Ratepayers would help pay off utilities’ fire debts under Legislature’s proposal

Aug. 25--California electricity customers would slowly pay off the debts utilities incur when they're held responsible for the costs of sprawling disasters, including catastrophic wildfires, under a legislative plan that emerged Friday.

An outline of the plans says lawmakers are ready to get behind a proposal that would allow PG&E and other large utilities to issue bonds after a wildfire. The bonds would help them smooth out their costs, and potentially protect ratepayers from sudden spikes in their bills, the proposal says.

"Financing these costs is not a 'bailout,' " the proposal says, "but rather a mechanism for the (Public Utilities Commission) to approve a dedicated rate component, to allow (a utility) to sell revenue bonds to help pay off that debt."

The Legislature's Wildfire Preparedness and Response Conference Committee is expected to release and vote on a final report early next week. The full Legislature would then consider it before adjourning for the year on Friday. The committee was convened this year to review wildfire laws because the state has experienced a string of deadly and costly fire seasons after its five-year drought.

Last week, lawmakers abandoned the most controversial item they had considered, a proposal that would have diminished PG&E's potential $15 billion liability for 2017 wildfires that devastated Santa Rosa and other parts of Wine Country.

Still, critics of the committee's current proposal said it could be a "bailout" for utilities by letting them pass costs on to customers.

"This looks like a bailout, smells like a bailout and certainly feels like a bailout," said Michael Shaw, vice president of the California Manufacturers and Technology Association.

He and a number of agriculture and fossil fuel industry representatives spoke against the proposal because they said they feared it would drive up the cost of doing business in the state.

Ratepayer advocates, too, wanted assurances that utility investors would have to pay for a company's errors before costs are passed down to customers.

"Ratepayers cannot be insurers of last resort," said Ignacio Hernandez, a lobbyist for a ratepayer advocacy group.

Other recommendations in the outline released Friday center on giving homeowners more flexibility in clearing trees from their properties, setting new standards for utility fire prevention plans, boosting funding for forestry management and adjusting the state's emergency response network to pre-position firefighters and equipment in high-risk areas.

Local government, fire district and insurance industry representatives supported the proposal. Some environmental advocates generally supported it, but worried it would allow the state to harvest large trees.

The proposal does not address PG&E's liability for last year's fires, which led some renewable energy companies and labor representatives to ask lawmakers for more clarity. They worry that PG&E will go bankrupt and jeopardize their contracts or employment.

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