California Democrats scuttle wildfire utility fee plan, turn to Newsom in last-ditch effort

Facing heavy opposition, California lawmakers have scrapped a last-minute bill to extend fees for utility customers and plan to replace it with a more modest call for $500 million in emergency fire response and mitigation efforts.

The new proposal requires Gov. Gavin Newsom to waive a state law that prevents legislators from amending bills in the final hours before the Legislature adjourns for the year.

The decision to abandon Assembly Bill 1659 came just five days after lawmakers introduced the measure. The legislation’s reliance on a 10-year extension of fees on utility bills — at a cost of more than $3 billion to customers — to pay for wildfire mitigation and climate projects drew sharp criticism from ratepayer advocates and utilities.

The new plan, pushed by Democrats in the state Senate, would instead tap into proceeds from California’s cap-and-trade program — which requires companies to buy permits to release greenhouse gas emissions — as well as state general fund revenues and a 2018 bond measure. The money would be spent on a variety of efforts aimed at addressing wildfires and climate change, including cooling centers, back-up solar power, emergency shelters, warning and detection systems, hardening projects, forest health and workforce training.

“We’ve had 1.7 million acres that have already burned this year and we haven’t even gotten to the peak of wildfire season,” said state Sen. Ben Allen (D-Santa Monica), who is among the Democrats pushing the proposal. “Either we’re going to continue spending money to fight the fires and help communities rebuild and address the devastation after the fact, or we can try to act now to be more proactive.”

But Allen and other proponents would have to overcome major hurdles to pass the proposal with less than two days left in the legislative year.

Proposition 54, a 2016 voter-approved amendment to the California Constitution, requires a bill to be in print for 72 hours before the Legislature passes it. With lawmakers required to adjourn for the year Monday night, the new proposal would require Newsom to submit a statement to the Legislature saying it’s necessary to address a state of emergency.

If Newsom takes action, legislators plan to make the bill a majority-vote proposal tied to the state budget, an easier threshold to clear than the two-thirds vote that would have been required to pass AB 1659.

Newsom probably won’t intervene unless the Senate and Assembly reach an agreement to support the new proposal.

Senate President Pro Tem Toni Atkins (D-San Diego) said she was prepared to negotiate.

Atkins “is not taking a position on any specific proposal, but is willing and ready to engage to get something done in the next 36 hours,” her office said in a statement.

But Assembly Speaker Anthony Rendon (D-Lakewood) questioned whether the bill was necessary to address the state’s wildfire emergency.

“Given the governor’s office has not yet engaged with us on this proposal, I don’t believe it meets the bar for a waiver of the 72-hour rule,” Rendon said in a statement. “This rule is designed to provide transparency, and overturning it should be done sparingly. Wildfire prevention and climate change are important issues in California, and deserve thoughtful discussion to figure out potential funding proposals.”

Assemblyman Chris Holden (D-Pasadena), the chair of the Assembly utilities and energy committee, strongly objected to the use of ratepayer-raised funds for AB 1659. Through a staff member, Holden declined to comment on the replacement proposal because he said he had not been able to review the bill‘s language.

Other key members of the Assembly, including Richard Bloom (D-Santa Monica), who introduced AB 1659, and Jim Wood (D-Healdsburg), did not immediately respond to requests for comment.

A spokesman for Newsom declined to comment on the new proposal and whether he would waive the 72-hour rule.

The decision to pare back the original spending plan under AB 1659 comes after the bill faced fierce pushback from businesses and ratepayer advocates.

A coalition of business groups — including the California Chamber of Commerce, the California Farm Bureau Federation, the Western States Petroleum Assn. and other influential groups — sent a letter to the Senate last week opposing the bill for requiring customers of the state’s three largest investor-owned utilities to pay for projects unrelated to their electrical service.

The business groups wrote that “choosing to fund bits and pieces of the state’s overall wildfire response and non-utility programs and projects solely on the backs of California’s ratepayers at a time when businesses are closing, unemployment is skyrocketing, and our economy is faltering is not an appropriate solution.”

AB 1659 would have added 10 years to an existing utility fee, already extended last year by lawmakers to 2035 to pay for wildfire damages caused by utility equipment. The extension would have cost ratepayers 96 cents a month, or more than $3 billion over 10 years, for bonds used to pay for wildfire prevention work.

Newsom and the Legislature approved AB 1054 to establish the wildfire fund last summer amid pressure from Wall Street to reduce the utility industry’s liability for damage linked to their electrical poles and equipment. The law made it easier for utilities to avoid being on the hook for wildfire damages through a new safety certification process and created a $21-billion fund as an additional shield against losses from blazes linked to their equipment.

Pacific Gas & Electric and San Diego Gas & Electric have opposed this year’s proposal, AB 1659, saying their customers shouldn’t “shoulder the financial burden for activities and public projects that benefit the entire state.”

“AB 1659 would impose extra costs on IOU [investor-owned utility] customers, which would be viewed negatively by lenders, ratings agencies, and capital markets, further exacerbating the already challenged credit ratings of the state’s IOUs,” the utilities wrote in the Aug. 27 letter. “AB 1659 therefore threatens to undermine the collaborative progress made to restore the financial health of the state’s IOUs, while imposing an additional, unnecessary burden on IOU customers.”

The utilities are expected to remain neutral on the replacement proposal because it does not require an extension of the ratepayer fee.

Mark Toney, executive director of the Utility Reform Network, ripped AB 1659 in a legislative hearing last week, saying the bill broke a promise the state made last year when it said ratepayer costs for wildfires would be capped at $10.5 billion — the cost of the 15-year fee increase for the wildfire fund.

“AB 1659 is nothing short of a last-minute backroom deal to loot ratepayers,” Toney said.