Explaining the bill.
California lawmakers are having one of their most substantive debates yet in response to the catastrophic wildfires that devastated the state in 2017 and 2018.
A major bill crafted to enact Gov. Gavin Newsom’s plan for addressing the wildfire crisis surrounding the state’s investorowned electric utilities moved swiftly through the Senate on Monday, won approval, and now heads to the Assembly. The bill, AB1054, would set up a new $21 billion fund to help utilities endure future wildfire costs.
The bill would have major consequences for Pacific Gas and Electric Co., which filed for bankruptcy protection in January because of its massive wildfire liabilities, and its Southern California counterparts.
Newsom previously challenged the Legislature to act on this issue by Friday, but he later told The Chronicle “the sky is not gonna fall” if it takes longer. Southern California Edison and San Diego Gas & Electric face potential credit rating downgrades if the deadline isn’t met.
What would the bill do? The marquee component of AB1054 is a new wildfire fund that would help PG&E and the Southern California utilities if their power lines are involved in more conflagrations. PG&E could access the fund only if it resolves its current wildfire claims and exits bankruptcy protection by June 30 of next year. The bill would also require electric utilities to seek annual safety certifications from the state. And it would change the way regulators consider whether utilities can pass any wildfire costs along to their customers. If the company in question has a valid safety certification, regulators would presume the utility’s conduct was reasonable, unless another party could raise “serious doubt,” in which case the utility would have to prove it acted reasonably. The bill would also create an advisory board that would make recommendations about wildfire safety to state regulators.
Who will pay for it? To finance the fund, the state would continue a Department of Water Resources charge that puts a few extra dollars on customers’ monthly utility bills. The charge, which originates from the energy crisis in the 2000s, was supposed to end in the coming years, and the governor’s advisers have said its extension could net $10.5 billion. Utilities themselves would also likely be expected to match the $10.5 billion using money from their shareholders, bringing the total direct contributions from the companies and their customers to $21 billion.
How likely is the bill to pass? Lawmakers need to assemble a twothirds majority in order for AB1054 to become law. Some members have pushed for additional provisions, including around wildfire prevention and preparedness, and some consumer advocates have voiced discomfort with parts of the bill. But it’s not clear yet how much organized opposition the legislation will face — if any. Up From The Ashes, a group that lobbies for wildfire victims, and the California State Association of Counties have both said they support the bill. PG&E has taken a neutral position, according to a company spokeswoman. What’s not in the bill? Notably, AB1054 does not propose any changes to inverse condemnation, the legal doctrine that holds California utilities responsible for damage caused by their equipment even if they were not negligent. PG&E cited the “unique nature of California’s doctrine of inverse condemnation” as one of many factors it weighed before deciding to file for bankruptcy protection. Are there other related bills? Yes. When lawmakers amended AB1054 on Friday, they split part of it off into another bill for procedural reasons. The second bill would create a new entity called the California Catastrophe Response Council to oversee the administrator of the wildfire fund. The council would be made up of several state government representatives, including the governor or someone he designates and two people appointed by the Legislature, serving alongside three members of the public appointed by the governor. The bill would also create a new government entity called the Office of Energy Infrastructure Safety that would eventually assume the duties of a temporary wildfire safety division that would be established at the California Public Utilities Commission. The second bill can pass on a majority vote, but it would only be operative if AB1054 passes as well.