By CAMILLE VON KAENEL, POLITICO
THE ENEMY OF MY ENEMY: Jamie Court of the advocacy group Consumer Watchdog and California’s property insurance lobby have spent decades finding new and creative ways to make each other miserable.
Now, they’re suddenly allies, thanks to the Newsom administration’s wildfire liability proposal.
Court, the advocacy group’s president, recorded an insurance industry veteran (opens in new tab)talking a bit too loudly on a Southwest flight years ago to expose — and stop — what he characterized as an end-of-session insurance bailout.
Then, last year, Consumer Watchdog and the industry came within inches of a multimillion-dollar ballot war about the state’s property insurance regulations. Both sides only backed down after representatives from each camp showed up at the secretary of state’s office (opens in new tab) at the same time because neither trusted the other to withdraw their proposals first.
And that’s before you get to the more routine warfare. Consumer Watchdog regularly jumps into Insurance Department rate cases to try to block increases, while insurers accuse the group of gumming up the works.
Yet the old antagonists are now on the same side of the wildfire drama engulfing the final weeks of the legislative session. Both are staunchly opposed to Gov. Gavin Newsom’s proposal to shield utilities from some of the costs of wildfires caused by their equipment, and both argue this would simply move those costs onto insurance companies and homeowners.
Consumer Watchdog last week joined some of the state’s biggest insurance trade groups (opens in new tab), along with local government and trial attorney groups, in a joint letter urging lawmakers to reject the proposal.
In an interview, Court called the alignment “ironic.” And Rex Frazier, the president of the Personal Insurance Federation of California, called it “novel.” But both said their deep experience with insurance issues gave them a common understanding.
“It makes sense why we would see things the same,” Frazier said.
Two wildfire survivor groups that have frequently partnered with Consumer Watchdog to battle insurers over rate hikes and slow payouts after the Los Angeles fires, Every Fire Survivor’s Network and the Extreme Weather Survivors Action Fund, also signed the letter. Their addition gives the coalition more political heft, as both sides are racing to claim the mantle of wildfire victim champion.
The utility-backed coalition has even named itself “Wildfire Victims First,” while Newsom himself has been on the defensive with a Los Angeles politician (opens in new tab) who said she was concerned he wasn’t prioritizing survivors.
Consumer Watchdog, the Personal Insurance Federation of California and the American Property Casualty Insurance Association have also collectively poured millions of dollars into political advertising to make their case.
“There’s a lot we disagree on, but the fact is we have common cause right now in trying to keep policyholders from paying more, when they’re already paying too much,” Court said.
Court and Frazier’s icy relationship began to thaw during last year’s ballot standoff, when the two sides were forced to negotiate their way out of mutually assured destruction, the two said. They even recently found themselves having a drink together after a gubernatorial debate reception at Pomona College.
“The thing about him is he likes to win his arguments,” Court said of Frazier. “So it’s really annoying when you’re on the other side of the argument from him because he will never stop, but when you’re on the same side of the argument, it’s very useful because he is persistent.”
The wonky issue reshaping these relationships is called subrogation.
After a power company causes a wildfire, insurance companies pay out claims to people whose destroyed or damaged homes were insured. But insurers can then recover some of that cost from the power company that was responsible, typically 40 to 60 percent of their losses.
The Newsom administration has proposed eliminating subrogation — their ability to do this. But PIFC estimates that taking that figure to zero would force insurers to raise the average homeowners premium by 15 to 20 percent statewide, or roughly $375 to $500 a year, with substantially larger increases in fire-prone areas.
There was a similar short-lived alliance in 2019, when Newsom and lawmakers first considered eliminating subrogation and instead created the ratepayer- and shareholder-funded wildfire fund that is again at the center of negotiations.
What’s different this time, Frazier said, is how closely he and Court are actually working together.
“That’s why you have to conduct yourself in an above-board way over an extended period of time, because issues change, and you want to make sure people are willing to work with you,” Frazier said.
WE’LL DO IT LIVE: Who needs a bill when you can cut a deal?
Sen. John Laird announced on Monday that San Luis Obispo County and Pacific Gas & Electric have agreed that the power company will provide $16 million for local schools and services over the next two years.
In 2022, legislation to extend operations at the Diablo Canyon nuclear power plant left a funding gap for community services. The new funds will cover the shortfall.
Laird, who authored a bill on the issue this session, SB 931 (opens in new tab), said that he is now “pausing the bill.”
PG&E approached the lawmaker, who represents the region home to Diablo Canyon, last week, according to Laird. “We negotiated through the weekend and came to the deal,” Laird said, adding that the agreement basically achieves what his bill set out to do.
The payments will draw from exclusively PG&E shareholders, not ratepayer funds, according to the company. — NB
FUNDING FRACAS: President Donald Trump has promised to dismantle nearly $1.6 trillion in spending and tax breaks the Biden administration dedicated to climate and clean energy.
A huge chunk of that funding has been wiped out, but roughly $600 billion has so far escaped Trump’s wrecking ball, a new POLITICO analysis found (opens in new tab).
The fate of those leftover dollars is an emerging subplot in the November elections and in congressional efforts to prevent a government shutdown this fall, POLITICO’s Jessie Blaeser, Benjamin Storrow and Kelsey Tamborrino report.
Even Trump’s own Energy Department has wavered, deciding in April to maintain most of its Biden-era grants (opens in new tab) after a lengthy review — in some cases, quietly reinstating funding (opens in new tab) it once cut.
But the damage has already been particularly severe for emerging technologies, analysts said. That includes a California company experimenting with cleaner ways to make cement that saw DOE cancel a $500 million grant last fall. — AN
GAS GUZZLER: The Trump administration is on the verge of weakening fuel economy standards for passenger vehicles — another potential blow to Democrats’ electric vehicle ambitions.
The White House has finished reviewing a revised rule that would require automakers to hit fleetwide fuel economy averages of 34.5 miles per gallon by 2031. That greatly reduces the rule’s strength compared with Biden-era standards, which mandated a 50.4 mpg average by 2031, Jean Chemnick writes for subscribers (opens in new tab).
Republicans have already hampered the electric vehicle market in California and nationwide. Congress voted last year to revoke an EPA waiver that allowed California to enforce a zero-emission sales mandate, and the Trump administration also ended a $7,500 federal tax credit for EV buyers. — AN
— Long Beach leadership says a gap in environmental rules delayed the city’s response to toxic firefighting runoff (opens in new tab) in the Los Angeles River.
— California has yet to learn from its wildfires, but Newsom’s latest proposal (opens in new tab) could help victims, argues Creek Fire survivor Joe Denham.
— The federal government, the Port of Long Beach and a new startup are joining forces to develop the state’s first new nuclear power project (opens in new tab) in 50 years.
