Legislation proposed to let utility pass on costs.

Lawmakers may allow utility to pass on its costs

With one week left to pass bills, California lawmakers on Friday proposed wildfire legislation that could let Pacific Gas and Electric Co. pass on to its customers some of the costs of settling lawsuits from last year’s Wine Country fires.

Lawmakers issued a twopage outline of legislation intended to help prevent wildfires, respond to those that do happen and help electric utilities deal with the costs when their equipment is responsible for sparking the flames. State fire investigators have blamed PG&E’s power lines for starting at least 16 of the fires that erupted across Northern California in October, and estimates of the company’s potential liability in lawsuits range as high as $17 billion.

For months, the utilities had pushed politicians to change the state’s liability rules, which hold the companies liable for any financial losses from fires that their equipment started. But a conference committee set up by Gov. Jerry Brown abandoned that idea last week, saying it is too complex and contentious to resolve by the end of the legislative session next week.

The brief outline issued Friday by the committee, however, would let utilities issue bonds to cover costs arising from fires, with customers paying off those bonds over time through their monthly bills. The outline does not specify which costs would be covered and does not mention lawsuits.

But a bill introduced in July by Assemblyman Bill Quirk, D-Hayward, whose son works at PG&E, specifically called for using such bonds to help the company pay lawsuit settlements from last fall’s fires. (That bill has stalled.) And at a hearing of the conference committee Friday, some speakers urged committee members to ensure that the legislation help utilities deal with the liability they face from last year.

Scott Wetch, a lobbyist for the International Brotherhood of Electrical Workers, said that if the final language produced by the committee next week does not specifically address PG&E’s liability from 2017, credit agencies would downgrade the utility’s rating to junk status. That, in turn, would force the company to put up as much as $1 billion more in collateral on its power purchase agreements with power plant operators, he said.

“It’ll be challenging to keep the doors open and keep California safe going forward,” Wetch told the committee. “That’s why the devil’s in the details.”

Representatives of utility customers, however, pushed back.

“We urge the conference committee to reject any provision that would give PG&E and other utilities a bailout,” said Becky Warren, a spokesperson for the Ratepayer Protection Network, a coalition of consumer, business and agriculture groups.

“Any provision that makes ratepayers the insurance of last resort while PG&E shareholders pay nothing and reap the financial benefits needs to be rejected by the Legislature,” Warren said, in a press release.

A PG&E spokesman said the company would review the committee’s legislative language once it’s drafted.

Committee members said they understand the need to strike a balance between costs borne by utility ratepayers and shareholders.

“What we want to do is have a proposal that makes sure (utilities) don’t go belly up, and the ratepayers are protected at the same time,” said Assemblyman Chad Mayes, R-Yucca Valley (San Bernardino County). “I haven’t heard anyone up here talk about bailing out PG&E.”

Other elements of the outline include imposing new requirements for utility companies to prepare comprehensive wildfire prevention plans that will be reviewed by the California Department of Forestry and Fire Protection, removing drought-killed trees from the state’s forests, and tracking greenhouse gas emissions from wildfires.

Committee member Sen. Hannah-Beth Jackson, DSanta Barbara, tried to assure environmentalist that the focus on tree removal would not turn into a license for indiscriminate logging.

“We recognize that clearcutting is not the answer,” she said at the hearing. “We don’t want to blast roads through every nook and cranny.”