Subscribe for 33¢ / day
California Governor Jerry Brown

California Gov. Jerry Brown.

Gov. Jerry Brown’s plan to end strict financial liability for utilities whose power lines spark wildfires received a skeptical response Thursday from state legislators, some of whom bristled at anything resembling a bailout of the companies.

At a joint legislative committee hearing to consider the plan, some legislators questioned its constitutionality and complained that it would give electric utilities less incentive to manage their power grids safely.

“Why should we reduce their liability and expect that they’d do more?” asked Sen. Hannah-Beth Jackson, D-Santa Barbara.

Faced with potentially staggering losses from last fall’s wildfires, Pacific Gas and Electric Co. and the state’s other utilities have been pushing for legislation that would help them evade automatic liability for fires triggered by their equipment. Under a concept known as inverse condemnation, the utilities can be held financially liable for such fires even if the companies did nothing wrong.

Brown took up their cause last month, arguing that the current system risked destabilizing the utilities.

He proposed instructing judges to consider whether the companies acted reasonably in running their systems before holding them liable. He also wants judges to weigh the damage caused by the fire against the public benefit of providing electricity.

Brown’s proposal would apply only to fires that began after Jan. 1 of this year, purposely excluding October’s deadly Wine Country fires and the blazes that tore through Ventura and Santa Barbara counties in December. Critics call it both a bailout for the utilities and a potential violation of the state Constitution, because it could deprive property owners of their right to compensation when a utility providing a public benefit takes or damages their property.

Time may not be on the governor’s side. The legislative session ends in three weeks, and some committee members seemed hesitant Thursday to tackle such a difficult, far-reaching issue in the days left.

“The path that you’re asking us to embark on is not constitutional,” Sen. Jeff Stone, R-Temecula (Riverside County), told utility representatives testifying at the hearing. “And what we’re doing is creating this big cloud of hope for the utilities that we’re going to opine the way you want us to opine.”

PG&E faces more than 200 lawsuits from last fall’s fires, and investigators with the California Department of Forestry and Fire Protection have blamed the company’s equipment for starting at least 16 of the blazes. The utility, California’s largest, took a $2.5 billion charge against its earnings in this year’s second quarter in anticipation of being held liable for damage from some of the fires and warned investors the final figure could be much larger. Estimates run as high as $15 billion.

The company, however, did not attend Thursday’s hearing. Sen. Bill Dodd, co-chairman of the committee, said PG&E had been purposely excluded.

“I felt, from my vantage point, that they did have an ax to grind,” said Dodd, D-Napa.

Get news headlines sent daily to your inbox

Instead, representatives of Southern California Edison and the Sacramento Municipal Utility District argued in favor of Brown’s proposal. The current system, they said, effectively turns utilities into insurance companies of last resort.

It also raises insurance and borrowing costs for the utilities, costs that get passed on to customers. SMUD’s chief executive officer, Arlen Orchard, said his district’s insurance costs for the coming year would be four times higher than a year ago. And the utility representatives noted that Brown’s proposal would still hold the companies liable for wildfire damage caused by their negligence.

“Wildfire risks require a balancing of the benefits of extending electricity service to all areas of the state against the risks of starting a fire,” said Henry Weissman, outside counsel for Edison.

But other speakers, including public officials from Wine Country testifying at the hearing, urged committee members not to tinker with the current system.

Napa County Supervisor Diane Dillon said local governments use inverse condemnation to force utility companies to the negotiating table after a fire. Yountville Mayor John Dunbar called the system essential to rebuilding communities.

“We must remember that any changes we make to laws today will impact future fire victims, and we will have future fire victims,” Dillon said. “The governor’s proposal would balance the benefits of electricity against someone’s house burning down. How can you do that?”

0
0
0
1
0