It’s Wildfire Season in California, and Utilities Want to Tamp Down Their Liability
To head off financial disaster, the companies and the electrical workers' union are frantically lobbying Golden State officials for relief from a system that the utilities say is unfair: They're liable when their equipment ignites a fire, but they can't automatically pass on the costs to consumers.
"Our employers are now at financial risk, because the damage associated with these fires is literally billions and billions of dollars," said
But advocates for ratepayers and wildfire victims say the current system works just fine, and that it gives utilities an incentive to trim nearby trees and invest in their infrastructure.
"They should not get a Get Out of Jail Free card," said state Sen.
No other state has both
Spot fires burn near power lines in
The National Flood Insurance Program, for instance, has been struggling financially for years, in part because of political pressure to keep premiums low even in places that repeatedly flood, such as the hurricane-prone
"What this is really about is how risks are allocated and who pays for them," said
The
State investigators recently found that four wildfires that broke out north of
The company said it looked forward to reviewing the findings. "Based on the information we have so far, we believe our overall programs met our state's high standards," the utility said in a statement at the time.
The Fire This Time
Five wildfires that blazed through
"We both thought we were going to die," McCallum recalled. The couple didn't even try to get in their car. They just ran, choking on smoke, until they reached two firefighters who saved their lives. Their house was destroyed.
McCallum, a longtime higher education lobbyist, is now advocating on behalf of attorneys who represent fire victims and want to make sure utilities don't avoid responsibility for paying for wildfire damage.
Power lines are a leading cause of those wildfires that can be traced to a single source in
Among
For the past 20 years,
And the commission is reluctant to pass on costs if it finds a utility to have been negligent. Last year, the commission denied
McCallum and Hill, the state legislator, say the current system works and prevents ratepayers having to bail out negligent utilities.
The 'New Normal'
Lobbyists, lawyers and other representatives for the major utilities say the current legal standard holding utilities liable is no longer workable, because climate change has created a "new normal" that has dramatically raised the potential costs of a wildfire.
The way courts assess liability doesn't consider extreme weather or the fact that utilities can't automatically spread the costs among ratepayers,
She said that under the changes the company is seeking, customers would still be able to sue, but "a jury should decide whether the company was negligent."
If nothing changes, she wrote, customers and communities will suffer, and utilities won't be able to continue investing in clean energy infrastructure.
Democratic Gov.
Nothing has come of those efforts yet, however, and no bill pending in the Legislature would achieve all the reforms utilities would like to see, according to Vanrenen and Stern, with the electrical workers union.
Experts who watch the energy industry say utilities have good reason to call for change. "The current legal regime, I believe, is unsustainable,"
That's a huge risk for their investors, he said. "That's like a coin toss with your money."
Davis said policymakers should try to spread the risk across all entities that can work to prevent fires, including utilities, homeowners and local governments.
"Part of the problem," he said, "is so much of new
Wara said that holding utilities liable only for damage caused by their mistakes is a reasonable reform. But changing liability standards for utilities could drive up insurance premiums for homeowners, transforming a crisis for utilities into a crisis for homeowners, he said. Politically, that's not an appealing solution.
He said he's concerned that lawmakers will struggle to solve the problem during an election year. They likely won't want to risk a vote on a bailout for
And peak fire season is right around the corner.
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