PD Editorial: On fire plan, getting it right is job one

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Gov. Gavin Newsom is finally getting behind a plan to help victims rebuild after wildfires without driving public utilities into insolvency.

The plan, unveiled Friday, doesn’t let PG&E or other utilities off the hook if their negligence causes a catastrophic fire. But it would allow utilities to draw on a $10.5 billion “liquidity fund” to quickly settle wildfire claims that could otherwise take years to resolve.

Utilities would have to comply with new state safety standards to draw money from the fund, and they would have to pay that money back to keep the fund viable.

A second pool of $10.5 billion would be available to utilities for damages that exceed their insurance coverage, so ratepayers wouldn’t get stuck with those bills.

Utilities would have to provide the money for the insurance fund — and reimburse any payouts for wildfires attributable to their negligence.

Yes, the rest of us would pay a little bit, too.

To seed the $10.5 billion liquidity fund for settlements, Newsom wants to renew for 15 years a $2.50 monthly surcharge on utility bills that is scheduled to expire next year.

That’s $30 a year that we’re already paying. It’s a small price for expediting settlements with homeowners and other victims of future wildfires caused by power lines — and we know they’re coming.

Newsom’s proposal won’t be the final word on wildfire prevention and recovery. It doesn’t address availability of homeowners’ insurance, planning and development of new homes or the cost of hardening existing homes in fire-prone areas.

Neither would the governor’s proposal directly benefit victims of the North Bay fires in 2017, many of whom are now unsecured creditors in PG&E’s bankruptcy. But PG&E wouldn’t be allowed to draw on the new funds unless it exits bankruptcy by June 30, 2020, with a reorganization plan that resolves claims from wildfire fires in 2017 and 2018.

That’s a powerful incentive for PG&E, which just agreed to pay $1 billion to local governments, including Santa Rosa and Sonoma County, to settle with other fire victims.

No one wants to bail out PG&E. We get that. But it’s already in bankruptcy, with potential liabilities of $30 billion, and the credit ratings of other California utilities are in jeopardy.

No one benefits if PG&E, Southern California Edison and San Diego Gas and Electric can’t deliver electricity to millions of residents across the state. In a report issued last month a panel of experts appointed by Newsom recommended the disaster funds as a way to restore stability in the energy markets, allowing companies to obtain the money they need for fire prevention and to meet renewable energy goals. The state’s nonpartisan legislative analyst reached the same conclusion in a report published on Friday.

Lower borrowing costs in turn benefit ratepayers.

Newsom waited more than a month before advancing any of his commission’s recommendations to the Legislature, but he wants lawmakers to act before they start their summer recess on July 12. That’s a tight window for a complex proposal that also would require annual certification of utilities’ safety plans and shift the burden of proof when they seek to pass on fire costs, meaning that ratepayers would need to show that a utility hadn’t acted as a “prudent manager” of its equipment.

With another fire season underway, reforms that protect fire victims while keeping the lights on in California are overdue. But lawmakers must ensure that wildfire victims, ratepayers and other stakeholders have adequate time to review and comment on these proposals, even if it means postponing their vacation.

You can send a letter to the editor at

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