California Senate Passes Controversial Wildfire Liability Bill With Bipartisan Vote
Tuesday, July 9, 2019
Credit: Associated Press
California senators approved a proposal Monday aimed at stabilizing the state's electric utilities and putting a renewed focus on safety in the face of devastating wildfires caused by utility equipment, with supporters calling it a plan that holds utilities accountable and protects ratepayers.
"Make no mistake — this is not a utility bailout, it's a ratepayer bailout," said Sen. Bill Dodd, a Napa Democrat and one of the bill's co-authors.
Lawmakers and Gov. Gavin Newsom are rushing to pass a package of wildfire bills by Friday before lawmakers take a monthlong break and as ratings agencies consider whether to further downgrade the credit ratings of the state's investor-owned utilities. California's wildfire season has already begun.
The proposal now heads to the state Assembly.
The bill creates a wildfire fund of tens of billions of dollars that utilities can tap to help pay for wildfire damages if they follow certain safety steps, including tying executive pay to safety. Utilities and ratepayers would pay into the fund. Utilities would also have to invest billions in wildfire mitigation efforts.
A coalition of groups has rallied around the measure, from labor unions representing utility workers to wildfire survivors, who see the bill as giving them more leverage as Pacific Gas & Electric Corp. goes through the bankruptcy process. A watchdog group, The Utility Reform Network, also supported the bill Monday, praising provisions on wildfire mitigation and tying CEO pay to safety.
Although it won bipartisan support, lawmakers said it wasn't perfect. Some questioned whether it would raise utility bills, while others said it didn't do enough to protect homes or manage vegetation that fuels wildfires. Sen. Scott Wiener, the only Democrat to vote against the bill on the Senate floor, said it was a missed opportunity to move the state away from reliance on investor-owned utilities.
California's three major utilities — PG&E, Southern California Edison and San Diego Gas & Electric — are owned by investors.
"We need to take what is a broken model right now in terms of investor-owned utilities in California and look toward the future," Wiener said.
The bill is speeding quickly through the Legislature; it was introduced less than two weeks ago and amended significantly last Friday. It had its first public hearing roughly six hours before it went to a vote on the full Senate floor.
"It's a little rushed," said Republican Sen. John Moorlach, though he voted to pass it.
It is a sprawling piece of legislation and has turned into a battleground for special interests. It provides, for example, broad worker protections if a utility changes ownership or sells off some of its assets. Wiener said that would make it harder for municipal electric utilities to buy assets from major power companies, potentially stifling efforts to expand publicly owned electric systems.
Last week Newsom acknowledged the complexity of the issue and said in response to critics that doing nothing would be catastrophic for utility ratepayers.
"None of this is easy," Newsom said then. "I think it's the best of all the options and, in the absence of others being presented, I think it's the one most likely to get the votes."
The urgency to act comes after California experienced two of its most devastating wildfire seasons in 2017 and 2018, with some of the worst blazes blamed on utility equipment. PG&E Corp. filed for bankruptcy in January as it stared down potentially tens of billions of dollars in liability costs.
Under the plan, utilities would have to get a new safety certification and show their conduct was reasonable in order to tap it. If a utility has the safety certification, it would be presumed to have acted responsibly, shifting the burden to victims or others to show they did not. If victims' groups raise serious doubt about the utility's conduct, the burden would then shift back onto the utility.
It also creates a new Wildfire Safety Advisory Board with appointees from the governor and legislative leaders to advise the California Public Utilities Commission. The Associated Press reported that the original version of the legislation would have automatically exempted all communications between the board and the Public Utilities Commission from public disclosure and exempted it from some portions of the state's open meetings law.
The bill has been changed to remove the open meetings law exemptions, and it no longer includes a blanket disclosure exemption. Instead, the Public Utilities Commission or the board would have to assert privilege in individual cases.
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