Gov. Newsom seeks $10.5B from utility ratepayers

Collected money would go to new wildfire fund to help power companies pay for fire damages

SACRAMENTO — Gov. Gavin Newsom is asking the California Legislature to extend an existing charge on utility customers’ bills in hopes of generating $10.5 billion for a new wildfire fund, one that power companies could use to pay for fire damage — but only if they meet the state’s safety standards.

Under pressure from Wall Street analysts to take action, the governor disclosed a broad outline of a plan Friday that seeks to shore up the finances of the state’s utilities amid rising costs for wildfires.

The proposal stops short of meeting investor demands that the state change its doctrine of inverse condemnation, which holds utilities responsible for wildfire damage linked to their equipment.

But Newsom’s advisers said they were confident that a fund coupled with a new safety certification process will stabilize the industry’s finances, ensure that wildfire victims can recoup losses and reduce fire risks. They said the plan would create incentives for utilities to safely manage the thousands of miles of power lines and equipment that crisscross the state.

“Financially unstable electrical utilities will put wildfire victims in jeopardy and cause California families to see their electrical bills skyrocket,” Newsom said. “In the coming days, I will continue working with the Legislature to turn this framework into a package of bills that make the changes we need.”

The issue of wildfire liability has vexed the Legislature since state regulators, in an unprecedented 2017 case, blocked San Diego Gas & Electric from passing off costs to ratepayers that exceeded the company’s insurance coverage.

The pressure to take action mounted following the Camp Fire in November, which killed 85 people and reduced Butte County towns to ash. Pacific Gas & Electric subsequently filed for bankruptcy, citing as much as $30 billion in potential liability costs. That triggered concerns that Southern California Edison could similarly fold if lawmakers failed to lessen the financial exposure of utilities.

The Legislature established a commission that issued several recommendations last month. Newsom and his team of advisors have also spent months studying the issue and paid top law firms and investment analysts $6 million to help them develop a solution by July 12, a deadline he imposed on lawmakers to pass a bill. Credit rating agencies have threatened to downgrade Edison and SDG&E if the Legislature fails to approve legislation to significantly reduce the financial risk for utilities.

Under the governor’s proposal, the state would establish a new wildfire division within the California Public Utilities Commission to enforce safety standards, according to administration officials.