Utility Wildfire Cost Recovery Bill Blasted for Overreach

Private utility wildfire liability is a huge concern at the state capitol.

During an April 17 hearing, legislators grappled with how to protect utilities from overwhelming liability in the face of impacts to ratepayers, third-party distributed energy and the growing number of people living near the risky wildland-urban interface.

“We here in the Senate know there are some complex issues” with liability insurance and impacts on ratepayers and affected communities, said Sen. Ben Hueso (D-San Diego), who chairs the Senate Energy, Utilities & Communications Committee. “We are taking these matters very seriously."

“We anticipate continued discussion and that may or may not be addressed” in the current legislation before the committee, he added.

Hueso’s committee passed controversial legislation that would contain utility wildfire liability when the companies are found in compliance with new safety plans.

SB 1088 by Sen. Bill Dodd (D-Napa) passed only when the author agreed to back off a provision that would have prohibited non-utility owned distributed energy development and promised his measure would not interfere with the court’s civil liability process. The provisions are to be reworked in the next draft of the bill, which will remain subject to subsequent review by Hueso's committee.

As written when it was brought to the committee, the bill would limit the liability Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric face from damage caused by fires and other natural disasters after the California Public Utilities Commission finds them in “substantial compliance” with utility safety and reliability plans that follow protocols to be developed by the Office of Emergency Services.

The measure as presented also sought to prohibit third-party distributed generation in the name of safety.

“I’m not willing to throw the distributed energy industry under the bus,” said Sen. Scott Wiener (D-San Francisco).

“This bill would severely hamper the deployment of distributed energy resources and block competition and keep consumers from having energy choices,” added Bernadette Chiaro, California Solar & Storage Association executive director. “It is an over reach and a power grab.”

Bill proponents, including utility labor and trade unions, insisted the bill only allocated liability to those responsible for parts of the grid.

The CPUC would have one year to approve the utility safety plans.

Regulators also would be required to approve utility safety spending when deemed in substantial compliance with the company safety blueprints.

According to Dodd, the bill would result in utilities giving “greater attention and care to safety and reliability.” The plans would be developed and designed following public input on protocols the CPUC develops with local agencies and emergency planners. He added the utilities also would be prohibited from diverting safety and resiliency funding.

Mark Toney, The Utility Reform Network executive director, blasted the bill for potentially saddling ratepayers with billions of dollars of new costs.

“Stand up for ratepayers and vote no on automatic approval” of cost recovery, Toney insisted. He said funding for utility safety work should be tied to “measurable increases” in safety and resiliency.

Another controversial provision in SB 1088 would essentially create a separate safety review at the CPUC.

Recently, the CPUC included greater scrutiny of utility safety risk management and mitigation as part of its general rate case proceedings. The CPUC Safety & Enforcement Division and intervenors are to evaluate how well the utilities are incorporating risk mitigation into their rate case spending proposals.

SB 1088 would create a consolidated proceeding “to address new all-encompassing safety, reliability and resiliency plans” outside the general rate case.

“Safety gets little attention in general rate cases,” according to Mark Joseph, representing The Coalition of California Utility Employees.

Two senators took issue with the bill for interfering with the legal process for determining utility liability for sparking fires or for other negligence.

“When it comes to negligence, the CPUC is not best arbiter of what is reasonable,” said Sen. Henry Stern (D-Canoga Park). He told Dodd he could only support the bill if doesn’t civil proceedings.

The bill is supported by the three investor-owned utilities.

It passed on a 9-1 vote. It is to be heard next by the Governmental Organization Committee.

The committee also approved Dodd’s SB 901. The bill calls for utility fire safety plans to include protocols for de-energizing power lines and deactivating specific devices during wind storms. The devices, known as reclosers, send pulses of electricity through power lines that have tripped off.

SB 901 seeks to balance fire danger mitigation with problems associated with power shutoffs, including for example, access to water pumped from wells.

The legislation is supported by the three private utilities, utility workers and the Office of Ratepayer Advocates.

“It gives utilities the flexibility to make safety decisions,” said Kent Kauss, Pacific Gas & Electric lobbyist. “It is not something we do lightly.”

It faced no opposition, passing 8-0. It is to be heard next in the Senate Appropriations Committee.

The committee passed two other wildfire liability bills.

SB 819 by Sen. Jerry Hill (D- San Mateo) codifies a CPUC rule that prohibits utilities from recovering wildfire costs arising from imprudent and unreasonable action. “This is a vote only for what is right and fair,” Hill said. It does not address the controversial issues raised by climate change or strict liability for utilities, he noted.

SB 1169 by Sen. Joel Anderson (R-Redondo Beach), approved on a 10-0 vote, would direct 10 percent of fines utilities pay to the state for sparking wildfires in violation of CPUC rules to harmed communities. The bill is to be heard next in the Appropriations Committee. — Elizabeth McCarthy

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Utility Wildfire Cost Recovery Bill Blasted for Overreach

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