Newsom Signs Wildfire Liability Legislation And Hires A New Utilities Commission President

The legislation establishes a $21 billion fund that power companies can access for damages related to utility-caused wildfires.


July 12, 2019

Gov. Gavin Newsom capped a week of break-neck legislative action in Sacramento by signing into law Friday a wildfire liability bill that significantly changes the way costs are addressed when the equipment owned by California’s state investor-owned utilities spark blazes.

The first-year governor also announced his choice for president of the California Public Utilities Commission, or CPUC, the regulatory body that oversees the big three power companies in the Golden State.

“We have a lot to be proud of in this legislation,” Newsom said at a signing ceremony in which he was accompanied by the author of Assembly Bill 1054, the directors of Cal Fire and the governor’s Office of Emergency Services.

Introduced less than one week ago as an “urgency statute” that could go into effect immediately if it passed through each house of the State Capitol with a two-thirds super-majority, AB 1054 cleared committees in the State Senate and Assembly in rapid succession before moving through the Senate 31-7 on a Monday night floor vote and 63-8 in the Assembly on Thursday morning.

Large in scope and complicated in its provisions, AB 1054’s most notable aspect establishes a $21 billion fund that power companies can access for damages related to utility-caused wildfires — but only after they receive a first-of-its-kind safety certification from the state. To qualify, the companies must tie executive compensation to safety performance, establish a wildfire safety committee on their respective boards and meet other financial and safety measures.

The money creating the fund would be split half-and-half between the utilities and ratepayers.

Newsom, whose staff played a major role in writing the bill and lobbying for it, said AB 1054 aims to put money into the hands of wildfire victims more quickly and promote programs to reduce fire risk. It also hopes the measure will help avoid further downgrades of utilities by credit ratings agencies by putting the power companies on firmer financial footing. He said his office and the Legislature looks to do more in August in regard to insurance and hardening the system in an environment that has seen six of California’s 10 most destructive fires take place in the past two years.

“Yes, we have more work to do,” Newsom said. “Yes, we are sobered by the enormity of the task at hand and yes, we are cognizant of the fact that we have to implement this legislation.”

The bill has been criticized as being rushed through the Legislature, but Newsom said the wildfire issue “has been front and center before lawmakers ” for “many, many months.”

As for opponents who say AB 1054 represents a bailout out of Pacific Gas & Electric, the largest utility in the state that filed for bankruptcy protection in January citing about $30 billion in potential liabilities, Newsom said although PG&E has “consistently been bad actors, period, full stop,” under the bill PG&E cannot access the wildfire fund until it exits bankruptcy proceedings.

“We made a determination this (AB 1054) was the best path,” Newsom said.

The governor also announced he has selected Marybel Batjer to succeed Michael Picker as the president of the CPUC.

Batjer moves over from secretary of the California Government Operations Agency, the department that administers state operations including procurement, real estate, information technology and human resources.

“She is about reorganization, about governance, about implementation, about building collaborations and partnerships,” Newsom said. “And she is one of the best in the business.”

Picker, appointed in 2014 by former Gov. Jerry Brown, announced his retirement in May. Batjer’s appointment must be confirmed by the State Senate.

In another personnel move, Newsom said he is firing Ken Harris, the director of the Division of Oil, Gas and Geothermal Resources, the state’s top oil and gas regulator.

Newsom was upset the division this year increased the number of state permits for hydraulic fracturing — the process drillers use that sends high-pressure injection of water, chemicals and sand into shale deposits to release natural gas and oil trapped within rock.

Earlier this week, advocacy groups Consumer Watchdog and and FracTracker Allliance released a report also showing officials working in the division owned stock in companies they regulate.

“I’m not a big fan of fracking,” Newsom said, adding, “I have the right to appoint people who share my values.”

The Associated Press and the Los Angeles Times contributed to this story.

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