By Hudson Sangree
A controversial bill to help California utilities pay for wildfires sparked by power lines cleared the State Legislature on Friday night and was sent to Gov. Jerry Brown.
SB 901 would allow the state’s investor-owned utilities to issue cost-recovery bonds, to be repaid by charges on customers electric bills, with the approval of the Public Utilities Commission.
Proponents argued it was a way to keep Pacific Gas and Electric and other utilities solvent at a time when wildfires are larger, more intense and far more costly than in prior years. Climate change is often blamed for the more deadly and destructive fires.
“SB 901 is a comprehensive approach that attacks the problems on multiple levels,” said Sen. Bill Dodd (D-Napa), the measure’s co-author, during Friday’s floor debate.
Critics called it a giveaway to utilities that, through their own negligence, allowed power lines to ignite trees and brush that are tinder dry from years of drought.
“This bill rewards their bad behavior,” said Sen. Jerry Hill, a Democrat who represents the Silicon Valley.
The bill was the subject of intense wrangling this summer.
A July 24 proposal by Brown would have done away with California’s broad use of inverse condemnation, a legal doctrine that holds utilities strictly liable for fire damage. Many argued that overturning the longstanding doctrine would leave fire victims without quick compensation. That part of the governor’s plan was not included in the bill.
Instead, a conference committee of Senate and Assembly members met seven times in recent weeks to hear testimony and gather information to redraft the measure. The committee approved a revamped proposal in a late-night scramble Tuesday, and its report passed the Senate and Assembly by ample margins Friday as the legislature neared its midnight deadline for passing bills.
The rewritten measure would maintain the state’s strict liability standard and require the PUC to determine the reasonableness of a utility’s fire safety practices in deciding whether costs can be passed on to ratepayers.
SB 901 would also require utilities to adopt wildfire mitigation plans and would create a commission to examine catastrophic wildfires associated with utility infrastructure. It would levy fines on utilities that fail to adhere to their fire-prevention plans.
As a result, utilities that once supported the measure turned against it, while insurers, plaintiffs’ attorneys and local governments switched their opposition to support.
The bill’s 100-plus pages also ease rules for tree cutting and address the disposal of the massive amounts of dead wood and brush that fuel wildfires. It would spend $1 billion over five years on fire prevention.
The bill also includes a “stress test” that instructs the PUC to “consider [an] electrical corporation’s financial status and determine the maximum amount the corporation can pay without harming ratepayers or materially impacting its ability to provide adequate and safe service.”
The provision applies only to last year’s wildfires, including the highly destructive blazes of October 2017 that killed dozens of residents and leveled thousands of homes in Napa and Sonoma counties. A large part of the city of Santa Rosa burned in the wind-whipped flames.
State investigators have determined that PG&E’s equipment was responsible for a number of the most destructive fires from that time and the company will face $15 billion or more in liability, according to some estimates.
The PUC would apply the stress test “to extract the maximum amount possible” from PG&E’s investors, Dodd said. Letting PG&E slip into bankruptcy would result in customers paying higher rates and would compromise the state’s efforts to reduce greenhouse gasses and to tap into greater amounts of renewable energy, he said.
Wildfires have burned 1.2 million acres in California already in 2018. The causes of most of the fires have yet to be determined. The blazes included the Mendocino Complex of fires that have burned more than 400,000 acres in the mountains north of San Francisco.
Brown has not yet indicated whether he will sign or veto the measure. He has until Sept. 30 to decide.
