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Ratepayer Lawsuit Claims New Wildfire Fund Law Unconstitutional

 July 22, 2019 at 10:18 AM PDT

Speaker 1: 00:00 A lawsuit challenging state legislation that changes the way utility companies pay for the cost of wildfires. Collins by their equipment was filed on Friday, the legislation would create a $21 billion wildfire fund that utility companies can use to pay for wildfire damage. Half would be funded by rate payers and half by utility companies. The lawsuit was filed by San Diego attorneys, Michael, a Geary and Maria Seaverson and Maria Seaverson joins us now. Maria, welcome. Speaker 2: 00:30 Thank you. Speaker 1: 00:30 I've heard people who oppose this legislation referred to it as a bailout for utility companies. But you're doing, because you believe a 10 54 is unconstitutional. How do you believe it violates the constitution? Speaker 2: 00:43 Ab 10 54 violates a constitution in several ways. It violates the United States constitution because it opposes upon, it's, uh, the citizens and taxpayers of the state of California charges for wildfires without the utilities having first proven that their rates are Justin reasonable. The bill switches the burden of proof to the rate payers instead of the utilities. Uh, there's been longstanding a case law where the utilities, I've had to show that when they want to pass rates onto their rate payers, they have to show their rates are just unreasonable. With this new bill ab 10 54, the burden is now put on the rate payers to show that there's serious doubts. So it's presumed reasonable if they get some new safety certificates or you've come up with and then after that the burden is heavily on the shoulders of the rate payers. Speaker 1: 01:44 And I know you've, you've expressed that you, you feel it violates due process rights of consumers. Can you explain what due process rights it violates? Speaker 2: 01:52 Sure. The due process rights are pertained to that. When the public has a right to participate in the process. Where are these types of assessments or these type of charges are imposed against them? So for instance, right now the C PUC, the California public utility commission, if a utility and investor owned utility wants to charge Rae payers, it has to go to the commission. And then the public, whether it be individually or through advocacy groups can challenge or comment or participate in those proceedings. There's often trials, there's evidence there sworn testimony, that's all gone. Now this new process allows the utility to, once they get a safety certificate, if they then start a wildfire, uh, buy their equipment by imprudent management of their systems, they then, uh, would be able to avail themselves of this funding and it would be up to the public to try to stop it. That completely turns on its head, longstanding case law and the right of due process before those charges aren't posted on repairs. Speaker 1: 03:03 And so we know that this fund will be paid for in part by utility companies and also in part by rate payers. Can you clarify how much would customers be paying on their bill to support this fund? Speaker 2: 03:15 Sure. It'd be up to 10 point $5 billion. Speaker 1: 03:18 And so how, how does that break down on each person's bill? Speaker 2: 03:21 Well, they estimate it as an average of a, depending about $2 and 50 cents per customer, that's a monthly charge. Then it would go on through 2035 with this bill, but in the aggregate in California it's 10.5 billion and that's one of the ways that utility companies and lawmakers get away with imposing these charges on the rate payers. Right now there is a charge that we're all paying and it was imposed back during the energy crisis 2000 2001 and it was imposed and and set to a sunset or or stop in 2020 what this bill does is it passes it on for another 15 years without the public's right to stop it. That's what our lawsuit is seeking to do and that is to stop the imposition of this 10 point $5 billion public bailout of the investor on utilities when their equipment causes wildfires. Speaker 1: 04:22 Okay. Also, if utility companies are on the hook for wildfire liability, could that also lead them to reduce the funds that they spend to upgrade equipment? Speaker 2: 04:29 A good example is SDG and e had sought to collect 279 million from Israeli payers. That was the amount that was over and above their insurance that covered claims. When the from the 2007 wildfires that cal fire found it's equipment caused. Since that time since the Public Utility Commission has voted initiative decision saying the utility cannot recover that extra money because it did not prudently manage the system. Guess what SDG needs equipment has not caused a fire since then. By taking away those types of safeguards a where there's the utilities have to understand if they don't prudently manage their systems they will not get paid. That is the type of policies that we need so that there are no more fires. But this legislation did was figuring out how to fund wildfires caused by the utilities instead of figuring out how to stop them. Speaker 1: 05:27 What kind of changes in this legislation could be made that you think would be fair? Speaker 2: 05:33 It would have to keep the burden onto the utilities to show that their rates are just in reasonable. It is exactly that type of process that leads to more prudent management and safety equipment so that fires are not caused. There would need to be a public process where when fires are caused by utilities and the utilities seek to find so that the public can participate and that there's evidence that is submitted and that can be vetted by the public utility commission and the public before a blank check or a check for 10 point $5 billion is given to the utilities. There also has to be changes with the, um, public disclosure of their records. What this bill did also in part was limit what the public could see by giving an broad exemption over communications when deciding whether or not to fund these wildfire costs. So those are the types of changes that are needed so that sunlight is shown on to the process before the utilities get a blank check. Speaker 1: 06:43 And you filed the lawsuit on Friday. What are you asking the court to do now? Speaker 2: 06:47 We're asking the lawsuit to issue an injunction to stop this bill from being, um, uh, an I said to stop any funding to stop any bond issues to prevent this law from coming into effect and a declaration that this law is unlawful because of violates not only the United States constitution, but also the California state constitution. Speaker 1: 07:10 I've been speaking to San Diego Attorney Maria Seaverson. Maria, thank you so much. Uh, we reached out to assemblyman Chad Mayes, who was a coauthor on the bill. He did not respond by air time. Governor Gavin Newsome said the legislation would move our state toward a safer, affordable, and reliable energy future provides certainty for wildfire victims when he signed the bill. Maria, again, thank you so much for joining us. Speaker 2: 07:35 Thank you for having me. Jay.

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Gov. Gavin Newsom says the law is needed to protect consumers from skyrocketing wildfire costs. Former City Attorney Michael Aguirre calls it an unlawful gift of public funds.
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