run through turbines to generate huge bursts of power when it’s needed. Back when the U.S. had lots of nuclear power, pumped hydro plants harvested the unused electrons during the night. With solar now producing more electricity during the day in some parts of the country than the grid demands, pumped hydro is seeing a potential renewal. But the U.S. hasn’t built any pumped hydro facilities since the 1990s. A project that looked likely to break that dry spell is now on pause as the Trump administration heeds opponents’ concerns and orders a new study on its environmental impact.
The Federal Energy Regulatory Commission has delayed its decision on whether to license the $3 billion project to add a pumped hydro facility to the Seminoe Reservoir, a lightning bolt-shaped waterway in southern Wyoming. The Bureau of Land Management said it will conduct a supplemental environmental impact statement and open the door to more public comments and input from local officials. “This feels like a small victory,” CiCi Oliver, a fly-fishing shop owner who opposed the project over its potential disruptions to the ecology of the reservoir, told WyoFile this week.
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At the start of the Iran War, some interpreters of President Donald Trump’s supposed four-dimensional geopolitical chess moves suggested that shutting down the Strait of Hormuz was an intentional move to show China’s vulnerable underbelly: Beijing’s dependence on oil imports. And yet, China’s vast oil stockpiles and refining capacity, plus its array of alternative energy sources, allowed the country to slash oil purchases by 23% in the first six months of the war compared to the same period last year, according to a New York Times analysis of customs data. “This is a power that nobody thought China had,” said Erica Downs, a senior research scholar at Columbia University’s Center on Global Energy Policy. “Going forward, it’s going to be really interesting to see: What does China do with this newfound power?” The heaviest answer to that question now weighing on Western officials involves China considering the ramifications of a potential invasion of Taiwan to be less worrying than before.
That’s especially true because Taiwan, by contrast, is more vulnerable to losing access to oil and gas imports than ever before. After completing its decades-long mission last year to shut down the nuclear fleet that powered the island’s 20th century transformation into the world’s premiere chipmaker, Taiwan’s ruling Democratic Progressive Party — which advocates for the republic’s continued de facto independence — left the nation dependent on imported liquified natural gas and crude for the vast majority of its energy. Now, according to Nikkei, the government is hastening its efforts to potentially bring at least one nuclear station back online.
Yet another state is considering a moratorium on data centers — one close to the epicenter of the artificial intelligence boom. Maryland, which shares a grid and a border with northern Virginia’s data center megacluster, could see a ban come into effect as early as next year if state legislators pass a bill in the next session. Governor Wes Moore, a Democrat, said he “will absolutely sign” a statewide ban “if it’s coming from local legislators.” Speaking to Punchbowl News, he suggested that any moratorium would come with loopholes for projects that meet high standards. “I believe local jurisdictions should have a say. There are certain local jurisdictions who want it,” he said. “I just need them to understand I have very strict guidelines for what is actually going to get state approval.”
A startup founded by members of the team of U.S. government scientists that first achieved net-energy gain from a fusion reaction has hit a new milestone that should raise the eyebrows of even skeptics of the so-called holy grail of clean power. Less than two months after publicizing its roadmap to commercial fusion, Inertia Enterprises ran a simulation demonstrating that its first commercial plant will be capable of producing 25 times more energy than the laser needed to trigger the reaction, the company told my colleague Katie Brigham in an exclusive.