California Gov. Gavin Newsom signed into a law a bill that will create a compensation fund for future victims of wildfires.
Newsom was joined by Assembly member Chris Holden, D-Pasadena, who introduced Assembly Bill 1054, as well as the heads of Cal Fire and Cal Oes.
“I think we have a lot to be proud of, and I think we have a lot to be proud of in this legislation,” Newsom said while calling it a first step in the state’s work to prevent catastrophic wildfires.
“This is one phase in the process,” he said. “We will be doing more in August on insurance, on home hardening. We have a lot of work to do over the course of many, many years.”
Here are six things to know about the bill:
1) Law creates a multibillion dollar fund
It creates a fund of up to $21 billion for future wildfire victims.
Ratepayers will contribute half of that money — about $10.5 billion — in the form of a $2.50 fee that was added onto monthly bills after the 2001 energy crisis. It was set expire next year, but it is now extended for another 15 years.
The other half will come from the utilities.
Assembly member Marc Levine, D-San Rafael, opposed the bill, in part, because of the cost required of customers.
“I don’t feel good about the ratepayers essentially being on the hook for a lot of those future liabilities,” he said. “That’s a bit of poison pill for me.”
2) Who benefits?
The fund benefits the victims of future wildfires.
It won’t benefit victims of the Camp Fire, the state’s deadliest and most destructive wildfire.
3) Law requires safety improvements
The state’s three biggest utilities, including PG&E, will have to spend $5 billion on improving their infrastructure.
Utilities won’t be able to profit from those expenses.
“They should be doing it regardless, and this should all be coming from shareholders,” Levine said.
4) PG&E faces a bankruptcy mandate
PG&E faces a one-year deadline to make it out of bankruptcy and also ensure settlements are reached with victims of the 2017 and 2018 wildfires.
The bankruptcy plan must raise rates for customers.
5) Advocacy group supports the law
TURN, The Utility Reform Network, an advocate for ratepayers, supported the measure.
“TURN supports AB0154 because it puts billions of dollars of shareholder money on the table,” Executive Director Mark Toney said. “There is nothing that protects ratepayers more than having shareholder money.”
However, Toney said he still has his concerns moving forward.
“We don’t like the fact that the standards for prudence for whether a utility is found at fault for causing a fire has actually been reduced,” he said. “We don’t like the fact that some of the powers of the (California Public Utilities Commission) are being restricted, but we had to look at the whole package. And as a whole package, this is the best protection of any proposal that I have seen when it comes to protecting ratepayers’ pocketbooks.”
6) Tight deadline to get the bill passed
The Legislature approved the bill just six days after the final version was published, leading some lawmakers to criticize the rushed process.
Newsom dismissed that criticism. “We’re capable as human beings of doing great things,” he said.