Warning issued: Wildfire bill could lead to overspending by utilities

A bill in Sacramento to help prevent wildfires is stirring controversy, with a consumer advocacy group warning that it would give California’s utility companies a blank check to spend their customers’ money on any work the companies say is related to safety.

The bill, SB1088, sprang out of last fall’s Wine Country wildfires, which many people suspect were started by Pacific Gas and Electric Co. power lines blowing in a fierce windstorm. Its author, Democratic Sen. Bill Dodd, represents Santa Rosa, which lost entire neighborhoods to the flames. He says the bill will not trigger a spending spree.

Under the bill — which faces a hearing Tuesday at the Senate Energy, Utilities and Commerce Committee — utilities would have to submit comprehensive safety plans to the California Public Utilities Commission every other January, spelling out how they intended to prepare for

major disasters such as earthquakes and intense storms over the coming two years. The plans would include spending estimates for the work.

Once the commission approved a utility’s safety plan, the regulators would be required to pass on to the utility’s customers any spending outlined in the plan. If the commission did not approve a utility’s safety plan by the end of the year in which it was submitted, the utility could simply implement its plan until the commission finally made a decision. The utility would be entitled to make its customers pay for any costs associated with the plan while awaiting a decision.

That’s a far cry from the way the commission usually operates.

Electricity and natural gas rates for California’s investor-owned utility companies are typically set through complex, detailed proceedings called general rate cases that can take 18 months to two years to complete. And the commission’s five voting members have great leeway to determine which costs the utilities can and cannot pass on to customers.

“This is an automatic preapproval of rate increases for anything the utility labels as ‘safety’ if the PUC doesn’t decide in 12 months,” said Mark Toney, executive director of The Utility Reform Network, a consumer group. “That’s a ridiculously short period of time, because these things cost billions of dollars, and that requires a thorough review.”

Dodd, however, rejected the idea that his bill would give the companies carte blanche to spend money, or straitjacket the utilities commission. And he noted that the bill specifically authorizes the commission to penalize utilities that don’t live up to their safety plans.

“The bill requires the funding to be justified and spent according to the mandates from CPUC,” Dodd said in a statement Monday. “That includes fines if PG&E doesn’t make the mandated investments. We’ve also worked to add opportunities for the public to weigh in with the commission with what actions should be required and prioritized.”

Although TURN believes the state’s utility companies are pushing the bill, PG&E spokeswoman Lynsey Paulo said her company has not taken a position on it.

In a letter sent last week to the Senate energy committee’s chairman, Ben Hueso, the company argued that it could not support SB1088 or other bills inspired by last year’s wildfires unless the Legislature addresses the issue of “inverse condemnation,” a legal doctrine under which the utilities can be held liable for economic damages caused by fires linked to their equipment — even when the companies did nothing wrong.

PG&E has been pushing hard for a legislative fix to inverse condemnation, which the company says turns utilities into the state’s insurer of last resort in major disasters. Southern California Edison has sent legislators a similar critique.

“SB1088 includes some good ideas that should be fully explored as part of the Legislature’s response to the wildfires,” Paulo said. “However, we believe the Legislature needs to take a more holistic view.”