Senators critique Newsom’s wildfire response plan
Two of Gov. Gavin Newsom’s proposals for bracing California against devastating wildfires - a multibillion-dollar fund to spread the cost and easing the strict liability standard faced by electric utilities - got a critical reception Thursday from the legislators tasked with turning the governor’s wide-ranging plan into specific policies.
The first public hearing by a special panel of 13 state senators also included a forecast that shaky economic conditions for power companies will drive up costs for ratepayers statewide.
Two members of a separate state commission on wildfire cost recovery, called as witnesses, told senators that customers will foot the bill for keeping the power on in California.
New York financial firms are “very nervous” about investing in the state’s utilities, which translates into higher costs for borrowing money, said Michael Wara, a lawyer and Stanford University scholar focused on climate and energy policy.
Carla Peterman, his colleague on the commission, noted that utilities are under pressure to replace aging facilities, another cost factor that will be passed on to customers.
“There are likely to be higher costs for electricity ratepayers in California,” Wara said.
Two proposals in the 52-page report from Newsom’s strike force, “Wildfires and Climate Change: California’s Energy Future” released in April, prompted criticism from senators, including the concept of a catastrophic wildfire fund that would spread the cost “more broadly among stakeholders,” the report said.
“The more stakeholders contribute the better,” said Peterman, who had earlier noted that “stable, well-managed, investable utilities” are critical to California.
Sens. Mike McGuire, D-Healdsburg, and Hannah-Beth Jackson, D-Santa Barbara, said wildfire victims in their districts would take offense.
McGuire asked whether utility shareholders could pay for the fund, and Jackson said there was “nothing worse” to tell a fire survivor than they would pay into a fund that assists utilities.
Nathan Pollak, a director with Filsinger Energy Partners, a consulting firm, ran into trouble with his analysis of the likelihood a potential wildfire fund at three potential sizes - $10 billion, $25 billion or $40 billion - would be able to pay claims until 2030. The smallest fund had a 98% chance of running out of money; the next had a 53% chance; and the $40 billion fund had only a 7% chance of falling short.
The chances depend on whether California wildfires continue on the pace of the last two years, in which more than 16,000 blazes have charred nearly 3 million acres.
If the 2017-18 trend continues, a “wildfire fund is not a workable solution,” Pollak said.
Sen. Bob Hertzberg, D-Van Nuys, pressed Pollak for a specific recommendation. “We need an answer, not options,” he said. “Help us get there, that’s all I’m asking.”
Pollak said he couldn’t do so. “There’s more work to be done,” he said.
Nancy Mitchell, an attorney with O’Melveny & Meyers, said neither of them had an answer, but doing nothing “is not a good option for California with utilities teetering on the brink of bankruptcy.”
Pollak and Mitchell said they were both representing the governor’s strike force.
Newsom’s proposal to adopt a “fault-based standard” - modifying California’s strict liability rule to “balance the need for public improvements with private harm to individuals” - also hit a wall.
The standard, inverse condemnation, holds utilities liable for any damage caused by their equipment, regardless of whether the company was deemed negligent.
Former Gov. Jerry Brown advocated for such a change and PG&E spent millions of dollars lobbying for it, but state lawmakers wouldn’t consider it last year.
Jackson said PG&E, which is now in bankruptcy proceedings, should have spent that money on hardening its infrastructure and also noted that inverse condemnation is a constitutional requirement the Legislature can’t touch.
Sen. Bill Dodd, D-Napa, the committee chairman, dismissed the idea. “I don’t think anybody’s come up with a plan on how inverse condemnation could be changed,” he said.
On another front, McGuire pressed California Secretary for Natural Resources Wade Crowfoot on whether the 13 new Cal Fire engines in the governor’s proposed budget were sufficient.
The state firefighting agency has 31 fewer engines than it did at its fleet peak in 1975, McGuire said, adding it was “not acceptable.”
“Overall, I take your point,” Crowfoot said.
McGuire also said that local fire engines should be equipped with locating devices - as Cal Fire trucks are - so all responders would “be on the same system.”
Crowfoot said he would take that comment back to Cal Fire Director Thom Porter.
You can reach Staff Writer Guy Kovner at 707-521-5457 or firstname.lastname@example.org. On Twitter @guykovner.