California regulators approve funding for controversial wildfire law

Oct. 25--The California Public Utilities Commission on Thursday approved a surcharge that will pay for a $21 billion wildfire fund that the state's big power companies can tap if their equipment ignites a fire that leads to significant damages, provided the commission determines the utilities acted responsibly.

"I think this speaks to the magnitude of the very large-scale risks posed by utility-caused wildfires in this state," said commissioner Clifford Rechtschaffen just before the 5-0 vote.

Passed amid controversy in July, Assembly Bill 1054 requires investor-owned utilities San Diego Gas & Electric, Southern California Edison and Pacific Gas & Electric to put up half of the money in the $21 billion fund. The other half comes from ratepayers across the state. Introduced as an "urgency statute," the bill passed within a week.

The ratepayers' portion comes from extending a bond issued through the state's Department of Water Resources that was set to expire. Instead, under AB 1054, a surcharge estimated at $2.50 a month paid by customers across state would be extended.

The utilities commission, known as the CPUC for short, had to determine whether imposing the charge was "just and reasonable." All five commissioners said it was.

Rechtschaffen, the commissioner assigned to the case, cited a number of "ratepayer benefits" justifying the costs.

Among them, he said, establishing the wildfire fund will:

-- help utilities avoid credit downgrades, leading to higher borrowing costs that would be passed on to customers -- get money into the hands of wildfire victims more quickly -- require utilities to pay half the cost in cases where they followed applicable safety rules but their equipment nonetheless was found to cause a big fire. Without the legislation, ratepayers would have had to foot the entire cost.

Critics of AB 1054 blasted the CPUC's decision, saying it amounted to a bailout for the utilities.

"The bottom line is this," San Diego attorney Michael Aguirre said. "The governor, the Legislature and the Public Utilities Commission are forcing the customers to pay for the wildfires that the utilities caused imprudently."

Aguirre has filed a lawsuit seeking a federal judge in San Francisco to stop the implementation of the law, arguing the money raised through the bonds burdens the state's power customers without giving them "just compensation," which amounts to a violation of the U.S. Constitution.

"The federal court in San Francisco has been very diligent and well informed on the misdeeds of the utilities," Aguirre said. "So we're encouraged that what we could not get the CPUC or the Legislature or the governor to do, we will get the United States District Court to do."

Under AB 1054, power companies must receive a first-of-its-kind safety certification from the state. To qualify, the companies must tie executive compensation to safety performance, establish a wildfire safety committee on their respective boards and meet other financial and safety measures.

SDG &E and Southern California Edison have already received their safety certifications. PG &E must first emerge from its ongoing bankruptcy proceedings by June 30 of next year to access the wildfire fund.

April Maurath Sommer, executive director of the Wild Tree Foundation, an environmental group based in the Bay Area, said the quick approval of safety certifications amounted to a "rubber stamp" and criticized how the new law shifted the burden from utilities having to prove they acted responsibly onto customer advocates needing to show power companies acted negligently.

"It's a David and Goliath situation now," Maurath Sommer said. "There's an assumption of safety here that the utilities don't deserve."

The CPUC vote, making a rare road appearance in Redding, came as PG &E announced another round of power shutoffs in its service territory in Northern and Central California--this one affecting 179, 000 of its customers.

Two weeks ago, PG &E received harsh criticism--including from AB 1054's big booster, first-year Gov. Newsom--for de-energizing lines for several days to about 2 million customers as a way to prevent high winds from knocking branches into power lines and sparking wildfires in its service territory.

Commissioners heard from angry PG &E customers prior to the vote but said approving funding for AB 1054 won't coddle PG &E.

"PG &E won't have the privilege of accessing the fund unless they come out of bankruptcy without a bill increase," said commissioner Martha Guzman Aceves. "I think that's another very critical component of this statutory structure and another reason I'm supporting it today."

Facing an estimated $30 billion in wildfire liabilities, PG &E filed for Chapter 11 in January. Its equipment has been traced to 19 major wildfires in 2017 and 2018 that killed more than 100 people.

Santa Ana wind conditions Thursday in Southern California Edison's service territory prompted the utility to shut off power to almost 27, 000 customers. It is considering turning off power to another 386, 000 in areas where the fire danger is climbing.

With winds gusting and temperatures some 18 degrees higher than average at San Diego International Airport, SDG &E shut off power to nearly 7, 300 customers Thursday and 35, 000 other customers have been notified they could lose power before a red flag warning is scheduled to end at 5 p.m. Friday.

Though it has received criticism from some quarters for turning off power in the backcountry, SDG &E has implemented a program considered more advanced and strategic than PG &E and Edison.

Since the 2007 Witch Creek, Guejito and Rice wildfires destroyed more than 1, 300 homes, killed two people, injured 40 firefighters and forced more than 10, 000 to seek shelter at Qualcomm Stadium, SDG &E has spent about $1.5 billion in ratepayer dollars on programs to fight and prevent wildfires. The measures include a network of 190 weather stations, 17 high-definition cameras perched on mountain tops and a weather center that employs five full-time meteorologists and fire scientists.

SDG &E fought to pass $379 million in outstanding costs onto its customers due to the 2007 fires but was turned back by the CPUC. The utility appealed all the way to the U.S. Supreme Court but earlier this month, the high court refused to hear the case, leaving shareholders of SDG &E's parent company, Sempra, to pay for the balance.

SDG &E spokeswoman Allison Torres said the vote "puts California in a better position" and the wildfire fund "will benefit and protect all Californians as we grapple with the growing costs and liabilities associated with increasingly catastrophic and frequent wildfires."

The Camp Fire in Butte County last year proved to be the deadliest fire in state history, killing 86 people and destroying more than 18, 000 structures. Nine of the 10 largest wildfires in terms of acreage in California history have occurred since 2003.

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