Sparks fly over wildfire costs
SACRAMENTO – A far-reaching proposal to assist electric utility companies faced with covering billions of dollars in wildfire damage was unveiled Friday to intense debate over whether ratepayers would be saddled with some of the bill for California’s worst-ever fire year.
With time running out before the California Legislature adjourns for the year, lawmakers released a plan that would allow the utilities to use payments from customers to help underwrite the cost of wildfire liability. Some of the biggest wildfires since 2017 – which destroyed thousands of homes – have been caused by downed power lines, and at least one major utility has said it faces insolvency without help in covering the costs.
“Ratepayers can’t be on the hook for everything, but we cannot bankrupt the investorowned utilities,” GOP state Sen. Anthony Cannella of Ceres said. “At the end of the day, we’re going to be providing power and somebody’s going to pay for it.”
While lawmakers were generally reserved during the hearing in Sacramento, interest groups sparred over a two-page outline of wildfire prevention and response proposals. Those ideas must be crafted into legislative language over the weekend to meet a key procedural deadline on Tuesday.
Under the plan, any attempt by a utility to borrow money for wildfire damages – which would probably depend on using a specific amount of money collected from ratepayers as collateral – would have to be authorized by the California Two bulldozers cut a fire line next to raging flames at North Main Divide along Ortega Highway in Lake Elsinore on Aug. 10.
Public Utilities Commission. Lawmakers were adamant during Friday’s hearing that the plan would not let utilities and their shareholders off the hook.
“Financing these costs is not a bailout,” Democratic state Sen. Bill Dodd of Napa, co-chairman of the conference committee, said of providing new help for utilities.
But some stakeholder groups, including large manufacturers and consumer organizations, told lawmakers they saw no guarantees in the proposal that the utilities would have to first use existing funds to pay wildfire costs, rather than impose an additional surcharge on customers.
“This looks like a bailout,
smells like a bailout and certainly feels like a bailout,” said Michael Shaw of the California Manufacturers and Technology Association. “We haven’t heard a description of a scenario in which shareholders are going to be first at the table in paying this.”
Nor were critics of the plan happy that it appeared to offer utilities a way to pay for past fires. No company has been as insistent on a retroactive legislative fix than Pacific Gas & Electric Co., which has said it faces potential costs of $2.5 billion or more for the deadly Northern California blazes last fall. PG&E’S president told industry analysts last month that wildfire costs could push the company into bankruptcy.