Gov. Newsom isn’t backing down from push to limit how much utilities pay when they cause a wildfire
Despite backlash from several different groups, Gov. Gavin Newsom signaled Wednesday he’s not backing down from his push to limit who and how much California’s utility companies pay when they cause a catastrophic wildfire. KCRA 3 has also learned new details about the proposal.
“We need to move on this,” Newsom told reporters at an unrelated press conference in the Bay Area Wednesday. “I’m not going to walk away and hand a real mess to the next governor.”
In the final days of California’s legislative session, Newsom is pushing to limit payouts and change the rules around the state’s wildfire liability fund, which utility companies and their customers pay into. The proposal would not affect victims of past wildfires but would limit payouts for future incidents.
The wildfire fund is expected to be drained soon as Southern California Edison pays for its role in the Eaton fire in Altadena. The governor said the way the state handles this fund is “untenable.”
This week, KCRA 3 spoke with several sources who provided new details about the governor’s proposal. Some noted the proposal seeks to streamline the most serious wildfire victim claims the way Hawaii did following the devastating, utility-caused fires in Maui.
In June, a judge in that state limited attorneys fees and prevented insurance companies from suing utilities to recoup their losses.
For future wildfires, Newsom’s proposal would limit who is considered a victim, mainly prioritizing those who are in the fire’s burn scar area. It would also prevent insurance companies from suing to recoup their losses and strictly limit how much local governments get to rebuild.
Sources have told KCRA 3 the governor’s latest push also includes an increase in civil penalties for utility companies that cause wildfires, as well as enhanced oversight programs that threaten a third-party takeover of the utility if it fails to improve after causing a wildfire. Newsom has also said he wants to prevent utility executive bonuses if their company causes a wildfire.
The governor’s proposal does not include any new rules, requirements or deadlines for the companies to clean up faulty equipment or underground their lines.
Current state law requires the utility companies to submit wildfire mitigation plans to the California Public Utilities Commission and California Office of Emergency Services. The CPUC and CalOES then certify those plans. Utility companies cannot tap into the state’s wildfire liability fund without that certification.
“We are in an iterative process,” Newsom told KCRA 3 when asked about the lack of new expectations around powerline maintenance for the utility companies. “We are in a dialogue with all these groups, and I imagine this is going to go through many incarnations. If you think that I think what I put out is what I expect to sign, then you haven’t been paying attention to what I’ve been doing here.”
KCRA 3 has also learned Newsom’s plan would change how much money can be pulled from the state’s wildfire liability fund for a single wildfire and how utilities pay for claims.
Utility ratepayers and shareholders split the fund 50/50 for a total of $18 billion right now. If the utility is found liable for a wildfire, the company can tap into the fund to pay claims and is required to pay the money back into the fund.
Right now, utilities can use an unlimited amount of money from the fund. The governor’s proposal attempts to change that so that utilities would be limited to using $6 billion from the fund per wildfire, meaning one single disaster cannot deplete the fund the way the Eaton fire is right now.
Under the governor’s proposal, utilities that exceed the $6 billion would have access to securitization bonds, meaning they would borrow money and add charges to customer bills to help pay the debt for the rest of the expenses associated with the wildfire. If the utility company is found liable, the company would be required to issue credits to customers.
Sources told KCRA 3 as of Wednesday the proposal was still evolving and meetings were held late that afternoon in the governor’s office on the situation. Lawmakers had not put anything into writing as of Wednesday night.
On Wednesday, victims of the Altadena wildfire marched at the state Capitol to voice their frustration.
“This is ridiculous and unfair, and we need to re-center the conversation on what survivors need,” Democratic State Sen. Sasha Renee Perez, who represents Altadena, said during the rally.
Assembly Speaker Robert Rivas told reporters Tuesday he had nothing new to share. State Senate Pro Tem Sen. Monique Limón said the conversations are ongoing.
“The legislature is doing its due diligence to vet these ideas, discuss these ideas, and take input from stakeholders,” Limón said.
Utility companies have not publicly commented on the proposal.
Lawmakers and the governor have about a week and a half to sort it out.
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