PD Editorial: A high-stakes debate looms on wildfire costs
California lawmakers will reconvene Monday with wildfires burning across the state — and a raging debate over who should pay for the damage.
PG&E and other utilities, both public and investor-owned, want relief. They say it’s unfair to require them pay for damage caused by power equipment, unless their negligence caused the damage. Under the present rules, utilities are on the hook regardless of fault.
They say the potential liability costs are so steep — PG&E already has set aside $2.5 billion to help cover its costs from October’s fires — that fire-prevention efforts and the state’s renewable energy goals could be undermined.
Insurers and plaintiffs’ lawyers, and at least some local governments, say the rules should stand. If utilities aren’t held to the strictest liability standard, they say insurers will charge higher premiums — and coverage could be denied in fire-prone areas.
State lawmakers want to resolve this by Aug. 31, when they’re scheduled to adjourn for the year.
It’s an ambitious goal, but waiting until next year isn’t a good option when pretty much everyone agrees that we’re confronting a “new normal.” Temperatures are rising, drought conditions are returning, dry fuel is abundant, and experts warn that fires are going to be bigger, hotter and more frequent in the years ahead.
“We’re in for a really rough ride,” Gov. Jerry Brown said Wednesday. “It’s going to get expensive, it’s going to get dangerous, and we have to apply all our creativity to make the best of what is going to be an increasingly bad situation.”
To meet that challenge, firefighting agencies will need more manpower and equipment, brush and dead trees must be properly thinned on public and private land, and early warning systems must be upgraded to save lives.
The primary objective should be fire prevention, and Brown recently presented lawmakers with a proposal that would require utilities to develop more expansive mitigation plans and increase penalties for safety violations.
Brown’s plan also would loosen the liability standard, formally known as inverse condemnation, directing courts to “balance the public benefit of the electrical infrastructure with the harm caused to private property and determine whether the utility acted reasonably.”
As drafted, the new rules would apply only to fires after Jan. 1 of this year. As such, they wouldn’t affect litigation from last October’s fires.
A special legislative committee, co-chaired by state Sen. Bill Dodd, D-Napa, is trying to craft a bill that addresses fire prevention as well as liability for damage to homes and property. The committee meets again Tuesday to review power grid safety and reliability.
We think Brown offered a good framework for updating liability standards. He proposes a more equitable apportionment of costs between utilities and insurers, so long as the fire-prevention plans and associated standards for maintenance and construction of electrical equipment are strict, transparent and vigorously enforced.
Also, any liability changes should be coupled with insurance reforms introduced after October’s fires, including extending coverage guarantees and helping policyholders settle claims for property lost in an officially declared disaster.
PG&E, meanwhile, is seeking legislation permitting it to borrow at below-market rates to begin settling claims from the 2017 fires. Let’s get money to victims as quickly as possible — but lawmakers must ensure that ratepayers aren’t left on the hook for fires caused by utility negligence.
Ultimately, the best way to avoid debates about liability is to develop better ways to prevent massive wildfires.
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