State lawmakers drafting wildfire relief bill for utilities

Proposed legislation would protect PG&E from 2018 fire liabilities

Even before the cause of the deadly Camp Fire is determined, California lawmakers are drafting legislation to shield PG&E from massive liabilities connected to the blaze.

“We want to send a signal to the financial markets that we are not going to leave the utilities flapping in the wind,” Kellie Smith, chief consultant for the state Assembly Utilities and Energy Committee, said Tuesday.

The legislation is expected to be introduced by Democratic Assemblyman Chris Holden of Los Angeles County, who is the chairman of the key legislative panel.

The bill is expected to protect California’s major investorowned utilities from wildfire liabilities.

“What a happy Thanksgiving gift this is for PG&E shareholders, directors and executives to enjoy this holiday weekend, while over 12,000 residents of Butte County spend Thanksgiving in shelters, tents or their cars with some mourning their dead or distraught over loved ones who are missing,” state Sen. Jerry Hill, D-San Mateo, a frequent critic of PG&E, said Tuesday.

The idea behind the anticipated legislative framework would be to ensure that financial liabilities arising from any destructive wildfires in 2018, like the Camp Fire in Butte

County, don’t destabilize a big utility, such as PG&E.

Gov. Jerry Brown in September signed SB 901, a sweeping bill designed to remedy California’s past, present and future wildfire ailments, brushing aside criticism that the measure was a bailout for PG&E, which faces a troubling

mountain of liabilities linked to infernos that torched the Wine Country and other regions in October 2017.

That bill created a smoother path for state regulators and PG&E to pass on costs to the company’s customers with higher monthly power bills. SB 901 requires the powerful state Public Utilities Commission to set up a stress test to determine the maximum amount

that a utility and its shareholders can bear without crossing into bankruptcy. SB 901 contained a narrowly worded provision to include the Wine Country firestorms, a number of which have been deemed to be caused by PG&E equipment.

The new legislation would appear to remedy what’s now viewed as a flaw in SB 901, which applied primarily to liabilities from fires in 2017 as

well as potential blazes occurring in 2019 and years after that, but didn’t specifically apply to fire catastrophes in 2018.

“There will be a time and a place for all of this, but right now, PG&E is solely focused on helping the first responders and helping our customers recover and rebuild,” PG&E spokeswoman Andrea Menniti said Tuesday.

Ultimately, the legislation is designed to prevent

a utility from going bankrupt in connection with the wildfires, and that protects customers, Smith said.

“If a utility goes bankrupt, that will hurt ratepayers a lot more than this mechanism we are creating to make the utility pay until it hurts,” Smith said. “The idea is to make the utilities pay until they hurt.”

San Francisco-based PG&E, in Hill’s view, is using the specter of bankruptcy to alarm state lawmakers and regulators to rush to the company’s aid.

“PG&E is using the bankruptcy bogeyman to scare lawmakers,” Hill said. “You could set up a payment plan over many years for PG&E, which is what BP did after the Gulf oil spill. Instead, PG&E always looks for the easy way out, no matter how many people are affected.”