California leaders call for protecting utilities, spreading costs after catastrophic wildfires

A panel of state leaders Wednesday called for legal changes that would give PG&E and other utilities some more protection against wildfire liabilities.

The five-member Commission on Catastrophic Wildfire Cost and Recovery, created last fall by the Legislature, said in a draft report that California should overhaul the legal doctrine known as “inverse condemnation,” which holds utility shareholders liable for wildfire costs if the company’s equipment caused the fire — even if the company didn’t act negligently.

Under that new system, utilities could bill ratepayers for “just and reasonable investments” that reduce the likelihood of fire.

The panel also called for the creation of a Wildfire Victims Fund to quickly pay claims to survivors of the Camp Fire, which destroyed most of Paradise last November, and the 2017 wine country fires. The fund would include financial contributions from shareholders as well as ratepayers. The panel was silent on the size of the fund.

The recommendations dovetail similar proposals outlined by Gov. Gavin Newsom in April and recognize the dire plight facing the state’s major utilities. PG&E Corp. has been driven into bankruptcy by an estimated $30 billion in wildfire liabilities from the past two years. The other major utilities, Southern California Edison and San Diego Gas & Electric, have seen their credit ratings plummet as lenders fear they will get swallowed by wildfire liabilities as well.

The report comes as state officials are wrestling with how to get wildfire victims paid while keeping utility rates relatively low — a task complicated by PG&E’s bankruptcy. All three of the big utilities have asked the Public Utilities Commission for substantial rate hikes to deal with wildfire risks, earning a rebuke from Newsom last month.

In a joint statement with legislative leaders Wednesday, Newsom pledged to work for a solution that treats everyone fairly.

“We must act now to stabilize the energy market and our utilities by addressing the liability faced by utilities after catastrophic wildfires,” said Newsom, Senate President pro Tem Toni Atkins and Assembly Speaker Anthony Rendon in a joint statement following the release of the report Wednesday.

The three said they’re committed “insisting on a culture of safety for utilities and on affordability for ratepayers.”