PG&E-friendly wildfire plan is labeled unconstitutional by fire victims

July 31--Fire victims on Monday derided Gov. Jerry Brown's wildfire liability proposal for large utilities as unconstitutional and illegal -- even though PG&E's top boss has said the plan doesn't go far enough to help the utilities.

Gov. Brown on July 24 proposed a plan that could dramatically ease future potential wildfire-related financial burdens on large utilities such as PG&E by potentially shoveling more costs onto the shoulders of utility ratepayers and California homeowners. Brown said the plan wouldn't, however, affect any of PG&E's potential costs from the deadly October wildfires that torched the North Bay Wine Country and nearby regions.

The fire victims' opposition to the governor's plan is a fresh indicator that a full-scale battle looms in the waning weeks of the state legislative session over the nature and extent of future liabilities for PG&E and other big power companies when their equipment is involved in fires.

"The governor's wildfire proposal strips victims of their guaranteed right to compensation," the Up From the Ashes coalition of wildfire victims said in a statement Monday.

The coalition noted the state Constitution allows private property to be taken by an investor-owned utility for a public use only after the owner has been compensated for the loss of, or damage to, the property.

The governor's plan, however, would no longer require compensation because the proposal's language allows courts to use discretion regarding "whether the utility acted reasonably," the wildfire victims said. They suggested "reasonable" could have a wide-ranging interpretation.

San Francisco-based PG&E has in recent months waged a campaign to change a legal framework known as inverse condemnation that is used to determine whether utilities and their shareholders -- or the companies' rate-paying customers -- ultimately pay for costs associated with wildfires sparked by the utilities' infrastructure.

Fire victims warned that it's possible that even if property owners are compensated, the payments might fall far below the value of the defunct property.

However, a key passage in the governor's proposal could do away with full compensation and leave that up to the discretion of a judge or jury.

"Just compensation to the owner is not protected because the court can reduce the damages below the fair market value by determining proportionate fault," the legal analysis by the wildfire victims stated.

Alarmed by destructive wildfires this year and in past fire seasons, the governor has said his proposed legislative remedy is needed to protect a crucial electricity system whose financial stability could be undermined if today's legal framework for determining liability isn't altered.

But PG&E wants the governor and Legislature to go even further to fashion financial shields for PG&E.

"The governor's proposal is constructive, but it is insufficient," Williams told the analysts on July 26. "It is an important input, but more work is necessary."

"None of the reforms being discussed would limit a victim's ability to pursue a negligence claim against their utility," PG&E spokeswoman Lynsey Paulo said.

Although Brown's legislative proposal wouldn't absolve PG&E of exposures to past fires, a separate measure, AB 33, would use state-backed bond measures to finance, up front, billions of dollars in costs for the wildfires so victims could be paid rapidly, noted state Sen. Jerry Hill, a frequent critic of PG&E. The utility caused a fatal explosion in 2010 in San Bruno, which is part of the senator's legislative district.

"The governor's plan is clearly a way for PG&E to be bailed out for future liabilities, and as we know, AB 33 is designed to bail out PG&E for last year's illegal activities that started many of the October fires," Sen. Hill said.

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