California Senate Approves Proposal For Funds That Pay For Wildfire Damages

SACRAMENTO, Calif. (AP) — A California proposal aimed at stabilizing the state’s electric utilities and putting a renewed focus on safety in the face of devastating wildfires caused by utility equipment passed a key committee Monday, setting it up for a floor vote later this week.

Lawmakers and Gov. Gavin Newsom are rushing to pass a package of wildfire bills by Friday before lawmakers take a monthlong break and as ratings agencies consider whether to further downgrade the credit ratings of the state’s investor-owned utilities. California’s wildfire season has already begun.

The hearing in the Senate Energy, Utilities and Communications Committee on Monday underscored what lawmakers argue is the urgency of at least passing some piece of legislation to grapple with the effects of catastrophic wildfires on a key piece of the state’s infrastructure.

“It is not the proposal I would have done,” said Assemblyman Chad Mayes, a Republican from Yucca Valley, California, and an author of the bill.

But he argued the measure would provide much needed certainty.

“We must take necessary steps to make sure we have stable electric utilities,” said Assemblyman Chris Holden, a Democrat from Pasadena and another author of the bill.

The proposal approved by the committee creates a wildfire fund of tens of billions of dollars that utilities can tap to help pay for damages from wildfires if they follow certain safety steps, including tying executive pay to safety. Utilities and ratepayers would pay into the fund.

An unlikely coalition of groups have rallied around the measure approved Monday, from labor unions representing utility workers to wildfire survivors, who see the bill as giving them more leverage as Pacific Gas & Electric goes through the bankruptcy process.

A watchdog group, The Utility Reform Network, also came out in support of the bill on Monday, praising provisions on wildfire mitigation and tying the pay of utility company CEOs to safety.

But some lawmakers raised concerns about how the measure would affect utility bills.

Backers argued utility rates would still rise, but to a lesser extent than if the state does not take the steps set out in the bill.

That was not enough to persuade Republicans on the committee, each of whom either opposed the bill or did not vote on it Monday.

Still, while it is moving quickly through the Legislature, Assembly Bill 1054 is a sprawling piece of legislation and has turned into a battleground for legions of special interests.

Some lawmakers pointed to specific provisions in the series of amendments published on Friday, the end of a holiday week, that could have broad ramifications. For example, Sen. Scott Wiener, D-San Francisco, argued the bill would make it harder for municipal electric utilities to buy assets from major power companies — potentially stifling efforts to expand publicly owned electric systems.

Last week Newsom acknowledged the complexity of the issue and said in response to critics that doing nothing would be catastrophic for utility ratepayers.

“None of this is easy,” Newsom said last week. “I think it’s the best of all the options and, in the absence of others being presented, I think it’s the one most likely to get the votes.”

The urgency to act comes after California experienced two of its most devastating wildfire seasons ever in 2017 and 2018, with some of the worst blazes blamed on utility equipment.

Pacific Gas & Electric Corp. filed for bankruptcy in January as it stared down potentially tens of billions of dollars in liability costs. Major ratings agencies have already downgraded the bond ratings of the state’s other two investor-owned utilities, Southern California Edison and San Diego Gas & Electric. They have suggested the ratings could lower further if lawmakers don’t act.

Under the plan, utilities would have to get a new safety certification and show that their conduct was reasonable in order to tap it. If a utility has the safety certification, it would be presumed to have acted responsibly, shifting the burden on victims or others to show they did not. If victims groups raise serious doubt about the utility’s conduct, the burden would then shift back onto the utility.

The bills need support from two-thirds of lawmakers to pass, a high hurdle to climb among lawmakers weary of appearing to bail out the utilities. Nine lawmakers, including Republicans and Democrats, criticized the bill recently for failing to include money to help people harden their homes against wildfire risks.

And it creates a new Wildfire Safety Advisory Board with appointees from the governor and legislative leaders to advise the Public Utilities Commission. An original version of the bill would have automatically exempted all communications between the board and the PUC from disclosure to the public and exempted the bill from some portions of the state’s open meetings law.

The bill has been changed to remove exemptions from the open meetings law, and it no longer includes a blanket exemption from disclosure. Instead, either the Public Utilities Commission or the board would have to assert privilege over the documents in individual cases.

Another proposal would create an Office of Energy Infrastructure Safety to oversee utilities’ and the state’s wildfire prevention efforts. An information hearing before the Assembly Budget Committee lasted 10 minutes, and no one from the public spoke on the bill.

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