PG&E backs ratepayer financing plan for 2017 wildfire damage that critics call ‘bailout’
Facing multibillion-dollar claims for damage done by last year’s Northern California wildfires, PG&E is pushing for a state-authorized financing plan to cover liability claims and compensate survivors, proposing the utility’s ratepayers pick up the tab.
The concept, known as securitization, is embodied in a bill by an East Bay assemblyman and has full-throated backing from the utility, which has recently spent nearly $1.7 million lobbying state officials.
Assembly Bill 33 is expressly designed to facilitate prompt settlement of damage claims from the?2017 fires, according to its supporters. It would allow PG&E to sell state-authorized bonds to finance billions of dollars in wildfire damages, with the utility’s millions of customers paying for them through charges on their power bills.
Steve Malnight, PG&E’s senior vice president for strategy and policy, said it is “the right vehicle” to balance the need to compensate fire victims with “maintaining customer cost at a manageable level.”
“The laws that were built for yesterday are just not going to be sufficient for the risks that we face today and tomorrow,” Malnight said last week in a meeting with The Press Democrat’s editorial board.
But critics, including a Santa Rosa attorney representing survivors and a 45-year-old San Francisco utility watchdog, say AB 33 grants an unjustified bailout for PG&E, which faces more than 200 lawsuits from thousands of fire survivors as well as local governments related to the October fires.
State Sen. Bill Dodd, a Napa Democrat who represents thousands of fire survivors, called the bill “incredibly flawed.”
“I think AB 33 at this point in time is a total bailout for the utility,” he said Friday. “I don’t think it’s fair to the ratepayers to have a PG&E bailout.”
Dodd is co-chairman of a 10-member bipartisan conference committee formed last month for the sole purpose of developing legislation aimed at strengthening disaster preparedness and assessing the standards for holding electric utilities accountable.
So far, the securitization proposal is separate from a plan recently presented to lawmakers by Gov. Jerry Brown that would loosen the strict liability standard that applies to utilities in California in cases where their equipment is responsible for disasters. Brown has stressed that such reforms are needed in an era of increasingly more frequent and destructive wildfires.
“I don’t like to scare people, but we’ve got tough times ahead,” he said on Saturday during his visit to Shasta County, where the Carr fire has burned more than 140,000 acres across two counties and destroyed more than 1,000 homes.
Cal Fire has determined that PG&E equipment caused 16 major fires across Northern California in October. Its investigators found evidence that the utility violated safety codes governing brush clearance around power lines in 11 of those blazes, and those cases have been forwarded to local district attorneys.
Not yet in the mix is the Tubbs fire, the most deadly and destructive of the October 2017 fires, which altogether claimed more than 3,000 homes in Santa Rosa and 5,300 homes across Sonoma County. Across the greater North Bay, including Mendocino, Lake, and Napa counties, ?6,200 homes were destroyed.
Cal Fire’s report on the cause of the Tubbs fire is still pending.
PG&E has already said it expects to be held liable for $2.5 billion in damages, while insured losses have been estimated at $10 to $15 billion.
With just four weeks to go before the Aug. 31 deadline for sending legislation to the governor’s desk, Dodd said the committee will be hard-pressed to accomplish its goal.
“We will not present something that isn’t well thought-out,” he said.
The committee has scheduled public hearings on Tuesday and Thursday at the Capitol.
Dodd said he did not know if the committee would consider AB 33, introduced by Assemblyman Bill Quirk, a Hayward Democrat whose son works for PG&E.
Dodd said the panel would need to conduct a “forensic review” of utility financing, including the question of how to manage liabilities tied to the fires.
Lawmakers need to protect ratepayers from all the special interests involved in wildfire liability, including trial lawyers, counties and insurance companies, Dodd said, acknowledging that PG&E’s needs also matter.
“PG&E going bankrupt could be devastating for ratepayers,” he said.
The utility would not get unlimited relief under AB 33, Malnight said, noting that the California Public Utilities Commission would conduct a “prudence review” and disallow bond funding for any damage associated with cases where PG&E is found negligent.