Cal­i­for­nia util­i­ties seek wild­fire li­a­bil­ity pro­tec­tion

The State (Sunday) - - News - BY IVAN PENN

As Cal­i­for­nia’s deadliest wild­fire was con­sum­ing the town of Par­adise in Novem­ber, some of the state’s top power-com­pany of­fi­cials and a dozen leg­is­la­tors were at an an­nual re­treat at the Fair­mont Kea Lani re­sort on Maui. In the course of four days, they dis­cussed wild­fires – and how much re­spon­si­bil­ity the util­i­ties de­serve for the dev­as­ta­tion, if any.

It is an is­sue of in­creas­ing ur­gency as more fires are traced to equip­ment owned by Cal­i­for­nia’s in­vestor-owned util­i­ties. The largest, Pa­cific Gas and Elec­tric, could ul­ti­mately have to pay home­own­ers and oth­ers an es­ti­mated $30 bil­lion for caus­ing fires over the last two years. The most dev­as­tat­ing of those, the Camp Fire, de­stroyed thou­sands of homes in Par­adise and killed at least 86 peo­ple.

Re­al­iz­ing that their po­ten­tial fire li­a­bil­ity is large enough to bank­rupt them, the util­ity com­pa­nies are spend­ing tens of mil­lions of dol­lars on lob­by­ing and cam­paign con­tri­bu­tions. Their goal: a Cal­i­for­nia law that would al­low them to pass on the cost of wild­fires to their cus­tomers in the form of higher elec­tric­ity rates. Af­ter an ear­lier lob­by­ing push, leg­is­la­tors have al­ready voted to pro­tect the com­pa­nies from hav­ing to bear the cost of 2017 fires, and util­i­ties are seek­ing the same for 2018.

The util­ity com­pa­nies ac­knowl­edge that they may bear some re­spon­si­bil­ity but say not all of it, be­cause cli­mate change and de­vel­op­ment in re­mote ar­eas have made wild­fires more de­struc­tive. In ad­di­tion, they ar­gue that elec­tric­ity rates would go up re­gard­less of whether the state pro­tected them be­cause in­vestors and banks could grow wary of lend­ing to Cal­i­for­nia’s en­ergy sec­tor.

But pub­lic in­ter­est groups say the util­i­ties are ef­fec­tively seek­ing a bailout for mis­takes made by well-com­pen­sated ex­ec­u­tives. The util­i­ties have been fre­quently crit­i­cized, for ex­am­ple, for not trim­ming trees along power lines. Some pol­icy ex­perts and law­mak­ers say it might be bet­ter to break up PG&E, re­place its board and man­age­ment or con­vert it into a pub­licly owned util­ity.

Peo­ple on both sides fear that the state, which prides it­self on be­ing a leader in the fight against cli­mate change, could be on the cusp of an en­ergy cri­sis – its sec­ond in less than two decades. In 2000 and 2001, Cal­i­for­nia was roiled by black­outs, soar­ing elec­tric­ity rates and the bank­ruptcy of PG&E.

“There clearly is a great deal of dis­rup­tion that would oc­cur,” said Assem­bly­man Chris Holden, chair­man of the Util­i­ties and En­ergy Com­mit­tee. He was re­fer­ring to the pos­si­bil­ity of a sec­ond bank­ruptcy of PG&E, which serves 16 mil­lion peo­ple in cen­tral and North­ern Cal­i­for­nia.

Just two months be­fore the Camp Fire, PG&E seemed to have solved its most press­ing prob­lem: pro­tect­ing its share­hold­ers from foot­ing the bill for the 2017 wild­fires. On the typ­i­cal bill of $100 a month, the com­pany es­ti­mates, a cus­tomer would pay an ad­di­tional $5 for ev­ery $1 bil­lion the util­ity bor­rowed to cover dam­ages.

Con­sumer groups say the ef­forts to pro­tect util­i­ties are par­tic­u­larly galling be­cause Cal­i­for­ni­ans al­ready pay more for power than peo­ple in other Western states. The state’s res­i­den­tial elec­tric­ity prices are be­tween 19 per­cent and 40 per­cent higher than in neigh­bor­ing Ari­zona, Ne­vada and Ore­gon.

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