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California Panel To Probe Growing Wildfire Costs

In this photo taken Monday, Oct. 30, 2017, a partially burned vineyard is seen along Highway 121 in Sonoma, Calif.
Associated Press
In this photo taken Monday, Oct. 30, 2017, a partially burned vineyard is seen along Highway 121 in Sonoma, Calif.
California Panel To Probe Growing Wildfire Costs
California Panel To Probe Growing Wildfire Costs GUEST: Marisa Lagos, reporter, California government and politics, KQED

Many San Diegans might say it's hard enough to get utilities to pay for wildfire damage as it is. However Governor Jerry Brown has proposed legislation that would loosen the standard which holds utilities liable for causing wildfires. Brown says his proposal is in response to the heightened threat of wildfire across the state and the huge costs utilities face. Joining me is Merissa Alagoas politics and government reporter for KQED and Merissa welcome. Thanks for having me. The legal standard now is a kind of strict liability it's known as inv. condemnation where utilities can be held liable for their equipment causing wildfires even if they are in compliance with safety laws. So how would Governor Brown's proposal change that. Essentially it would give courts a little bit more flexibility in deciding whether or not to completely hold a utility liable in the case of you know an instance where they weren't negligent. So when they had followed state rules and regulations he's basically saying that courts would be able to balance the public benefit of electrical infrastructure which we obviously all benefit from with the damage to private property. And so you know I think critics would say this is potentially a sort of get out of jail free card for PG&E. I think what the governor is trying to do is maybe strike some middle ground so that there's a little bit more leeway and things that courts can take into consideration in these types of civil cases. OK so last year it wasn't a court but state regulators said Estey GenY could not recoup 379 million dollars from ratepayers for costs connected to the 2007 which fires here in San Diego. If this new proposal were in place might that have worked out differently. It's possible another provision of this bill would be to require utilities to not only have more robust plans around wildfire mitigation and other disaster sort of preemptive actions that they take but also require them to have an independent evaluator look at that plan. And so I think the question would be in that case that you know the Witch Fire case Genie was found to have basically not followed state regulations. I think the question would be if you know if this bill were to pass and things looked exactly the same would you still find that they hadn't followed their own plan. I think the problem with a lot of this is that it's really up to the interpretation of either state regulators or judges. And so we don't know exactly how this would play out if the law were to change. Why is this change being proposed. Are the states utilities in trouble from wildfire damages. They are. I want to play you something that Senator Bill Dodd talked about yesterday at the beginning of the hearing laying out just how sort of robust this problem is and how he sees it. We know downed power lines have caused many of the devastating fires in the past. Frankly PG&E violated our trust and must be held accountable. So I think what we're hearing from lawmakers is that we know you know that just in general we've seen a spike in wildfires because of drought and climate change and that a lot of them are being caused by utility equipment. And so I think that there's a real lobbying effort that we've seen go on among not just Viginia but utilities in general to try to change this inversed condemnation law so that at least they wouldn't be held financially responsible if they did follow state laws and regulations around equipment maintenance. And I think that they are concerned about what all of this means for their bottom line. Of course there's sort of a dual question too which is even if they are held liable who actually pays for that. Is it ratepayer's or is it shareholders. And so suffice to say there's a lot of very moneyed interests in the Capitol right now talking to both lawmakers and the governor and they include the utilities they include insurance companies who of course insure homeowners who lost homes and businesses. And then of course the lawyers who represent a lot of these folks who also have money in are up there lobbying tale. I read Merissa that PG&E is could be on the hook for about 10 billion dollars for the Northern California fires of last year. So one would imagine that PG&E and utilities like it would be very happy with this proposed legislation. You would think so but they actually said on a conference call with investors today executives said they felt like it didn't go far enough. I think they would like to see a complete change where this inversed condemnation law would be repealed entirely. And so you know maybe that is a credit to the governor if nobody's happy maybe it's a good compromise but they have spent hundreds of thousands of dollars lobbying in Sacramento over this. They've spent a lot of money. I would say on a sort of more PR campaign talking about this with investors and sort of more publicly and so Piccinin is the face of it. I think you're right that the utilities in general have concerns about whatever lawmakers do that they would like to see less liability held on them especially because we're seeing more and more fires and more destructive fires. So what's the likely scenario for this proposed legislation cannot get through the legislature. I would be surprised if it gets through exactly as it was proposed by the governor. There's a few other pieces of legislation that also deal with utility plans around wildfire mitigation and liability questions. There's this conference committee that Senator Dodd is chairing. They are tasked with coming up with something and having it passed by the full legislature by the end of August so I think we're going to see a lot more hearings a lot more debate about this and Senator Dodd has promised that this will debate this debate will happen in public so that people feel like it's spent a fair and transparent process. So I think it's going to be fascinating and I do wonder if this is this compressed timeframe is realistic given the huge questions being raised around so many different issues utilities insurance sort of drought climate change and where people should be building their homes so it's a big task. Well it will be interesting to watch. I've been speaking with Boreas Alekos politics and government reporter for KQED. Lisa thank you. My pleasure. Maureen.

Gov. Jerry Brown is urging lawmakers to back a proposal that would soften the standard that makes electric utilities financially liable when their equipment causes wildfires.

A legislative committee meeting Wednesday to discuss the growing threat of wildfires did not take any formal action on Brown's proposal, but some lawmakers indicated the need to review the impact of frequent blazes on utilities.

Brown's proposal would allow courts to decide how much utilities should pay for damage, backing away from a legal standard that generally holds electric companies entirely liable for the costs of wildfires triggered by their power lines, transformers or other infrastructure.

It would apply to fires sparked after Jan. 1, 2018. Pacific Gas & Electric Co. executives have said they expect to pay more than $2.5 billion after the company's equipment was blamed for starting several of the 2017 wildfires that killed dozens of people in Northern California's wine country and triggered billions of dollars in insurance claims.

RELATED: PG&E Says Someone Else’s Wires May Have Started Deadly Blaze

Utilities that are negligent "must be held accountable," but they also need to survive, Assemblyman Chris Holden, a Democrat from Pasadena, said Wednesday.

"They are the backbone of our daily existence and our economy," Holden said. "Therefore we have to consider ways utilities can manage their costs without disrupting service to customers or triggering excessive ratepayer impacts."

California's legal standard is among the strictest in the nation for assigning costs to utilities. The companies are on the hook to pay for wildfire response and recovery if their equipment started a fire, even if they aren't found negligent.

Only Alabama has a similar legal structure, which treats private utilities the same as government entities when they take or destroy someone's property, said Michael Wara, a research fellow focused on climate and energy at Stanford University's law school.

Utilities say they're facing unprecedented costs as California confronts a longer, more severe fire season due in part to drought and climate change. This month, a wildfire has been ripping through the Sierra Nevada just west of Yosemite National Park.

PG&E spokeswoman Lynsey Paulo said the company is reviewing the governor's proposal.

"We believe comprehensive public policy reforms are urgently needed to address the challenges brought about by more frequent and more intense wildfires," she said in a statement.

Critics, including insurers and local governments, say changing the liability mechanism would raise insurance premiums and remove incentives for utilities to do everything they can to prevent fires.

RELATED: Regulators Vote SDG&E, Not Ratepayers, Must Pay For 2007 San Diego Wildfire Costs

A coalition of insurers called Brown's proposal a bailout for utilities.

"Protecting utilities' shareholders over fire survivors leaves the very individuals and communities whose lives were upended on the hook to the benefit of huge utility companies," the coalition said in a statement.

In addition to the wildfire changes, Brown's proposal would increase the maximum fine utilities can face if they do violate state law or rules from $50,000 to $100,000 per offense. It would also require utilities to development more robust wildfire plans and better state oversight of those plans.

It also would require equipment inspections, maintenance and temporary power shut-offs during extreme weather.

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