Slow down, Sacramento

One of this year’s most critical pieces of state legislation is AB1054, a major overhaul of the way California deals with wildfires created by the major utilities, including Pacific Gas and Electric Co. California is still enduring the fallout from the devastating fires of 2017 and 2018. Wildfire victims are still struggling to rebuild their lives, and PG&E’s recent bankruptcy filing promises to have adverse impacts on ratepayers for years to come. So the efforts of both the state Legislature and Gov. Gavin Newsom, who is pushing AB1054, to tackle this problem are most welcome.

Unfortunately, AB1054 may have dramatic unintended consequences for ratepayers, wildfire victims, and local governments.

It’s also speeding through the state Legislature at a clip. On Monday, it passed the state Senate. Now it’s headed for a vote in the state Assembly. Newsom, who proposed the plan just last month, has said he wants a solution passed by July 12. After that date, bond rating agencies have indicated that they may downgrade the utilities to junk status.

It’s never good to risk a credit downgrade. (Although it’s worth noting that this threat is less serious for PG&E, because of its bankruptcy.)

But there are real, growing concerns about the bill’s provisions for current and future wildfire victim relief, the potential that it will create openended costs for ratepayers, and lastminute amendments that will restrict municipalities that are seeking to set up local power providers.

These provisions could carry tremendous costs, too.

“Acting fast and scared instead of deliberately and with knowledge will have huge unintended consequences, because the provisions in this bill are super complicated,” said Loretta Lynch, former president of the Public Utilities Commission.

Lynch is one of the many voices to raise concerns about AB1054 over the past several days.

Her major concern is that the bill will set up a tension between current and future wildfire victims, and she’s absolutely right.

The wildfire damages fund created by AB1054 includes a cap on reimbursements from companies that are found to have acted unreasonably to have started a fire.

But if and when the damages exceed that cap, the odds are high that ratepayers will be left to pay the difference.

Speaking of ratepayers, it’s also galling that the bill extends a ratepayer fee from the energy crisis of the early 2000s. That charge, which was scheduled to end in the upcoming years, will be extended through 2035 so that ratepayers can contribute $10.5 billion to the wildfire fund.

State Sen. Scott Wiener, DSan Francisco, who voted against AB1054, has raised another serious issue: The bill will limit the ability of municipalities to offer competitive electric service to their residents through local power programs.

AB1054 requires the Public Utilities Commission to approve a public agency’s acquisition of a utility’s assets — regardless of whether this acquisition was voluntary or involuntary.

This is a new restriction, and one that should be interpreted as a way to limit the spread of local power programs, since the Public Utilities Commission has historically been resistant to municipalities seeking to provide competition to the utilities. The provision has nothing to do with wildfires and doesn’t even belong in this bill, although it will make the utilities very happy.

It’s more important to get AB1054 right than it is to get it passed quickly. The state Assembly must resist the pressure and stop giving this bill a fast run to the governor’s desk.