California Today: A Bailout for the Power Company?

The legislative session is over for this year. But the shouting about at least one piece of legislation may not be.

After a succession of fierce California wildfires, lawmakers voted in the session’s final hours last week to approve Senate Bill 901, a measure aimed at protecting against future fires. But the legislation also protects Pacific Gas and Electric Company from liability for such fires, enabling it to pass the costs on to ratepayers.

Consumer advocates are calling it a bailout.

“The worst thing about it is when they’re negligent, when they have violated the rules, the ratepayers pay, not the shareholders,” said Mark Toney, executive director of the Utility Reform Network, which advocates for consumers before the California Public Utilities Commission.

The Department of Forestry and Fire Protection, known as Cal Fire, determined that power lines and poles and other equipment owned by Pacific Gas and Electric had been responsible for a dozen fires in Northern California last October that ravaged the wine country.

Under the legislation passed last week, if the Public Utilities Commission determines that it is reasonable to do so, the costs arising from the utility’s liability — estimated at $17 billion for the 2017 fires, more than eight times its profit that year — could be borne by its customers. Without such protection, some said it could potentially face bankruptcy.

For its part, Pacific Gas and Electric, the state’s largest utility, said the bill helped respond to “the growing threat of climate-driven wildfires.”

“Senate Bill 901 is a common-sense solution that puts the needs of wildfire victims first, better equips California to prevent and respond to wildfires, protects electric customers and preserves progress toward California’s clean-energy goals,” the utility stated.

The bill provides $1 billion over five years for clearing brush around power lines and other fire-prevention efforts. It also imposes tougher penalties on utilities for violations.

“From the start of this year, my highest priority was and remains responding to past wildfires and preventing future tragedies,” said Senator Bill Dodd, the legislation’s sponsor, a Democrat whose district includes the Napa Valley. “My goals were simple: to stand up for constituents and ensure they recovered all they are entitled to for the damage they suffered, protect Californians from new wildfires and destruction, hold electric utilities accountable and protect the long-term interests of ratepayers.”