LOS ANGELES — As California’s deadliest wildfire was consuming the town of Paradise in November, some of the state’s top utility executives and a dozen legislators were at an annual retreat at the Fairmont Kea Lani resort on Maui. In the course of four days, they discussed wildfires — and how much responsibility the power companies deserve for the devastation, if any.
It is an issue of increasing urgency as more fires are traced to equipment owned by California’s investor-owned utilities. The largest, Pacific Gas and Electric, could ultimately have to pay homeowners and others an estimated $30 billion for causing fires over the past two years. The most devastating of those, the Camp fire, destroyed thousands of homes in Paradise and killed at least 86 people.
Realizing that their potential fire liability is large enough to bankrupt them, the utility companies are spending tens of millions of dollars on lobbying and campaign contributions. Their goal: a California law that would allow them to pass on the cost of wildfires to their customers in the form of higher electricity rates. After an earlier lobbying push, legislators have already voted to protect the companies from having to bear the cost of 2017 fires, including the North Bay infernos, and utilities are seeking the same for 2018.
The utility companies acknowledge that they may bear some responsibility but say not all of it, pointing to climate change and development in remote areas that have made wildfires more destructive. In addition, they argue that electricity rates would go up regardless of whether the state protected them because investors and banks could grow wary of lending to California’s energy sector.
But public interest groups say the utilities are effectively seeking another bailout for mistakes made by well-compensated executives. The utilities have been frequently criticized, for example, for not adequately trimming trees along power lines. Some policy experts and lawmakers say it might be better to break up PG&E, replace its board and management or convert it into a publicly owned utility.
People on both sides fear that the state, which prides itself on being a leader in the fight against climate change, could be on the cusp of an energy crisis — its second in less than two decades. In 2000 and 2001, California was roiled by blackouts, soaring electricity rates and the bankruptcy of PG&E after the state made missteps in deregulating the power industry.
“There clearly is a great deal of disruption that would occur,” said Assemblyman Chris Holden, chairman of the Utilities and Energy Committee. He was referring to the possibility of a second bankruptcy of PG&E, which serves 16 million people in Northern and Central California.
Just two months before the Camp fire, PG&E seemed to have solved its most pressing problem: protecting its shareholders from footing the bill for the 2017 wildfires and passing that burden to ratepayers. Except in cases where PG&E is found negligent by state regulators and customers are shielded, the company expects the additional ratepayer expenses, on a typical bill of $100 month, would amount to $5 for every $1 billion the utility borrowed to cover damages.
The companies waged a multimillion-dollar campaign to secure that protection. In the first nine months of 2018, the three investor-owned utilities collectively gave $5 million to the campaigns of state lawmakers, as much as $1 million more than they had in any full year since 2011, according to Consumer Watchdog, an advocacy organization in California.