A major bill intended to rein in the increasingly dire wildfire risks faced by California’s investor-owned utilities easily cleared its first legislative hurdles on Monday as the state’s elected leaders raced to get new laws in place before power lines cause any more devastating blazes.
The Senate voted 31-7 in favor of the far-reaching legislation, AB1054, which would create a fund of at least $21 billion to cover future wildfire claims and usher in a series of changes to the way the state oversees the safety of its electric grid. Two Senate committees voted overwhelmingly in favor of advancing the bill earlier in the day.
The fast-tracked bill now heads to the Assembly, which is under pressure from Gov. Gavin Newsom’s administration and Wall Street to act before the end of the work week. If passed on a two-thirds vote, the legislation would become California’s most comprehensive response so far to the wildfire problems of Pacific Gas and Electric Co. and its two Southern California counterparts.
Aside from creating the wildfire fund, the bill also would mandate that the three major utilities make a total of $5 billion in safety investments — from which their shareholders cannot profit — and get the safety of their operations certified annually by the state. It also would change the standard regulators follow when deciding whether utilities can recover wildfire costs from their customers. A related bill would create an office within the Natural Resources Agency that focuses on energy infrastructure safety, advised by a panel of experts.
“It is clear we must rapidly adapt and respond to the effects of climate change and other causes driving these monster infernos,” said state Sen. Bill Dodd, D-Napa, on the Senate floor. “Too often, electric utilities are blamed for these devastations … No plan is perfect, but neither is (the) wildfire situation we face as Californians.”
The bill is intended to help avoid a repeat of the situation faced by PG&E, which filed for bankruptcy in January because of its massive wildfire liabilities. PG&E would not be able to access the wildfire fund unless the company resolves its current wildfire claims and exits bankruptcy protection by June 30 of next year.
One of the no votes came from Sen. Scott Wiener, D-San Francisco, partly because of recent amendments that he said would make it harder for local jurisdictions to create or expand municipal utilities.
San Francisco is considering buying the local power lines controlled by PG&E. Mayor London Breed joined the mayors of Oakland and San Jose in a letter opposing the amendments, which would give state regulators greater authority over any attempt by a local government to buy part of a utility.
Wiener said he was reluctant to oppose the bill because “there’s a lot of good in this legislation” and it “will have benefits for ratepayers.” Ultimately, however, he was compelled to vote against it in committee and on the Senate floor in large part because it “dramatically increases” the power of regulators over municipal utility expansion efforts, he said.
Newsom, whose office spearheaded the plan underlying the bill, had asked lawmakers to act by Friday — when the legislature is scheduled to break for summer recess. Southern California’s major investor-owned utilities could see their credit ratings downgraded to junk if legislation is not in place by then.
Some of the state’s most frequent utility critics of late have not opposed the bill or even actively backed the measure.
Supporters include Up From The Ashes, a wildfire victim advocacy group, and the California State Association of Counties, among many other organizations.
Mark Toney, executive director of The Utility Reform Network consumer group, said at the hearing that his organization reserves the right to demand changes to the bill later, but called it “the best proposal we have seen on the table.”
Only a handful of people spoke in opposition to the bill, including 2017 Santa Rosa wildfire victim Will Abrams, who, during a committee hearing, called it a “Christmas tree for utilities” with “too many ornaments on it” and warned of loopholes in the legislation that “utilities and their attorneys will drive trucks through.”
PG&E is neutral on the bill, while Southern California Edison supports it and San Diego Gas & Electric has no position, according to representatives of the companies.
Before the bill’s first hearing, about two dozen survivors of the 2017 and 2018 fires gathered on the steps of the Capitol to rally in support of the bill. They said that while AB1504 doesn’t directly help victims of past fires, it’s a crucial starting point and will give them leverage to negotiate a settlement with PG&E.
The bill came after months of policy work from state government officials and a special wildfire commission, but the specific legislative language was released less than two weeks ago.
Sen. John Moorlach, R-Costa Mesa (Orange County), lamented his colleagues’ rush to pass the legislation, saying he was “sorry the perceived immediacy is dictating the pace” of AB1054. Still, Moorlach indicated on the Senate floor, perhaps jokingly, that the bill’s swift progress had one upside— showing the state government can move quickly.
He ultimately voted yes.