California lawmakers may make it easier for utilities to reduce liability for wildfire damage as the state braces for more severe blazes in the face of climate change.
This comes after investor-owned utilities (IoUs) faced liability for damage caused by the state’s wildfires in 2017. (See California fires causing bankruptcy concerns for IOUs)
The changes would apply only to future fires, not the ones that swept across California’s wine country last year — the most devastating in state history.
But the debate comes as Pacific Gas & Electric Co. faces potentially billions of dollars in costs for those fires. The utility has called on the state to change a law it says holds it almost entirely responsible for wildfire damage even if it follows safety rules.
Gov. Jerry Brown and legislative leaders announced a special committee Monday to discuss financial responsibility for fires, as well as fire prevention and requiring utilities to develop more expansive wildfire preparedness plans.
Current law requires utilities to pay for property damage caused by their equipment, even if there’s no finding they were negligent in maintaining and operating it, under a doctrine known as “inverse condemnation.” Suggestions are that Brown and lawmakers are looking at scaling back that principle.
A bill the committee will work from says “current legal standards should be refined” to allow courts to determine liability when utilities “have acted reasonably in installing, maintaining, and operating their transmission systems.”
The October wildfires in Northern California killed 44 people, destroyed 8,800 structures and forced more than 100,000 people to evacuate. It was the largest group of wildfires in California’s recorded history.
The California Department of Forestry and Fire Protection reported in June that a dozen of the fires were started by PG&E power lines and utility poles.
The damage resulted in about $10 billion in insurance claims. Facing lawsuits, PG&E has sought to raise rates. Shifting liability away from utilities is opposed by insurance companies and local governments, which count on reimbursements from electric companies to recover costs related to wildfire damage.
“We urge this conference committee to focus on positive changes to increase resiliency and safety requirements while not shifting liability to victims and local government,” said a statement from the California State Association of Counties.
Current laws create incentives for utilities to take care of their equipment, the statement said. Insurance companies have warned that premiums would rise if utilities escape liability.
PG&E chief executive Geisha Williams called the current law “a flawed policy” last week when the utility announced the fire would cost it at least $2.5 billion and likely much more. She said climate change and extreme weather conditions are exacerbating the severity of California’s wildfires, creating a “new normal” that requires a comprehensive solution.
That’s a view shared by Brown and legislative leaders.
“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. Tackling this challenge requires all of us to roll up our sleeves and to work together,” they said in a joint statement.
PG&E spokesman James Noonan called the committee “a valuable first step.”
“We look forward to working with lawmakers to develop new solutions to these problems,” Noonan said.