Does This California Wildfire Bill Protect Consumers? Or Give Utilities A Blank Check?

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Does This California Wildfire Bill Protect Consumers? Or Give Utilities A Blank Check?


April 26, 2018

A bill in Sacramento that would require utilities to submit detailed plans outlining how they would handle disastrous wildfires is moving through the California Legislature — but it’s facing fierce opposition from consumer groups who say it amounts to a giveaway to power companies.

And some of the utilities aren’t crazy about it, either.

The legislation, Senate Bill 1088, authored by Sen. Bill Dodd, D-Santa Rosa, breezed through the Governmental Organization Committee on an 11-1 vote Tuesday and is heading to the Senate Appropriations Committee in Sacramento.

“We need the electric utilities and the Public Utilities Commission to implement best practices and also mandate that our investor-owned utilities do the best job they can to harden the grid and prevent these types of fires,” Dodd said.

The bill comes after a series of deadly wildfires scorched the state last year. Fires have been occurring with greater frequency, with eight of the 20 most destructive fires in California history coming since 2015.

SB 1088 wants to make sure the equipment owned by the state’s major investor-owned electric and natural gas utilities is more resilient and resistant to damage from wildfires and other “major events,” including earthquakes.

The legislation calls for utilities to submit a “safety, reliability and resiliency plan” to the California Public Utilities Commission (CPUC) every two years. The CPUC would then review those plans in a single, consolidated proceeding and make sure the utilities are complying with those plans, which also include spending estimates.

“We need to think innovatively and proactively about fire prevention,” said Dodd, who lives in Napa and said 151 homes in his neighborhood burned down in 2017.

Opposition to the bill

But some consumer groups find fault with SB 1088 on a number of fronts and say the bill will lead to utility customers paying higher rates.

Under the legislation, once the CPUC approves a utility’s safety plan, the commission would be required to pass along the costs of the plan to the power company’s customers.

That, says The Utility Reform Network (TURN), undercuts the process of “general rate cases” that utilities make before the CPUC. Those hearings are complex and detailed, often taking two years — sometimes longer — to get resolved. The bill, TURN argues, would put the plans submitted by the utilities on too fast a track.

TURN’s communications director Mindy Spatt said utilities would have “carte blanche to raise rates with limited or no regulatory review. TURN and other consumer representatives would be shut out under SB 1088, unable to hold utilities accountable for spending or stop rates for essential services from skyrocketing for so-called safety initiatives of no proven value.”

Also, if the CPUC does not approve a given utility’s safety plan by the end of the year in which it was submitted, the utility can go ahead and implement the plan, getting full rate recovery, until the commission eventually OKs it.

That’s not enough time for the CPUC to go over the details of each utility’s plan, said TURN’s executive director Mark Toney, who called the timeline “wildly unrealistic.” The California Large Energy Consumers Association agreed.

Los Angeles-based Consumer Watchdog denounced the bill as “a massive bailout.”

The legislation “changes the standard so that as long as (a utility) files a nebulous plan for fire control then the company is not legally accountable for its failure to take reasonable steps that prevent wildfires,” Consumer Watchdog’s president, Jamie Court said in a letter this week to Senate Pro Tem Toni Adkins, D-San Diego, and Assembly Speaker Anthony Rendon, D-Lakewood.

Dodd said Thursday that recent amendments to the bill could expand the time for the CPUC to review a utility’s plan from one year to two years.

“I felt that was a legitimate criticism,” Dodd said.

Utilities mum or even skeptical

San Diego Gas & Electric declined to say if it supports or opposes SB 1088, writing in an email, “We are currently in the process of reviewing the new amendments” to the bill. Southern California Gas has not taken a position on the bill.

But other utilities have been more vocal.

In an April 13 letter, Southern California Edison said SB 1088 needs to be improved and alluded to the legal concept known as “inverse condemnation” that, according to the California Constitution, says utilities can be held liable for damages caused by wildfires linked to their own equipment — even if the companies followed accepted safety procedures.

Edison said it wanted to see a “move away from the current structure of allowing what is essentially limitless utility liability, and instead include appropriate cost recovery standards.”

Pacific Gas & Electric sent its own letter to the chairman of Senate Committee on Energy, Utilities and Communications — Sen. Ben Hueso, D-San Diego — making similar arguments.

PG&E spokesman Ari Vanrenen told the Union-Tribune that SB 1088 “includes some good ideas” but “we believe it is only one part of what needs to be a broader solution to address California’s new normal of climate-driven wildfires.”

Large parts of the Wine Country fires last year that killed 44 people and scorched 245,000 acres occurred in PG&E’s service territory. There has been speculation that PG&E power lines blowing in a windstorm may have sparked some of the fires but investigations by Cal Fire and the California Department of Forestry and Fire Protection are still underway and have not reached any conclusions.

San Diego attorney Michael Aguirre, a longtime critic of the state’s investor-owned utilities and the CPUC, said he suspects the utilities actually favor the bill but are pushing for more, such as protection from inverse condemnation.

“I think they like it,” Aguirre said, “they just want some whipped cream and a cherry on top.”

Going forward

Dodd said he has “worked really hard to thread the needle” among the groups criticizing the bill.

“The reality is I don’t believe you’re going to get the investor-owned utilities to invest what they need to invest to make our grid safer without some assurances that they’re going to get compensated for it,” Dodd said. “There’s no free lunch.”

But at the same time, Dodd said, his proposal “isn’t a slush fund that (utilities) can use for corporate executives. This isn’t a slush fund they can use for anything else other than doing the job.”

The bill calls for fines to be levied against utilities who don’t adhere to their “safety, reliability and resiliency” plans. The CPUC would be in charge of determining the size of those fines, Dodd said.

According to PG&E’s website, Dodd received $4,200 from the utility in 2016 campaign contributions.

“During the campaign I raised over $2 million,” Dodd said. “The fact of the matter is people that know my record know that doesn’t play into what I do … I am a ratepayer. I’m not interested in paying higher rates, but at the same time I’m interested in keeping communities safe.”

SB 1088’s hearing in the Senate Appropriations Committee is expected within a couple of weeks. Should the committee pass it along, it will then go to the Senate floor. If approved by the Senate, the bill would go to the Assembly where it would run a similar legislative gauntlet.


Consumer Watchdog
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