Advocates warn plan is a bailout for utility companies
By JONATHAN J. COOPER, Associated Press
SACRAMENTO, Calif. (AP) — California utilities could sell bonds and pass on the cost to their customers to help cover debt incurred when their equipment starts wildfires, under proposed legislation outlined on Friday.
The proposal is part of a wide-ranging plan to help shield utilities from bankruptcy and better prepare the state to deal with massive wildfires. The plan needs legislative approval next week but Republicans and Democrats appeared to be on board.
Lawmakers say it’s designed to guard against rate spikes and excessive utility bills, but large power users and ratepayer advocates warn it amounts to a bailout for Pacific Gas & Electric and other utilities.
PG&E expects to pay billions of dollars related to lawsuits after wildfires tore through Northern California last fall. Several blazes have been traced to PG&E equipment, though investigators have not released their findings in the most expensive fire that destroyed thousands of homes in Santa Rosa.
California law holds utilities almost entirely liable for damage sparked by their equipment even when the utilities follow all safety rules.
The proposal would allow utilities to finance their debt and pay it off using a surcharge on monthly statements. Lawmakers said requiring shareholders to shoulder the entire cost would make it difficult for electricity providers to raise money from investors, crippling their finances.
“There are going to be impacts to ratepayers. There’s no way around it, and I think we need to be honest about that,” said Assembly Republican Leader Brian Dahle of Bieber. “We need to make sure the investors have a heck of a lot of skin in the game … but at the same time, we have to make sure they’re still in business.”
Lawmakers released only a broad outline of the proposal that lacked key details, including whether it would apply to past wildfires such as the devastating blazes in 2017.
Large power users and ratepayer advocates reacted with disappointment, warning that the proposal amounts to a bailout that will drive up prices for consumers.
“Any provision that makes ratepayers the insurance of last resort while PG&E shareholders pay nothing and reap the financial benefits needs to be rejected by the Legislature,” Becky Warren, a spokeswoman for the Ratepayer Protection Network, said in a statement.
The proposal was outlined in a conference committee created by Gov. Jerry Brown and legislative leaders to deal with wildfires, which have been larger and more destructive as California contends with years of drought.
Aside from utility costs, lawmakers also outlined plans to clear out dead trees and other flammable fuels that help fires grow. The plan includes reducing regulations, creating incentives for private landowners and extending biomass energy.
Lawmakers had considered but rejected eliminating the standard that holds utilities entirely liable for wildfires they cause, instead allowing courts to decide.
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Associated Press writer Kathleen Ronayne contributed to this report.
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