Consumers Now Paying For California Wildfires That Haven’t Yet Happened

Why did you decide to examine Assembly Bill 1054?

Anytime legislation rushes through the statehouse in a matter of days, my interest is piqued. Plus, I have been following the California Public Utilities Commission for some years -- largely since regulators shifted billions of dollars in closure costs from the failed San Onofre nuclear plant from Southern California Edison and San Diego Gas & Electric shareholders to ratepayers -- and I have learned that utilities tend to prevail in proceedings before state officials.

Mostly though, I just thought it was strange that customers are now being charged for wildfires that have yet to happen -- even those caused by utility equipment.

What are the most serious impacts of AB 1054?

The most obvious impact is the higher electricity rates all California residents, businesses and industries are paying under the legislation – almost $1 billion a year over the next 15 years. We calculated the extra fee at about $2.50 per month for a household using 500 kilowatt hours a month, which is close to typical, but the costs are greater for commercial and industrial users, and those will be passed along to consumers as well.

Perhaps more pressing than the extra $900 million-plus we will pay each year for electricity is the shift in what's called the "just and reasonable" standard. For more than 100 years, utilities have only been permitted to charge customers for costs that reasonably benefit the end users. Under AB 1054, utilities are "deemed" to have behaved reasonably even if their equipment starts another Camp Fire -- so long as they have a safety certification, which all three major power monopolies received within weeks of the legislation being signed.

The certifications only require that utilities have a wildfire mitigation plan -- not that those plans be implemented. This means damages are almost automatically covered by the ratepayer-funded insurance pool unless some third party can establish "serious doubt" about the utility's regulatory compliance -- a very high bar. The law basically puts the onus on consumers or activists to prove the utilities misbehaved.

Lastly, the law takes away the regulators' ability to consider a utility's history of violations when considering whether it acted reasonably. This is another major shift in the way California has regulated power monopolies for the past 100-plus years.

Why should consumers be paying attention to wildfire legislation?

Most people don't have time or even interest in monitoring this sort of legislation. They only know their electricity bills keep climbing and for many the system somehow feels rigged against them. In my experience, utility interests prefer the status quo because the more complicated the process becomes, the fewer people participate.

Consumers should pay attention because it is costing them money through no fault of their own. Worse, the legislation may not be working. Utility equipment is suspected in at least seven fires ignited in October.

What can utility ratepayers do now that the bill has been signed into law?

Like any issue before a local, state or federal agency, citizens are free to protest. They can reach out to their elected representatives in the state Capitol or in the Governor's Office and register any concerns. They also can organize to oppose the bill — or support a new law reversing some elements in AB 1054.The law also can be challenged in court, which has already happened. San Diego attorney Michael Aguirre filed a lawsuit earlier this year seeking to overturn the law under the legal theory that government officials illegally imposed a burden on consumers without the benefit of a public hearing. The case is pending in U.S. District Court in San Francisco.

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