Protecting taxpayer interests in the fire liability fight

Thomas FireOne of the most contentious political battles currently being waged in Sacramento during the final two weeks of the legislative session is over the extent to which investor-owned utilities, such as Pacific Gas & Electric, should be held liable and have to compensate property owners for the damage inflicted by the horrendous wildfires that are still burning across the state. Average California taxpayers and homeowners probably sense this is a big deal because of extensive media coverage, but may not know what to think about it.

Here’s what’s going on.

First, there is little dispute that the number of wildfires and their intensity has increased dramatically in recent years. Investor-owned utilities, including PG&E as well as San Diego Gas & Electric, have been forced into big legal settlements because many fires were allegedly caused by electrical wires or other equipment. The utilities, however, have attempted to shift some of the blame to natural causes such as climate change, which they argue produces the conditions for more catastrophic fires. (More recently, blame has also been placed at California’s mismanagement of public lands, which is undoubtedly a contributing cause).

Determining liability for wildfires is such a hot issue — no pun intended — because of the amount of money involved. San Diego Gas & Electric was facing more than 2,500 lawsuits and thus paid $2.4 billion in settlements for its role in three 2007 fires that burned over 1,500 homes, took human lives and burned 368,316 acres in San Diego County. Fires still burning as this column is being written have inflicted even greater damage and loss of life.

These damages have rocked PG&E and SDG&E.  According to a January blog post from the Energy Institute at Hass, California utilities lost $20 billion in market capitalization after last year’s fires.

In an effort to lessen their liability, the utilities say a constitutional doctrine called inverse condemnation has compelled them to settle lawsuits from property owners, firefighting agencies and local governments. They believe the doctrine entitles them to recoup some of the expenses by raising rates, but California’s Public Utility Commission has balked.

Although the utilities’ efforts to offload some of their liability for fire damage is understandable, taxpayer advocates are opposing the shift as it diminishes their own property rights.  The Howard Jarvis Taxpayers Association views limited taxation on property as a natural extension of property rights generally.  For example, following the infamous Kelo v. New London decision by the United States Supreme Court allowing the use of eminent domain for private-to-private transfers of property, HJTA fought for both a state constitutional, as well as statutory, prohibition of those takings.  Other property-rights issues of major concern to taxpayer advocates include the attempt to expand rent control in California and ensuring that just compensation is paid to property owners for traditional exercises of eminent domain, especially for boondoggle projects like California’s High Speed Rail project. …

Click here to read the full article from the Pasadena Star News

Trump declares California wildfires a ‘major disaster’

A wildfire rages in Buck Meadows, in the Yosemite National ParkPresident Donald Trump has approved declaring the California wildfires a major disaster, the White House said on Sunday, and ordered federal aid to be provided.

His move, which will make federal funding available for the most stricken areas, comes after California governor Jerry Brown called for federal help.

It comes as the wildfires in northern California have spread to more than two-thirds the size of Los Angeles as more residents were ordered to evacuate their homes.

In a statement the White House said: “Assistance can include grants for temporary housing and home repairs, low-cost loans to cover uninsured property losses, and other programs to help individuals and business owners recover from the effects of the disaster. …

Click here to read the full article from the Guardian

PG&E Seeks Protection From Costs of Wildfires They Cause

A wildfire rages in Buck Meadows, in the Yosemite National ParkCalifornia’s three large investor-owned utilities are renewing efforts to allow them to make ratepayers cover the costs of wildfires that authorities blame on utilities’ mistakes or poor maintenance.

Pacific Gas & Electric officials made this clear last week when they announced they expected to have at least $2.5 billion in liabilities from the wildfires that scarred the wine country of Northern California last October. That sum is only for 12 relatively small blazes that the state blames on PG&E’s failure to maintain equipment and clear brush near power lines. Authorities are still looking at what caused the biggest blaze – the Tubbs fire – which torched more than 3,000 homes in Sonoma County and is blamed in the deaths of 22 people.

PG&E CEO-President Geisha Williams used a conference call with analysts to make the case for state legislation to protect electricity utilities from bankruptcy in an era in which huge wildfires – blamed on hotter, drier weather – are more common than ever. PG&E only has an estimated $840 million in insurance coverage to deal with the 200 and counting lawsuits from the wine country conflagrations.

Williams said “flawed” state laws made utilities responsible for fire risks that were beyond their control. But in a decision-making process that began last summer – before the wine country blazes – and ended after they were finally put out, the California Public Utilities Commission rejected a similar argument put forward by San Diego Gas & Electric. In August, CPUC staff recommended that commissioners reject an SDG&E request to pass along to ratepayers $379 million in unrecovered costs from 2007 wildfires that ravaged San Diego County. After three months of wavering, the CPUC board voted unanimously in late November to deny the request.

Williams said negative media coverage of the October fires complicated utilities’ efforts to get help from the California Legislature. But some utility watchdogs are still wary of state lawmakers, whom they see as sending out mixed signals on wildfire liabilities.

On the one hand, the state Senate voted 39-0 in May and an Assembly committee voted 15-0 last week for Senate Bill 819. It would ban the CPUC from allowing utilities to pass along to ratepayers the costs of fines or penalties as well as the cost of damages that were “caused” by a utility’s infrastructure. Only costs the CPUC deems “just and reasonable” can be shifted from shareholders to ratepayers under the legislation. PG&E and Southern California Edison expressed “concerns” about the bill without formally opposing it, according to a legislative analysis.

Benign bill pushing responsibility – or stealth bailout?

But another bill that had similarly lopsided support in the Senate is drawing a very mixed response. Senate Bill 1088 passed the Senate 34-2 in late May and survived an Assembly committee vote last week with eight lawmakers in support, two in opposition and five declining to vote.

It would require utilities “to submit a safety, reliability and resiliency plan to the California Public Utilities Commission every two years.” It would also require the state Office of Emergency Services “to adopt standards for reducing risks from a major event and requires the office to update the standards at least once every two years.”

Supporters – including PG&E, SDG&E, labor unions and some counties hit hard by last year’s blazes – depict the measure as a benign attempt to make sure utilities are prepared to handle their responsibilities.

But critics see the language requiring the state to regularly “update” how it evaluates risks posed by the biggest blazes as potentially giving legal ammunition to the utilities – specifically, to their arguments that emerging, more dangerous conditions should change what costs can be shifted on a “fair and reasonable” basis to ratepayers.

Formal opponents of SB1088 include groups which have standing to challenge utilities’ proposed rate hikes (The Utility Reform Network and the Office of Ratepayer Advocates); business interests (the California Manufacturers and Technology Association, the Western States Petroleum Association and farm groups); and green activists (most notably the California Environmental Justice Alliance).

This article was originally published by CalWatchdog.com

Brown Linked Climate Change to CA’s Wildfires. Scientists Disagree.

As reported by the Los Angeles Times:

The ash of the Rocky fire was still hot when Gov. Jerry Brown strode to a bank of television cameras beside a blackened ridge and, flanked by firefighters, delivered a battle cry against climate change.

The wilderness fire was “a real wake-up call” to reduce the carbon pollution “that is in many respects driving all of this,” he said.

“The fires are changing…. The way this fire performed, it’s not the way it usually has been. Going in lots of directions, moving fast, even without hot winds.”

“It’s a new normal,” he said in August. “California is burning.” …

Click here to read the full story