California's electric utilities would no longer be automatically liable for wildfire damage caused by the equipment, under a detailed proposal Tuesday from Gov. Jerry Brown.
The proposal marks perhaps the most significant legislative reaction yet to last fall's deadly wildfires, many of which investigators have blamed on power lines. And if approved by the Legislature, the proposal would represent a major victory for California's utility companies.
Brown's proposal specifically says it would not apply to any fires before Jan. 1, 2018. However, a separate bill from Assemblyman Bill Quirk, D-Hayward, would allow Pacific Gas and Electric Co. to pass on to its customers the costs of settling lawsuits from the Wine Country wildfires, provided the fires were not caused by company negligence.
Issued one day before a legislative conference committee is scheduled to discuss wildfire-related bills, Brown's proposal would alter the way California courts apply a legal doctrine known as inverse condemnation that the utility companies, particularly PG&E, have aggressively campaigned to change.
Under inverse condemnation, a utility can be held liable for economic damages from wildfires sparked by the company's equipment, even if the company followed all applicable safety laws.
Brown's proposal, however, instructs courts to consider whether the utility acted reasonably and complied with safety regulations. The courts also would need to "balance the public benefit of the electrical infrastructure with the harm caused to private property." Finally, the courts would take into consideration other factors that contributed to the fire. Last year's Wine Country fires, for example, erupted during a powerful windstorm.
The proposal also would double the potential penalties for utilities that don't follow state safety rules, from the current maximum of $50,000 per infraction to $100,000 for each violation. And it would bar electric utilities from making their customers pay for any fines or penalties.
"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 Tuesday, in a letter to the co-chairmen of the conference committee. "Yet the increasingly destructive and costly wildfires and natural disasters have the potential to undermine this system, leaving our energy sector in a state of weakness at a time when it should be making even greater investments in safety."
PG&E faces more than 200 lawsuits from the Wine Country fires, with liability estimated as high as $15 billion.
Former state Sen. Noreen Evans, now one of the attorneys suing PG&E, accused the governor Tuesday of trying to bail out the company.
"Governor Brown's proposal would relieve public utilities of responsibility for the fires caused by their equipment by mandating that judges balance the "public benefit" of utilities against the private harm," she wrote in an email. "No other wrongdoer is given that kind of consideration by our courts when they kill, maim or harm innocent people."
PG&E, meanwhile, stopped short of endorsing the governor's proposal Tuesday, although the company's CEO, Geisha Williams, has made changing inverse condemnation a top priority.
"We look forward to reviewing the governor's statement and the upcoming work of the joint conference committee," company spokeswoman Lynsey Paulo wrote in an email. "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 investors, however, cheered the news. Within 10 minutes of the governor's office releasing his proposal, the company's stock price jumped 4 percent, before giving up some of those gains. The stock closed at $42.49, up 2.3 percent for the day.
Much of Brown's proposal closely tracks SB901 from state Sen. Bill Dodd, D-Napa, that calls for utility companies to regularly file wildfire mitigation plans with the California Public Utilities Commission. The costs of carrying out each plan would be included in that utility's rates, and the company would not be allowed to use that money for any other purpose. The commission could impose penalties on utilities that failed to follow their own wildfire plans.
Dodd, is one of two co-chairs of the legislative conference committee scheduled to meet Wednesday.
"The governor has put forward his proposal," said Dodd in an emailed a statement Tuesday. "It's the legislature's job to now determine what's best for Californians. That is what we will be working on in the conference committee."
(c)2018 the San Francisco Chronicle
