Close to Home: Don’t give utilities less incentive to prevent fires

As the Legislature debates who should pay for increasingly destructive utility-caused wildfires, it's disheartening to hear the governor and investor-owned utilities, including PG&E, talk about the need to “reform” liability laws, because their proposed reforms would make rebuilding even more difficult for victims, and more expensive for ratepayers, while giving the utilities less incentive to prevent future fires.

At the heart of their proposal is eliminating “inverse condemnation,” a well-established legal protection that holds the utilities financially responsible when their equipment damages or destroys private property, which has often been the case with PG&E.

Under California law, investor-owned utilities exercise eminent domain, giving them the authority to place power lines, transformers and other equipment on private property. Inverse condemnation balances this power by guaranteeing just compensation if property is damaged or destroyed by the equipment.

The governor and PG&E would eliminate this important legal safeguard, which has been protecting California property owners for more than half a century. Instead, victims and ratepayers would be responsible for the cost of utility-caused fires, unless victims could prove that the utility was negligent.

But proving negligence would be more difficult under the governor's proposal, because it would dramatically expand the definition of what constitutes “prudent” management by the utilities. Victims, including cities and school and fire districts, would be forced into costly and protracted legal battles against teams of utility lawyers, which few victims and local governments could sustain.

As wildfires become the “new normal” in California, we should be taking strong steps to prevent fires. We shouldn't be giving utilities less reason to operate safely, nor should we hold them less accountable for damage they cause. Yet this is precisely what the governor and the utilities are proposing.

If PG&E and the other investor-owned utilities are let off the hook, they'll have less incentive to invest in safety or properly maintain and operate their equipment. Given PG&E's record, this would be like giving them a new box of matches.

If there's no financial penalty, why not spend money on executive bonuses and shareholder profit as PG&E did, instead of using it to upgrade equipment, bury power lines and trim trees as required by state law? PG&E has a history of misspending funds earmarked for safety, with disastrous consequences.

Cal Fire investigators have concluded that PG&E was responsible for most of last October's fires and referred many of them to local district attorneys for possible criminal prosecution.

Clearly, the focus of any legislation should be preventing utility-caused fires, because that would save billions of dollars and keep others from suffering what we victims have been through. But you don't accomplish this by dumping the cost of future fires onto ratepayers or by stripping victims of their right to recover.

Rather than wasting time on a proposal that is unconstitutional, the special legislative committee should focus on a comprehensive proposal that would include more prevention and accountably to ensure that state standards are followed by PG&E and other utilities, securitization of some of the debt to ensure that utilities have resources for prevention and safety (but not at the expense of ratepayers if they are negligent) and a risk-pooled insurance fund so that utilities are properly insured if future disasters were to happen.

You prevent fires by giving the utilities an incentive to operate safely and by holding them accountable when they don't.

As we smell the smoke and get reminded of our experiences last October, we know that all of us need to play a role in fire prevention but not at the expense of our constitutional rights.

Patrick McCallum, who lost his home in the Tubbs fire, is co-chair of Up from the Ashes. He runs a higher education lobbying and consulting firm.

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