Utilities could sell bonds to pay wildfire debts under legislative proposal

SACRAMENTO - Utilities would be allowed to sell state-authorized bonds to pay for some of the damages caused by wildfires - with ratepayers responsible for repaying the debt - under a wildfire response bill unveiled Friday by state lawmakers.

The bonds would only be used to pay out damages that utilities could not afford without being bankrupted, and the determination of that amount would require a stringent “stress test” by the Public Utilities Commission, said Assemblyman Jim Wood, D-Santa Rosa.

Unlimited use of bond funding was proposed in an East Bay legislator’s bill that state Sen. Bill Dodd, D-Napa, dismissed as a “total bailout” for PG&E, which faces billions of dollars in damages from the October wildfires.

Dodd is co-chairman and Wood is a member of the bipartisan conference committee on wildfire prevention that conducted a public hearing Friday on a two-page outline of the full bill, which is due for release Monday or Tuesday. The deadline to pass bills is Friday, when the Legislature adjourns for the year.

The outline of the nine-point proposal also included loosely sketched provisions requiring power companies to adopt fire prevention plans that would be reviewed by the PUC, Cal Fire and other state experts to ensure they meet “leading edge requirements” to thwart wildfires.

In previous hearings, the committee had expressed dismay over what it perceived as the PUC’s lax enforcement of standards for electricity providers.

The outline included a provision sought by Wood to provide multi-year funding for forest management drawn from the state’s Greenhouse Gas Reduction Fund.

Members of the 10-person committee made a point of noting that the outline and the full bill will not include any softening of the longstanding state policy of inverse condemnation, which holds power companies responsible for ?wildland blaze damage caused by their equipment, even when the utility has done nothing wrong.

PG&E has lobbied hardfor and Gov. Jerry Brown last month supported a change that would allow judges to determine whether a utility had acted “reasonably” in awarding damages.

Cal Fire investigators have determined PG&E equipment started 12 of the major wildfires that ignited in Northern California last October, and the company violated safety codes in eight of those cases. Total damages have been estimated at $10 billion and PG&E has said it expects to be held liable for at least $2.5 billion in damages.

Discussion by the legislators - six Democrats and four Republicans - and many of the more than 50 people who offered comments at Friday’s public hearing focused on two goals: protecting utility ratepayers and ensuring that PG&E and other electric utilities remain solvent.

“There are going to be impacts to ratepayers, no way around it,” said Assemblyman Brian Dahle, a Republican from Lassen County whose district was ravaged by the Carr fire. The question comes down to “who pays and when do they pay,” he said.

State Sen. Anthony Cannella, R-Ceres, said ratepayers must be protected “but we cannot bankrupt” the utilities.

Assemblywoman Eloise Gomez Reyes, D-San Bernardino, said the solvency of ratepayers must also be protected. “I want to make sure they are not the ones that suffer because of (utility) mismanagement.”

None of the committee’s proposals applies to last year’s fires.

In an interview, Wood said there is still time to develop standards that would specifically apply to the 2017 wildfires that ravaged Northern California.

Wood said he had discussed with the governor’s office his proposal to fund forest management from the greenhouse gas fund, but gotten no commitment on either the source or the specific amount, which he believes should be $300 million a year.

Without funding written into the bill, “it’s simply a statement on paper with no value to anyone,” he said.

Wildfires are the major source of greenhouse gas emissions in California, Wood said, justifying the use of the fund.

Dodd, whose district was hit hard by last year’s fires, opened the hearing by saying “we can all agree the status quo is unacceptable.”

State Sen. Hannah-Beth Jackson, D-Santa Barbara, said the committee’s work had been a “very collaborative effort” on issues “affecting virtually everybody in the state.”

“There still is work to do,” she said.

Cara Martinson, representing the California State Association of Counties, said funding fire prevention is a “critical component” of the legislation. She also endorsed the bond funding proposal, called securitization, describing it as a “tool local governments use to manage their debt.”

Maria Garcia, a lobbyist for Sonoma Land Trust, endorsed permanent funding for vegetation management as a fire prevention strategy.

Several speakers criticized the outline for lacking specifics on ratepayer protections, with some calling the proposal a bailout for utilities.

Ratepayers need “airtight protection” from fire costs due to utility negligence, said a spokesman for The Utility Reform Network, a nonprofit watchdog group.

You can reach Staff Writer Guy Kovner at 707-521-5457 or guy.kovner@pressdemocrat.com. On Twitter ?@guykovner.