CA Leaders Poised to Act on Utility Wildfire Costs

California’s political leadership announced March 13 their collaboration on developing measures that lessen the impacts of devastating fires, mudslides and other climate driven natural disasters. That includes pushing expected legislation to allow utilities to recover all of their wildfire costs from ratepayers.

“It is critical we take strong and comprehensive action to protect all Californians from the threat of natural disasters and climate change,” Gov. Jerry Brown, Senate President pro Tempore Kevin de León, Assembly Speaker Anthony Rendon, Senate Republican Leader Patricia Bates, Assembly Republican Leader Brian Dahle and Senate President pro Tempore-designee Toni Atkins said in a joint statement.

The Tuesday announcement notes that the politicians are to push for measures that change the liability regulations “for utility services in light of changing climate and the increased severity and frequency of weather events.”

The California Public Utilities Commission last year denied San Diego Gas & Electric recovery of $379 million of its claimed costs from 2007 wildfires sparked by power equipment. The regulators concluded SDG&E did not act as a prudent manager.

Subsequently, massive fires in Northern California resulted in potentially huge liability for Pacific Gas & Electric. Underlying it is the precedent set by the CPUC’s denial of full recovery to SDG&E and subsequent credit rating downgrades.

Standard & Poor’s downgraded the credit rating of PG&E on Feb. 22 to BBB+ from A-. That came after PG&E suspended stock dividends in response to potential exposure related to the Northern California fires. Standard & Poor’s then placed on its “credit watch with negative implications” the 550 MW Topaz Solar Farm in San Luis Obispo County. The rating company did so because Topaz, which is owned by Berkshire Hathaway, sells all its power output to PG&E under a 25-year power purchase agreement.

Those actions grabbed the attention of state legislators , who fretted about possible utility bankruptcies and pledged to protect them. The lawmakers also are highly critical of the CPUC for not approving the full recovery from ratepayers of the utilities’ costs when wildfires are sparked by power lines.

The quintet of political leaders also hope to develop legislation that ameliorates a range of extreme weather threats. Steps would include better vegetation management and forest protection to reduce wildfires, assessing the availability of insurance in high-risk wildfire areas, and bolstering the emergency response systems, including 911.

According to the leaders, their collaboration is to build on the work of “the Legislature and administration – alongside the federal government, private sector, non-governmental organizations, community members and other stakeholders – to improve fire threat evaluation, hazard mitigation, carbon storage capacity and tree mortality and forest management practices.” — Elizabeth McCarthy

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CA Leaders Poised to Act on Utility Wildfire Costs

William J. Kelly

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