California law would make customers pay the cost for wildfires caused by utilities

Gov. Jerry Brown is expected to sign the industry-friendly bill.

The Thomas wildfire burns in Carpinteria, California on December 11, 2017. CREDIT: Ronen Tivony/NurPhoto via Getty Images
The Thomas wildfire burns in Carpinteria, California on December 11, 2017. CREDIT: Ronen Tivony/NurPhoto via Getty Images

California lawmakers passed a bill late Friday that will make it easier for electric companies to recover wildfire costs from their customers, even if a utility’s equipment is found to have caused the fire.

The approved bill, S.B. 901, allows state utility regulators to decide whether a utility acted reasonably when its infrastructure causes a wildfire, considering factors such as high winds and other extreme weather conditions. If so, the California Public Utilities Commission (CPUC) could order that the costs be passed on to a utility’s customers instead of its shareholders.

Under current law, California’s electric utilities are liable for damages from wildfires caused by their equipment — even if they did nothing wrong.

The bill, which passed by a vote of 29 to 4 in the Senate and 45 to 10 in the Assembly, requires approval by Gov. Jerry Brown (D). The governor, who released his own proposal in July to ease the potential wildfire-related burden on utilities, is expected to sign the measure into lawl.


Consumer advocates complained that state lawmakers are more concerned about how wildfires could harm shareholders of utility companies like Pacific Gas and Electric (PG&E) than how the change in law would raise electricity prices for the company’s customers.

According to the Sacramento Bee, state Sen. Jerry Hill (D), who voted against the bill, told his fellow lawmakers on Friday that “the tragedy of our response is that it’s focused more on Wall Street profits and utility shareholders instead of what’s right for Californians.”

Hill represents an area of San Bruno, California, where a PG&E natural gas pipeline explosion killed eight people in 2010. “Under this bill, the ratepayers will pay for a company’s neglect,” he said.


Last year, a federal judge sentenced PG&E for crimes linked to the San Bruno pipeline explosion, imposing the maximum fine of $3 million and branding the utility, according to the San Jose Mercury News, as a “convicted felon.”

With a couple months left in the traditional wildfire season, the state has already seen devastating fires in 2018. Extreme heat and years of ongoing drought — both linked to climate change — are increasing wildfire risk throughout California and making them a year-round threat.

Efforts to lessen the financial responsibility of the state’s electric utility companies began last year, after a wildfire in Northern California’s wine country left PG&E with up to $15 billion in liability.

The state’s electric utilities argued that if the state’s fire liability rules didn’t change, the destructive wildfires of 2017 could land a devastating blow to their finances, leaving the companies on the hook for billions of dollars in damages.

In S.B. 901, any costs that the CPUC determines PG&E shareholders cannot afford from the 2017 wildfire season could be covered by bonds that are paid by the utility’s customers over time. All of California’s utility companies would be allowed to seek similar bonds to finance recovery costs for future fires under certain conditions.

The bill also designates $1 billion to the removal of dead trees and brush that fuel wildfires.

In a June report, California Department of Forestry and Fire Protection (Cal Fire) blamed equipment owned and operated by PG&E for igniting 12 wildfires that raged across Northern California in October 2017, destroying thousands of structures and killing 18 people. The utility was in violation of state code on eight of those fires, failing to clear brush around its lines and properly maintain its power equipment, according to Cal Fire.


PG&E welcomed passage of the bill, noting in a statement that it helps the state address the “growing threat of climate-driven wildfires.”