Lawmakers approve bill that makes PG&E, ratepayers share wildfire costs

Critics call the bill a bailout for PG&E, while advocates say it is a fair way to protect ratepayers and save the utility from bankruptcy.|

The wildfires that brought horror to Northern California nearly a year ago led to some unusual political alliances and rifts among lawmakers as their response came to a momentous vote on a controversial measure that holds both PG&E and ratepayers responsible for multibillion-?dollar damages.

Approval by the Assembly and Senate late Friday night - on the final day of the legislative session - came nearly 11 months after the historic wildfires that took 44 lives and destroyed ?6,400 homes in Northern California last October.

There were Democrats and Republicans on both sides of the vote in each house, with some lawmakers who rarely agree in concert on the measure, while 24 legislators declined to cast a vote.

State Sen. Bill Dodd, D-Napa, who co-chaired the special 10-member committee that crafted the wildfire response bill, said Saturday it got “more attention, more hearings than any other legislative measure this year” and there were about ?2,500 bills introduced.

Dodd, whose district was hard hit by the October wildfires, said he was “totally confident” ahead of the votes that the bill would pass in the Senate, which it did handily, ?29-4, with seven members not voting. Three of the four no votes came from Republicans.

The Assembly vote, held after ?11 p.m. following the Senate action, came out 49-14, with 17 members not voting. Eight of the no votes came from Democrats.

“Natural disasters don’t discriminate against Republicans or Democrats,” Dodd said. “We’re all in ?this together.”

One surprise of the evening, he said, was Tehama Republican Sen. Jim Nielsen’s passionate call for support of the bill, SB 901, spearheaded by Dodd.

Nielsen, regarded as the dean of the Senate, took the floor just after Dodd had introduced his bill and recalled the obliteration of Keswick, a small community between Redding and Shasta, by the Carr fire.

“It’s gone,” he said, noting the fire tornado that killed a firefighter in Redding and made cars “literally explode.”

Nielsen, a farmer who has served more than 20 years in the Legislature, blamed the cataclysmic fires on “40 years of neglect” in managing state woodlands, allowing tons of fuel to accumulate.

“That was amazing to me,” Dodd said of Nielsen’s show of support. The districts of the two legislators adjoin, but “we don’t typically agree,” Dodd said.

A similar inter-party alliance came about between Assemblyman Jim Wood, D-Santa Rosa, and his Republican colleague, Brian Dahle of Bieber in Lassen County, whose districts abut one another. They also served together on the conference committee that hatched the bill in a month.

“This is the kind of bill that resonates,” Wood said Saturday. “Fire doesn’t know political boundaries.”

Support by Dahle, the Assembly Republican leader, brought other GOP members along, Wood said, calling Dahle “a commonsense farmer” and a “reasonable guy.”

Wood said he thinks the chances are “very high” that Gov. Jerry Brown will sign the bill, based on his meeting, along with three other Democrats, with the governor on Monday and two subsequent meetings with Brown staff members.

Brown has until Sept. 30 to sign the last batch of bills he will receive before leaving office at the end of the year.

The bill’s most controversial provision allows PG&E to lean on ratepayers to shoulder some of the multibillion-dollar cost of last year’s wildfires - provided it opens its books for an examination by regulators, referred to as a stress test.

The California Public Utilities Commission would determine how much the company can pay without harming ratepayers or diminishing its ability to provide electricity.

For any fire costs deemed reasonable by the commission, PG&E or any other utility may apply for state-sponsored funding, including recovery bonds that would be repaid by ratepayers through charges on their bills.

The average residential customer would pay about $5 a year for every billion dollars in financing over the life of the bond, PG&E said.

On the floor Friday night, Dodd said the bill was “necessary to protect our communities from monstrous wildfires in the future, and the loss of property, and even the loss of life.”

“We have done everything we could to protect victims and ratepayers in this package,” he said.

The strongest criticism came from Sen. Jerry Hill, D-San Mateo, who said PG&E management has “focused on shareholders’ profits over safety, adding that “this bill rewards their bad behavior.”

“Under this bill the ratepayers will pay for a company’s neglect,” said Hill, who represents the area where a PG&E gas pipeline explosion killed eight people in 2010.

Hill was the lone Democrat in the Senate who voted against the bill.

On the Assembly side, Wood said the bill was not perfect but was “the best we could do under the circumstances.”

Wood was a force behind another part of the plan, which calls for spending $1 billion over five years on vegetation management and fuel reduction. He touted it as “one of the largest commitments to fire prevention in the state’s history.”

Assemblyman Marc Levine, D-San Rafael, one of the eight Assembly Democrats voting against the bill, said it “leaves utility ratepayers on the hook for huge costs due largely to utility negligence.”

“Members, the word negligence doesn’t even appear in the bill,” he said.

Levine disparaged the stress test, saying it puts a cap on PG&E’s liability “that could well turn out to be a disproportionately low one that allows them to pass on major costs to ratepayers.”

As the bill took shape over the past week, critics said it amounted to a bailout of PG&E, the embattled utility which faces billions in damages, while advocates said it was a fair and fiscally responsible way to protect ratepayers and save PG&E from bankruptcy.

PG&E has said it expects to pay $2.5 billion in damages, and possibly much more. Total wildfire damages have been estimated at $10 billion to $15 billion.

Cal Fire, which fights and investigates the causes of wildfires, has determined so far that PG&E equipment caused 16 major fires across Northern California in October. Investigators found evidence that the utility violated safety codes governing brush clearance around power lines in 11 of the blazes, and those cases have been forwarded to local district attorneys.

A Cal Fire determination on the cause of Tubbs fire, the most destructive blaze in history is still pending. It killed 22 people and claimed most of the more than 3,000 homes lost in Santa Rosa alone.

Lynsey Paulo, a PG&E spokeswoman, said in an email that SB 901 “is a commonsense solution that puts the needs of wildfire victims first, better equips California to prevent and respond to wildfires, protects electric customers and preserves progress toward California’s clean energy goals.”

“While the legislation addresses many urgent needs,” she said, “we must continue to work together to ensure ongoing investment in climate resiliency and clean energy, and to combat the devastating threat that extreme weather and climate change pose to our state’s shared energy future.”

Dodd said Saturday the committee heard testimony from financial industry representatives that failure to pass the bill would likely cause PG&E’s credit rating to sink to junk bond status or plunge the utility into bankruptcy.

“In either one of those cases the impact on ratepayers would be tremendous,” he said.

Noreen Evans, a Santa Rosa attorney and former state senator who is part of a team representing about 2,000 fire survivors suing PG&E, said earlier last week that “ratepayers will be paying for their own loss” and faulted the bill for including “no requirement that PG&E compensate victims.”

Brad Sherwood, a Larkfield resident who lost his home in the Tubbs fire, said utility shareholders, not ratepayers or fire survivors “should bear the financial burden from the 2017 wildfires.”

Patrick McCallum, a Sacramento lobbyist whose Fountaingrove home was destroyed in the Tubbs fire, worked on the bill from the start. He said it would make PG&E “far more responsible, we victims are going to be made whole and it creates a balance for ratepayers.”

PG&E spent about $1.7 million lobbying in California from April to June, compared with McCallum’s group, Up from the Ashes, which represents displaced residents and trial attorneys and spent more than $560,000 lobbying for the bill.

The utility and the governor pushed hard, but without success, for a softening of the standard, called inverse condemnation, that holds power companies responsible for wildfire damage caused by their equipment, even when the utility has done nothing wrong.

Dodd, Wood and others acknowledged the final bill was imperfect, noting that it calls for creation of a five-member commission that will have nearly a year to come up with proposed changes in the handling of wildfire costs and damages.

“I think there will be some cleanup legislation,” Wood said Saturday. “We want to make sure we did the right thing.”

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