California lawmakers seek to stop ‘negligent’ utilities from hiking rates after disasters
A bill introduced by state lawmakers would prohibit electric utilities such as Pacific Gas & Electric Co. from passing on to ratepayers litigation costs or fines associated with their own negligence, creating protections for consumers in the wake of the October wildfires.
The legislation was prompted in part by a failed November effort by San Diego Gas & Electric to raise rates on its customers to cover $379 million in uninsured damages from 2007 fires. The California Public Utilities Commission rejected the increase but said the decision was not precedent-setting and future requests would be handled on a case-by-case basis.
Supporters said Senate Bill 819, introduced Wednesday by a delegation including North Coast lawmakers, would bring consistency, banning all hikes to cover fines, penalties or uninsured expenses resulting from operational mistakes.
The bill comes as hundreds of Northern California residents sue PG&E for wildfires beginning Oct. 8 that charred 250,000 acres, destroyed 9,000 homes and killed 44 people, causing $9 billion in damage. Cal Fire investigators have yet to determine a cause but the suits allege PG&E’s failure to maintain power lines and the trees around them is to blame.
“Thousands of North Bay residents have lost their homes and businesses and many escaped these devastating fires with nothing but the clothes on their backs and their family’s safety,” said Sen. Mike McGuire, D-Healdsburg. “While there is an active fire investigation taking place, there is absolutely no way residents who are suffering from this massive tragedy should ever pay for a corporation’s potential negligence.”
PG&E spokeswoman Deanna Contreras wouldn’t comment directly on the legislation, saying only that “California needs much broader reforms” recognizing the mutual interests of customers, utilities, investors and insurers.
Contreras pointed to the state’s inverse condemnation law, which she said allows a utility to be sued if its equipment causes damage, even if it has followed inspection and safety rules.
“Allowing essentially unlimited liability undermines the financial health of the state’s utilities, discourages investment in California and has the potential to materially impact the ability of utilities to access the capital markets to fund utility operations,” Contreras said. “All of these are bad for customers and bad for the state of California.”
But SB 819 only bars utilities from passing on costs if they have been found to have acted irresponsibly, said the bill’s author, state Sen. Jerry Hill, D-San Mateo.
And Hill said PG&E has a history of doing so. Last April, PG&E was fined $8.3 million by the state for failure to adequately maintain power lines that sparked the 2015 Butte fire in Amador County, killing two people and destroying 549 homes.
“I’m hoping they learned their lesson and this is not the cause of the Wine Country fires,” said Hill, chairman of the subcommittee on Gas, Electric and Transportation Safety.
Hill said he became focused on the utility after the 2010 pipeline explosion in San Bruno that killed eight people and led to a $1.6 billion fine to pay for safety improvements. He has since toured Sonoma County where fire burned nearly 88,000 acres, destroyed 5,130 homes and killed 24 people.
He will be among the lawmakers at a Jan. 26 hearing at Santa Rosa City Hall to discuss how utilities should prevent and respond to wildfires.
“I know how I felt after the San Bruno explosion and how they feel in Santa Rosa today,” Hill said. “We need answers and we need solutions.”
You can reach Staff Writer Paul Payne at 707-568-5312 or firstname.lastname@example.org. On Twitter @ppayne.