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Gov. Jerry Brown released a proposal Tuesday to reduce PG&E’s legal responsibility for wildfire damages after months of intense lobbying at the California Capitol.
The change could shift the financial burden for blazes onto insurance companies and lead to higher coverage premiums for homeowners.
“Now more than ever, Californians depend on reliable electrical power to heat and cool homes, run hospitals and fire stations and so much more,” Brown wrote in a letter to the Legislature. “Yet, the increasingly destructive and costly wildfires and natural disasters have the potential to undermine the system, leaving our energy sector in a state of weakness at a time when it should be making even greater investments in safety.”
Brown unveiled his plan on the eve of the first meeting of a conference committee comprised of members of the state Senate and Assembly to address the issue of wildfire liability in California. Pacific Gas & Electric Co. and other utility companies have been working the halls of the Capitol for months to persuade legislators to reduce their property damage liability.
State laws and regulations give utility companies the power to put equipment on private property. Under “strict liability” in California law, a utility company is then automatically responsible for providing compensation if the property is damaged by its equipment, even if investigators fail to prove the company behaved negligently.
PG&E, one of the most powerful players in California politics, argues it cannot afford the costs of intense wildfires, which it claims are fueled by climate change. The company has been asking the Legislature to do away with the “strict liability” standard and absolve utilities of financial responsibility for fire damages if they didn’t do anything wrong to cause the blaze.
Brown is giving the utilities exactly what they want. His bill would rewrite the wildfire liability laws with a new set of directives to determine whether a utility company has to pay for fire damages in civil cases.
It says a court would be required to “balance the public benefit of the electrical infrastructure with the harm caused to private property to determine whether the utility acted reasonably.” One of those factors is whether the utility acted in compliance with its “fire mitigation plans” to prevent fires, such as trimming tree branches around power lines.
Under the current system, homeowners, cities and counties file claims with insurance companies after wildfires cause damage to their properties. Insurance companies pay out the claims and sue the utility companies for reimbursement.
The existing “strict liability” standard ensures that the utility pays the insurer. Utilities can also pass off those costs to customers by increasing rates.
But if utilities are let off the hook for damages, the insurance companies could be left with the bill. The industry has said it would be forced to increase premiums or decline coverage entirely in fire-prone areas as a result.
“This proposal’s weakening of well-established liability standards is nothing more than a bailout of public utilities, shifting their financial liability onto the backs of wildfire survivors, homeowners, communities and businesses,” said a statement from Stop the Utility Bailout, a coalition of homeowners’ insurance companies.
“Protecting utilities’ shareholders over fire survivors leaves the very individuals and communities whose lives were upended on the hook to the benefit of huge utility companies.”
PG&E said it was reviewing the governor’s plan on Tuesday afternoon.
“As we have stated previously, we believe comprehensive public policy reforms are urgently needed to address the challenges brought about by more frequent and more intense wildfires,” PG&E said in a statement.
So far, the California Department of Forestry and Fire Protection has found PG&E’s equipment responsible for 15 of the wildfires that scorched Northern California last year. The agency has not announced a cause of the Tubbs fire in Santa Rosa, the most deadly and damaging of the October blazes. Brown’s proposal does not apply to the devastating 2017 fire season.
“The only reason we’re having this conference committee is because PG&E wants to change the laws they keep breaking,” said state Sen. Jerry Hill, a San Mateo Democrat and fierce opponent of PG&E.. “The system is working today.”
A coalition of residential and industrial ratepayers, called the Ratepayer Protection Network, said it was still reviewing the governor’s proposal.
“We are urging policymakers to prioritize safety, accountability and affordability and not give investor-owned utilities a blank check paid for by customers,” said Becky Warren, a spokeswoman for the Ratepayer Protection Network in a statement.