Newsom ‘strike force: ‘ Give PG&E legal protection from devastating cost of future wildfires
The proposals unveiled by a "strike force" Newsom created in January are sure to be controversial. It would potentially pile more costs on insurance companies and utility ratepayers while trimming damage payouts to wildfire victims and their lawyers. So far the Legislature, angered by the wildfires blamed on
But Newsom's task force said that, in an era of climate change and rising wildfire risk, there's no choice but to consider spreading the pain more widely. The panel's report consisted of a series of broad principles the governor should consider, not detailed legislative recommendations.
"No single stakeholder created this crisis, and no single stakeholder should bear its full cost," the panel wrote. "Any real plan must allocate costs resulting from wildfires in a manner that shares the burden broadly among stakeholders, including utilities (ratepayers and investors), insurance companies, local governments, and attorneys."
The panel was unsparing in its criticism of
But the task force, made up of Newsom's in-house advisers plus officials from
Newsom, who has made wildfire safety and
The task force was adamant that
At the same time, it also said it's time to consider ways of shifting more of the cost burden to others, while acknowledging that any effort will cause enormous complications -- particularly in the insurance business.
As it is, the panel said insurance companies are already raising rates and refusing to renew homeowner policies in fire-prone regions of
"Shifting more of the direct financial burden of wildfires to insurance companies may also affect the cost and availability of property insurance" in high-risk areas, the panel wrote.
The panel offered up multiple ideas for shifting costs. One would be the creation of a state-run "wildfire fund" to help utilities deal with the immediate costs of mega-fires, enabling them to pay claims to victims more quickly. The fund "would create a buffer to absorb a significant portion of the wildfire liability costs that might otherwise be passed on to ratepayers," the panel wrote.
The fund would be financed by "a substantial contribution" from utility shareholders. But a key element in making the program work would come from the insurance industry, which would have to "accept a cap" on how much carriers could collect from utilities when they sue for reimbursement.
As an alternative, the panel suggested that utilities be given greater legal protection against fire liabilities -- an idea likely to turn into a major fight in the Legislature.
Lawmakers last year gave the
Specifically, Newsom is being urged to seek changes to the legal doctrine known as "inverse condemnation."
Under the current system, inverse condemnation makes
Replacing the current legal model with a "fault-based standard" would alleviate some of the utilities' burden, but make it harder for insurers and fire victims to get compensated.
Some of the recommendations unveiled Friday dovetail with initiatives Newsom has already taken, such as redeploying
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