California backs effort to boost utilities during wildfires

Posted at 3:57 PM, Jul 11, 2019
and last updated 2019-07-11 18:57:09-04

SACRAMENTO, Calif. (AP) — California lawmakers approved a multibillion-dollar plan Thursday to shore up the state's biggest electric utilities in the face of catastrophic wildfires and claims for damage from past blazes caused by their equipment.

It requires major utilities to spend at least $5 billion combined on safety improvements and meet new safety standards, and it creates a fund of up to $21 billion that could help pay out claims as climate change makes wildfires across the U.S. West more frequent and more destructive.

Lawmakers passed the bill less than a week after its final language went into print, and Gov. Gavin Newsom was expected to sign it Friday. Republicans and Democrats said the state needed to provide financial certainty to the state's investor-owned utilities, the largest of which, Pacific Gas & Electric Corp., is in bankruptcy.

But they said their work is far from over and they plan to do more on wildfire prevention and home protection when they return in August from a summer break.

A broad coalition rallied around the measure, from renewable energy trade groups and labor unions representing utility workers to survivors of recent fires caused by PG&E equipment. Victims applauded provisions they say will give them more leverage to get compensation from the company as it wades through bankruptcy.

But several lawmakers raised concerns that the measure would leave utility customers on the hook for fires caused by PG&E despite questions about the company's safety record.

"No one has ever said this bill is going to be the silver bullet or fix all but it does take us in dramatic leaps to where we can stabilize California," said Assemblyman Chris Holden, a Democrat from Pasadena and one of the bill's authors.

Holden and other supporters said the legislation would not raise electric rates for customers. But it would let utilities pass on the costs from wildfires to customers in certain cases, which would make costs rise.

The legislation also extends an existing charge on consumers' electric bills to raise $10.5 billion for the fund that will cover costs from wildfires caused by the equipment of participating electric utilities.

PG&E filed for bankruptcy in January, saying it could not afford billions in damages from recent deadly wildfires caused by downed power lines and other company equipment, including a November fire that killed 85 people and largely destroyed the town of Paradise.

Credit ratings agencies also are eyeing the financial worthiness of Southern California Edison and San Diego Gas & Electric.

PG&E did not take a formal position on the bill. Spokesman Lynsey Paulo said the utility is committed to resolving victims' claims and reducing wildfire risks.

To use the fund, companies would have to meet new safety standards to be set by state regulators and take steps such as tying executive compensation to safety. The state's three major utilities could elect to contribute an additional $10.5 billion to create a larger insurance fund worth at least $21 billion.

Questions about PG&E's efforts to combat fires led to some opposition.

A day before the legislation passed, a federal judge overseeing PG&E's bankruptcy ordered its lawyers to respond to a report in The Wall Street Journal that showed it knew about the risks of aging equipment but did not replace systems that could cause wildfires.

"It is hard not to see this bill as something of a reward for monstrous behavior. They haven't done the work. They should not be rewarded," said Assemblyman Marc Levine, a Democrat from San Rafael who voted against the legislation.

David Song, a spokesman for Southern California Edison, said the utility supports the bill but wants to see "refinements." He offered no specifics.

"If the bills are signed into law they take initial steps to return California to a regulatory framework providing the financial stability utilities require to invest in safety and reliability," he said.


Associated Press writer Adam Beam contributed.