PD Editorial: Newsom must lead the way on wildfire reforms
California keeps rewriting the record book on wildfires, with 15 of the state's 20 most destructive fires occurring since 2000 - 10 of them since 2015.
Fire damage exceeded $10 billion in each of the past two years, creating a quandary for policymakers in Sacramento: They don't want to bail out the utility companies blamed for some of the worst fires, but they must ensure that power is available and affordable and the state remains on track to meet its ambitious clean energy goals.
To accomplish all that, they need to update the rules, which were written before climate change and when fewer people lived in fire-prone areas.
As one of his first acts, Gov. Gavin Newsom appointed a “strike team” of experts to “develop a comprehensive strategy” for climate change, wildfires and energy.
Newsom's task force delivered its report Friday, but the governor didn't endorse any of its suggestions. Instead, he urged state lawmakers to work something out before their summer recess. “We have 90 days,” Newsom said. “I'm hopeful that they can meet this moment.”
Governor, you can't sit on the sidelines. Too much is at stake. Leadership is required.
California, as the governor's report notes, took steps last year to improve fire prevention, backing the plan up with $1 billion over five years. That was easy. Lawmakers weren't able to settle on a strategy to ensure that utilities remain solvent if California continues to experience massive wildfires.
Newsom, in effect, asked them to try again.
Under state law, utilities are required to provide service to all homes and businesses, and they aren't allowed to charge customers more in areas at high risk of wildfires. Utilities also are liable for any damages, including fees for plaintiffs' attorneys, if their equipment causes a fire - even if there wasn't any negligence.
PG&E cited potential damages of more than $30 billion for fires in 2017 and 2018 in its bankruptcy filing earlier this year. Moody's Investors Service has downgraded the credit ratings of all three big investor-owned utilities in California, which will mean substantially higher borrowing costs for fire prevention, clean energy goals and other purposes.
With its poor safety record, PG&E created some of its own problems. But utilities aren't responsible for climate change or for 11 million people moving into areas susceptible to wildfires. And when a utility company goes bankrupt, fire victims are at the end of the line of creditors. They may never see a dime.
The utilities want California to relax its strict liability standard, which would put a larger onus on insurers. That's one of the options in the strike team report. However, many insurance companies already are canceling policies and refusing to write new policies in fire-prone areas.
Newsom's strike team also mentioned a widely discussed alternative: a state disaster fund to serve as a “source of immediate funding” for utilities to settle damage claims after wildfires. Another option is a “liability only fund” that utilities could draw on to pay damages while regulators determine whether those costs could be passed on to ratepayers.
The governor's strike team outlined the challenge facing California, with proposals for fire hardening as well as options for allocating costs. Any plan must ensure that fire victims are made whole, utilities are held accountable for negligence and that California can count on the safe, reliable and affordable energy the state needs to thrive. Accomplishing all of that won't be easy, and Newsom needs to lead the way.
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