California Senate Passes $21 Billion Wildfire Fund Legislation, As Newsom Pushes For Final Vote Friday

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By Robert Walton, UTILITY DIVE

July 9, 2019

Dive Brief:

  • The California Senate on Monday passed AB 1054, legislation Gov. Gavin Newsom, D, is rapidly pushing to help utilities cover wildfire damage liabilities through a new $21 billion liquidity fund.
  • The legislation was advanced by the Senate Energy, Utilities and Communications Committee and the Senate Appropriations Committee, before being approved 31-7 by the full chamber. Newsom is pressing for a final vote in the Assemby on Friday.
  • Some customer advocates say they have concerns that the legislation weakens the standards to hold utilities accountable. On the other side, Pacific Gas & Electric (PG&E) declared bankruptcy earlier this year in part due to wildfire liabilities, and the utility’s creditors have supported the legislation as a much-needed solution.

Dive Insight:

PG&E’s creditors are pressing for quick passage of AB 1054, while advocacy group Consumer Watchdog has warned that an accelerated schedule leaves utility customers vulnerable.

A Friday vote would leave no time for amendments to what is “very complex legislation where details have a lot of devils,” Consumer Watchdog President and Chairman of the Board Jamie Court wrote in a Monday blog post.

The proposal calls for utility ratepayers to contribute $10.5 billion, with shareholders contributing the same amount. Customers would pay into the fund through a $2.50 monthly charge on bills that has been in place since the state’s energy crisis, and had been slated to roll off. 

But Consumer Watchdog warned the legislation’s details give the state’s Public Utilities Commission “power to bond endlessly” without approval from lawmaker, if customers are forced to bear “recoverable” costs.

“The problem is the legislature is weakening the standard by which ratepayers can hold utilities accountable for not being prudent managers and starting fires,” Court wrote. “So ratepayers will pay in more instances than the past.”

PG&E’s official creditors committee, however, warned that taking too much time could be costly.

“Delays in legislation to address California’s wildfire liability crises will result in damaging consequences for wildfire victims, ratepayers, and businesses across California,” the group said in a statement. “Furthermore, these delays will affect the bankruptcy process, and likely result in delayed payments to victims, service and energy providers, and lenders.”

Several trade associations representing California’s wind, solar, geothermal, and bioenergy industries, have also said the legislation is necessary to “stabilize and hold accountable the state’s largest utilities.” 

“California’s energy future is dependent upon getting to a financially stable market, as AB 1054 intends,” Independent Energy Producers CEO Jan Smutny-Jones said in a statement.


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