California residents who live in regions hardest hit by the state’s 2017 wildfires are growing concerned that Gov. Jerry Brown and state lawmakers are caving in to pressure from electric utilities that are lobbying to get the state to change its liability laws.
Residents fear electric utilities, whose equipment and infrastructure caused many of the fires last year, will get a free pass on paying for the wildfire damage. On Tuesday, Brown released a proposal that would ease the potential wildfire-related financial burdens on the state’s investor-owned electric utilities by making customers, instead of the company’s investors, pay for a large portion of the costs.
Brown sent the draft legislation to top legislative leaders and the co-chairs of a committee tasked with coming up with a response to the deadly October 2017 wildfires. The governor’s proposal also applies to fires sparked after January 1, 2018. It would allow judges to determine “whether the utility acted reasonably” in awarding damages in cases in which electrical equipment is a “substantial cause of the fire.”
In a separate letter to the leaders of the Conference Committee on Wildfire Preparedness and Response, Brown told the legislators that current state law could leave the state’s electric utility sector “in a state of weakness at a time when it should be making even greater investments in safety” because it would weigh them down with too many financial liabilities.
The debate over financial liability for previous wildfires is occurring at a time when California’s 2018 wildfire season is nearing its peak. Firefighters, for example, are battling a blaze that started on July 13 and now covers more than 36,000 acres near the state’s Yosemite Valley. Since the fire began, it has claimed one life and injured six other people.
The fire season now runs almost year-round in California and other western states.
In a Wednesday conference call organized by a group called Stop the Utility Bailout, local leaders criticized efforts to try to protect Pacific Gas and Electric (PG&E) and other utilities from liability for the wildfires.
“PG&E has a long history of causing wildfires, creating explosions and poisoning communities,” Noreen Evans, a former state senator from Northern California, said on the conference call. “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.
In an email to ThinkProgress, Stop the Utility Bailout described itself as a coalition of homeowners’ insurance companies “who are committed to upholding liability laws that protect wildfire survivors, homeowners, communities, and businesses and holding utilities accountable for the fires they cause.”
California state fire authorities concluded that electric power infrastructure owned by PG&E — the largest electric utility company in the state — caused 12 wildfires last October. PG&E is facing dozens of lawsuits over the Northern California fires that altogether killed 44 people and caused an estimated $10 billion in damages.
And in January 2017, PG&E was sentenced to five years of probation after having been found guilty of violations of the Natural Gas Pipeline Safety Act of 1968 and for misleading National Transportation Safety Board investigators who were looking into the natural gas pipeline disaster in San Bruno, California on September 9, 2010 that killed eight people and injured 58.
PG&E was also unhappy with Brown’s proposal because the company believes it does not go far enough in protecting the company from financial ruin.
“The governor’s proposal is constructive, but it’s insufficient. It reflects just one element of a more comprehensive set of solutions that the legislature needs to address in the coming weeks,” PG&E said in a statement emailed to ThinkProgress on Thursday.
California utilities want to change the law and make homeowners and local government pay for #Californiawildfires they cause! Their proposal would shield Wall Street investors who own the utilities from financial responsibility, even though they make BILLIONS of dollars in profit pic.twitter.com/DfTGc7gHXB
— Stop The Utility Bailout (@StopUtilBailout) July 26, 2018
Four of California’s five most destructive wildfires have occurred in the past 15 years, with the wildfires in 2017 the most destructive in state history. “Climate change will make these wildfires even more destructive and costly,” Brown said in the letter dated July 24.
The governor emphasized that nothing in his proposed legislation would change liability for the 2017 wildfires. But under his proposal, courts would have to balance “the public benefit of the electrical infrastructure” with the damage caused by a wildfire and also determine if “the utility acted reasonably.”
Utilities in California face liability under what’s known as inverse condemnation as well as for negligence claims for wildfire and other incidents caused by power lines or other utility equipment. There are state regulations requiring strict vegetation management practices by utilities, and they include standards for keeping vegetation clear of power lines.
Under current California law, shareholders, and owners of the electric utilities are responsible for paying the cost of damage resulting from wildfires caused by their electric power lines or equipment.
Patrick McCallum, president of a lobbying firm in Sacramento, California that is representing a coalition of wine country fire victims called Up From the Ashes, criticized the governor’s proposed legislation a “non-starter.”
“It sacrifices the rights of property owners to protect the utilities… from any responsibility for future damages,” McCallum said on the conference call. “And it does not adequately create a prevention standard so these horrible disasters that we faced don’t happen again.”