Critics on Wednesday blasted a proposal circulated by Gov. Jerry Brown that could change the legal framework for determining whether utilities or their customers pay for future potential wildfire liabilities, calling the governor’s plan a measure that would shield PG&E from wildfire costs and create a bailout for a utility that’s already a convicted felon.
The governor this week proposed a plan that could dramatically ease the future potential wildfire-related financial burdens on large utilities such as PG&E by potentially shoveling more costs onto ratepayers’ shoulders. Proposals by the governor and two lawmakers have drawn intense scrutiny and skepticism in the wake of fatal infernos last October that scorched the North Bay Wine Country and adjacent region.
“PG&E has a long history of causing wildfires, creating explosions and poisoning communities,” Noreen Evans, a former state senator from Northern California, said Wednesday. “PG&E was on criminal probation at the time of the wildfires. I can’t believe that the governor’s plan is to let PG&E off the hook and make ratepayers liable for the wildfires.” Evans was in the state Legislature from 2004 to 2014.
Fueled by optimism that wildfire-related political support for power companies could protect profits for PG&E and other utilities in California, Wall Street traders sent PG&E shares 1.2 percent higher Wednesday to close at $42.99.
San Francisco-based PG&E has stumbled in recent years with problems involving its equipment and maintenance efforts, some with lethal consequences.
PG&E was deemed to have caused a 2010 fatal gas explosion that killed eight people in San Bruno. In 2016, PG&E was found guilty in a federal trial of felonies it committed before and after the San Bruno explosion, a decision that branded PG&E as a convicted criminal.
More recently, state fire investigators, in separate findings, determined that PG&E bore a measure of responsibility in 16 of the infernos last fall. In addition, the Cal Fire investigators believe PG&E broke the law in 11 of those instances.
“This ain’t rocket science,” said Ken Hale, a retired battalion chief with Cal Fire. “Utility companies have known for decades what it takes to maintain a safe electrical grid and not cause fires. Trees need to be trimmed. Hazardous branches need to be removed. But utilities have decided it’s more profitable to cut corners rather than to invest in the safety of the residents of this state.”
PG&E, in an effort led by Chief Executive Officer Geisha Williams, is attempting to influence lawmakers to pass multiple bills to ease its financial exposure in case of wildfires.
In presenting his proposal to key state lawmakers this week, however, Gov. Brown pointed out that his plan only seeks changes to determining liability for future wildfires. He wrote, “Nothing in this proposal changes any liability for the 2017 wildfires.”
PG&E spokeswoman Lynsey Paulo said this week, “We look forward to reviewing the Governor’s statement and the upcoming work of the joint conference committee.” The company said Wednesday it was still studying the proposed legislation.
Wednesday, the conference committee began to craft a plan to address potentially conflicting goals of forest management, the safety of residents and the utility liabilities and responsibilities. SB 901 will be the vehicle to steer solutions through the Legislature.
“My community will never be the same. People are dying,” said Assemblyman Jim Wood, whose legislative district includes parts of Sonoma County and all of Del Norte, Trinity, Humboldt and Mendocino counties. “My top priority is how will this legislation affect the survivors, not only in my district, but everyone affected by these wildfires.”
Gov. Brown’s proposed legislation, however, would deliver a victory for PG&E and other utilities by shifting to ratepayers the future cost burden of strict liabilities that power companies now face under a legal theory known as inverse condemnation. That legal approach currently holds utilities and shareholders liable if their equipment was a factor in causing a wildfire or other disaster, even if the utility properly conducted maintenance and facilities upgrades.
“The governor’s proposal is a non-starter,” Patrick McCallum, co-chair of Up From the Ashes, a coalition of North Bay wildfire victims, said Wednesday.
Although the governor’s plan won’t erase PG&E liability for past fires, a separate measure, AB 33, would use state-backed bonds to finance, up front, billions of dollars in costs for the wildfires so victims could be paid rapidly. PG&E ratepayers would bankroll the bond repayment.
The third bill, SB 1088, would allow PG&E and other power giants to simply be “substantially compliant” with fire-safety plans, regarding equipment maintenance and vegetation clearance.
PG&E also has warned investors it faces bankruptcy if its liability is too severe.
“PG&E threatening bankruptcy is nothing new,” Mindy Spatt, a spokeswoman for The Utility Reform Network, a consumer group, told the conference committee. “PG&E always threatens bankruptcy every time they have to face their financial responsibilities.”
When confronted with massive penalties linked to the San Bruno disaster, PG&E warned it could go under. Eventually state regulators imposed a $1.6 billion penalty for the gas explosion. Despite its warnings, PG&E didn’t go bankrupt.
Now, the utility is blaming climate change as a factor in the North Bay fires and other blazes.
“PG&E is using climate change as a bogeyman to scare lawmakers, clearly forgetting that climate change doesn’t start a fire,” Hill said. “A spark ignites a fire. And so far, sparks produced by PG&E are much of what caused the North Bay wildfires.”