Word to avoid: Bailout

Antelope Valley Press (Sunday) - - Opinion -

There’s one word Gov. Gavin New­som has as­sid­u­ously avoided in the days since he pro­posed a new $30.5 bil­lion Wild­fire Fund that would help the state’s big pri­vately-owned util­i­ties pay off dam­age claims from for­est and brush fires their lines have sparked or helped to cause: Bailout.

This fund would shore up util­ity fi­nances as they face tens of bil­lions of dol­lars in po­ten­tial judg­ments from law­suits that fol­lowed fires they ad­mit­tedly helped cause via neg­li­gence dur­ing 2017 and 2018.

Un­der pres­sure from Wall Street in­vest­ment firms, New­som pro­posed that util­ity cus­tomers (of­ten eu­phemisti­cally called “ratepay­ers”) and util­ity share­hold­ers share the costs. The leg­isla­tive form of New­som’s plan makes it clear cus­tomers would be stuck with at least half the costs of util­ity neg­li­gence.

This bill, AB 1054, co-spon­sored by Demo­cratic As­sem­bly mem­bers Chris Holden of Pasadena, Au­tumn Burke of In­gle­wood and Repub­li­can Chad Mayes of Yucca Val­ley, places the bur­den of prov­ing util­i­ties acted pru­dently on the con­sumers, re­vers­ing many decades of prece­dent.

There’s an unasked, unan­swered ques­tion here, ig­nored largely be­cause of the sheer power of the util­ity lobby and its fi­nan­cial al­lies, all of whom could lose big bucks if other util­i­ties fol­low Pa­cific Gas & Elec­tric Co. into bank­ruptcy: Why should cus­tomers/ratepay­ers foot any bills when they did noth­ing to cause these fires?

It’s a fact that cus­tomers’ monthly bills for decades in­cluded money ear­marked for util­ity main­te­nance. That tab came to more than $6 bil­lion over al­most 50 years be­fore the lat­est spate of big blazes.

State and fed­eral reg­u­la­tors never tracked what the com­pa­nies did with most of that money. As a re­sult, Cal­i­for­nia saw the fa­tal San Bruno nat­u­ral gas line ex­plo­sion in 2010 and huge amounts of veg­e­ta­tion sit­ting on or near power lines be­fore the start of the state’s largest and most costly fires ever dur­ing 2017-18.

If much of the main­te­nance money went to ex­ec­u­tive bonuses and other op­tional items, an­other ques­tion arises: Do these ir­re­spon­si­ble mo­nop­oly com­pa­nies de­serve to sur­vive?

For sure, there are other ways PG&E, for one ex­am­ple, could raise what­ever money it needs to pay off up­com­ing neg­li­gence judg­ments. Here’s one: sell off its nat­u­ral gas di­vi­sion and some of its elec­tric as­sets.

This could pro­duce many bil­lions of dol­lars, ex­act amounts de­pend­ing on how many as­sets are sold.

AB 1054 con­tem­plates none of that. It would keep the same com­pa­nies that dam­aged thou­sands of lives in busi­ness. And New­som asked that his

Wild­fire Fund plan be rushed through in a mat­ter of a few weeks, urg­ing pas­sage by July 12.

“It’s a mas­sive hi­jack­ing of the state of Cal­i­for­nia,” says Michael Aguirre, for­mer city at­tor­ney of San Diego.

New­som’s ra­tio­nale: “Fi­nan­cially un­sta­ble elec­tri­cal util­i­ties will put wild­fire vic­tims in jeop­ardy and cause Cal­i­for­nia fam­i­lies to see their elec­tri­cal bills sky­rocket,” he said, par­rot­ing the util­ity line. No won­der PG&E stock rose sharply after re­lease of his plan.

But would there be so much as a glitch if War­ren Buf­fett’s Ore­gon-based Port­land Gen­eral Elec­tric took over gas oper­a­tions in North­ern Cal­i­for­nia? Even the com­pany ini­tials would be the same. And what if the state’s pub­licly-owned Com­mu­nity Choice Ag­gre­ga­tion elec­tric out­fits bought up PG&E dams and power lines? Why would that cause ser­vice prob­lems?

Mean­while, New­som clev­erly de­vised his plan so cus­tomers res­cu­ing the un­de­serv­ing util­i­ties would barely no­tice their new pay­ments. He would con­tinue a cur­rent $30 per year fee that was about to ex­pire. Bills wouldn’t change un­til after the next huge fire piles on even more claims. Busi­ness as usual would con­tinue at com­pa­nies that spent many years mis­man­ag­ing safety oper­a­tions.

The gov­er­nor also wants util­i­ties to de­velop safety plans to be OK’d by the state Pub­lic Util­i­ties Com­mis­sion. Never mind the PUC’s long his­tory of kow­tow­ing to util­i­ties, fa­vor­ing them over their cus­tomers/ratepay­ers.

How could con­sumers be sure the new safety plans would be worth the pa­per they’re printed on? This is the same PUC that has long ducked its own safety re­spon­si­bil­i­ties by hir­ing far too few in­spec­tors to check all power and gas lines.

So New­som’s fund can only be de­scribed with the one word he badly wants to avoid: bailout.

Email Thomas Elias at [email protected]

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