Governor Newsom made the announcement during a press conference in Sacramento on Friday.
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Under Newsom's plan, the majority of the costs for this new so-called "insurance fund" would be split evenly between ratepayers and shareholders of PG&E, Southern California Edison and San Diego Gas & Electric.
Customers of those three utility companies will pay for that proposal through a monthly surcharge of about $2.50.
Power bills won't be increasing because of the fee though. The new surcharge would replace another $2.50 fee that customers have been paying since the early 2000s that was set to expire next year. Under Newsom's plan, the surcharge would be extended for 15 years.
In total, ratepayers and shareholders will both contribute $10 billion each to the fund.
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Additionally, the three utility companies must spend a combined $3 billion on wildfire safety measure to become eligible to be covered by the insurance fund.
The Sac Bee reports PG&E would have until June 30, 2020, to assemble the financing and get a bankruptcy plan approved in court to even get access to the fund.
Newsom believes this is the best and fairest way to deal with the rising costs of future wildfires.
Legislators still have to approve the plan. Newsom aims to strike a deal within the next three weeks.