The utility said in a statement on Friday the tentative agreement covers 85 per cent of the insurance claims from fires that included the one that decimated the town of Paradise and killed 86 people.

A group of insurers said in a separate statement the settlement is well below the $US20 billion the insurance companies had sought in bankruptcy court.

"While this proposed settlement does not fully satisfy the approximately $20 billion in group members' unsecured claims, we hope that this compromise will pave the way for a plan of reorganisation that allows PG&E to fairly compensate all victims and emerge from Chapter 11 by the June 2020 legislative deadline," the insurers said.

The settlement still must be approved by a bankruptcy court.

"Today's settlement is another step in doing what's right for the communities, businesses, and individuals affected by the devastating wildfires," PG&E chief executive Bill Johnson said in a statement.

PG&E Corp on Monday released a plan to offer nearly $US18 billion to wildfire victims, insurance companies and cities and public entities in California that battled wildfires sparked by its electrical equipment.

The plan, which must be approved by state regulators, proposed setting aside two trusts totalling $US16.9 billion to pay victims and insurance companies. Another $US1 billion will go towards local governments affected by the wildfires.

The company also proposed an $US8.4 billion trust to pay claims to uninsured victims.

The San Francisco-based company is under deadline pressure to emerge from bankruptcy by June 2020 to participate in a state wildfire fund to help California's major utilities pay out future claims as climate change makes wildfires across the US west more frequent and more destructive.

The utility sought bankruptcy protection in January because it said it could not afford an estimated $US30 billion in potential damages from lawsuits stemming from recent wildfires.

Australian Associated Press