BILL ON GOVERNOR’S DESK COULD MAKE RATEPAYERS PAY FOR WILDFIRES CAUSED BY UTILITIES’ EQUIPMENT IN 2017 AND BEYOND

By Miriam Raftery

September 2, 2018 (Sacramento)—California ratepayers could be forced to pay for costs of the 2017 wildfires and some future firestorms caused by utilities’ equipment, if Senate Bill 901 currently on the Governor’s desk is signed into law. Consumers who wish to weigh in can call Governor Jerry Brown’s office at (916) 558-2840 or fax (916) 558-3160.

The language is in an omnibus bill that addresses many wildfire-related issues including wildfire prevention, response and recovery as well as funding for mutual aid, fuel reduction and forestry policies, wildfire mitigation plans by utilities and cost recovery by electricity utility corporations for wildfire-related damages.

All of East County’s legislators voted for the bill including Republicans Randy Voepel and Joel Anderson as well as Democrats Ben Hueso and Shirley Weber.

The bill authorizes the California Public Utilities Commission (CPUC) to apply a “reasonableness standard” in deciding whether to allow a utility corporation to recover through rate hikes costs for damages from wildfires caused by the utility’s equipment.

The measure would not allow utilities to charge ratepayers for fires before 2017, so would not inlcude the 2007 firestorrms, for which the CPUC denied SDG&E's request to charge ratepayers for its uninsured losses involving two fires that state investigators found were caused by the utility's equipment.

For future fires starting January 1, 2019 or later, the CPUC would be mandated to consider 12 factors in determining whether utilitise should be allowed or disallowed to charge ratepayers for utility equipment-caused fires.

For the 2017 wildfires, however,  the bill would not require the CPUC to consider those factors, but instead would require the CPUC to consider the utility’s financial status and determine the maximum that the company could pay without harming ratepayers – and to limit disallowance from the 2017 wildfires only to the threshold determined by this “stress test.”

The bill authorizes financing through bonds to “reduce the bill shock” by spreading ratepayers’ charges for utility-caused wildfires over a long time period.

The bill is opposed by The Utility Reform Network (TURN) representing ratepayers, as well as by the American Association of Retired Persons (AARP) California, the Sierra Club, California Manufacturers & Technology Association, California League of Food Producers and various other agricultural interest groups, among others.

According to the Legislative Analyst, “…the coalition of opponents expresses concerns about the impacts to ratepayers. Specifically, those opposed to this bill argue that this bill reduces existing protections by creating more opportunities for utilities to pass on costs to ratepayers for past and future mismanagement and negligence.”

Supporters include the California Fire Chiefs Association, League of California Cities, National Association of Mutual Insurance Companies, California Labor Federation and various business interests, among others.  Supporters claim the bill is needed to prevent bankruptcy of Pacific Gas & Electric Company over the 2017 firestorms, as well for other aspects of the bill such as helping victims of the wildfires with cost recovery, improving mutual aid and pre-positioning local fire resources, forestry management investment and requiring utilities to upgrade wildfire mitigation plans.

Those mitigation plans can include intentional power-shutoffs such as those that SDG&E has imposed in rural areas during high fire risk periods, much to the consternation of some residents left repeatedly without power for extended periods.

The bill was amended in conference committee to remove language voicing findings and intent regarding the role of climate change in California’s increasingly severe firestorms.

Read the bill analysis and view voting records here:  https://leginfo.legislature.ca.gov/faces/billAnalysisClient.xhtml?bill_id=201720180SB901