- California lawmakers will consider changes to the state's policies regarding wildfires and utility liability, following a devastating fire season that has left Pacific Gas & Electric raising the possibility of bankruptcy.
- California courts have concluded that utilities must pay all damage costs if utility equipment was involved in a fire, whether the utility was negligent or not.
- Last month, PG&E announced it will take a $2.5 billion pre-tax charge related to deadly wildfires in Northern California last year — and that is before tallying potential government penalties or fines, or the impacts of seven other fires where PG&E may also be found liable.
California's wildfires are worsening and the state expects the risk to continue. Legislators and Gov. Jerry Brown are working on response and prevention proposals, and plan to review insurance and liability policies.
Investor-owned utilities in California have a unique kind of liability, which can leave them on the hook for damages even if they were not at fault. With PG&E raising the potential of bankruptcy, the state is considering changes.
Brown, along with bipartisan leaders in the Senate and Assembly, issued a joint statement Monday committing to "strengthen disaster preparedness and set forth appropriate policies to respond to the increasing wildfire danger."
"Wildfires and extreme weather are more destructive than ever and that's why we must take decisive action to protect the lives and property of the people of California," they wrote.
The group announced legislation to address preparedness and other policies, and sent Senate Bill 901 to a newly formed conference committee where it can be amended. The measure would require utilities to update wildfire prevention and mitigation plans. Importantly, any changes to liability policy will not impact fires that have already occurred.
The committee will consider new rules and policy changes, including improved fire prevention activities utilities can undertake, which could include vegetation removal, infrastructure maintenance, utility equipment inspections and temporarily shutting off power during "extreme weather."
Other issues include possible changes to the allocation of wildfire prevention and response costs "in a manner that protects ratepayers," the leaders wrote. The changes are necessary "in light of changing climate and the increased severity and frequency of weather events," they said.
Also signing onto the statement were: Senate President pro Tempore Toni Atkins, Assembly Speaker Anthony Rendon, Senate Republican Leader Patricia Bates and Assembly Republican Leader Brian Dahle.
Last month, California's state fire management agency said electric equipment owned by PG&E caused 12 wildfires that killed 18 people and burned hundreds of square miles. In announcing it would take a pre-tax charge related to the fires, the company said the state's laws were not helping to achieve its clean energy goals.
"Liability regardless of negligence undermines the financial health of the state's utilities, discourages investment in California and has the potential to materially impact the ability of utilities to access the capital markets to fund utility operations and California’s bold clean energy vision," PG&E CEO and President Geisha Williams said in a statement.