Last-Minute Deal Allows Utilities to Pass Along Costs of 2017 Fires

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A truck burns as fire ravages the Napa wine region in California on Oct. 9, 2017. (Josh Edelson/AFP/Getty Images)

A bipartisan group of lawmakers that's been working for weeks to craft legislation in response to the devastating wildfires sweeping through California came to a compromise plan late Tuesday. It's aimed at both protecting utility ratepayers from footing the bill for billions of dollars in damage caused by electrical equipment -- and ensuring that PG&E and other utilities don't go bankrupt.

It would do that by letting PG&E issue bonds to pay for damage caused by last year's North Bay wildfires while creating a commission to weigh utility liability in fires that started this year.

"Make no mistake about it, it’s not perfect," said state Sen. Bill Dodd, D-Napa, chairman of the Wildfire Preparedness and Response conference committee. “We ran out the clock. I think what we have here before us represents the best that we can do as a committee today."

The bill, released just in time to meet a deadline for the legislative session that ends this week, also would aim to curb future blazes by directing an annual $200 million in state funding toward forest management, fire prevention and fuel reduction.

The rush to advance bill language out of the conference committee resulted in a final report littered with handwritten notes and edits.


Several members of the committee voiced displeasure with the rushed final hearing, which was meant to advance the bill before a 72-hour waiting period required of all bills before they are given a floor vote.

Friday is the final day of the session for lawmakers to pass legislation.

"The truth is this language was done in a back room," said Chad Mayes, R-Yucca Valley. "That is incredibly frustrating."

Mayes was the only assemblymember on the committee to abstain from voting on the report. Senators Anthony Cannella, R-Ceres, and Ben Hueso, D-San Diego, also did not vote on the plan.

Ratepayer advocates who spoke during the hearing said the proposal does not do enough to prevent utilities from passing on wildfire liability costs.

"We strongly oppose this bailout for PG&E," said Mark Toney, executive director of The Utility Reform Network. "Billions of dollars at stake should not be decided in such a rushed process."

Under the plan, a new Commission on Catastrophic Wildfire Cost Recovery -- appointed by the governor and legislative leaders -- would decide whether utilities can recover costs from ratepayers after fires, beginning in 2018.

"The commission shall consider the conduct of the electrical corporation," along with factors such as whether the utility ignored fire risks and whether the fires were caused by "circumstances beyond the electrical corporation's control."

Representatives of utilities like Southern California Edison said the plan does not provide enough clarity for utilities to recover costs after a wildfire. They questioned why the plan seemed to hedge in saying the commission "may" allow utilities to recover costs, even if their application was found to be reasonable.

"It may be a little bit encouraging that the ratepayers and the utilities both have a problem with this," Dodd said.

The legislation now moves to the Senate and Assembly floors for Friday votes.