Published
4 years agoon
Californians should always be skeptical when their politicians overhaul the state’s electrical utility system while promising more efficient, less polluting, and reasonably priced service.
So here we are again.
PG&E is once again bankrupt, this time because of $30 billion in claims for damages from horrendous wildfires that its downed electric lines appear to have caused. Bankers are threatening to downgrade all California utilities’ credit ratings, and shareholders, particularly large hedge funds, are clamoring for financial relief.
For the state’s new governor, Gavin Newsom, it’s a crisis reminiscent of what happened when PG&E went bankrupt the first time during Gov. Gray Davis’ first term.
Davis mishandled that 2001 crisis and it contributed to his recall by voters two years later, a reminder of the high political stakes.
However Newsom, unlike Davis, didn’t freeze. He promised to deal with the twin problems of utility solvency and wildfire safety and the result is legislation that once again overhauls utility operations.
To bolster utilities’ solvency, Assembly Bill 1054 makes a huge change in their liability for wildfire damages under the doctrine of “inverse condemnation.”
If utilities have proven that they are operating as safely as reasonably possible under new standards, they will be presumed to be at least partially faultless for fires. As a state Senate analysis puts it, “In this respect, the burden of proof would switch to other parties … to raise ‘serious doubt’ as to the (utility’s) reasonableness.”
To offset that lessened liability, the legislation creates a fund, as much as $48 billion, from contributions by utilities’ shareholders and consumers, to pay for wildfire damages, and allows utilities to tap ratepayers for extraordinary damages if they have operated safely.
Dan Walters has been a journalist for nearly 60 years, spending all but a few of those years working for California newspapers. He has written more than 9,000 columns about the state and its politics and is the founding editor of the “California Political Almanac.” Dan has also been a frequent guest on national television news shows, commenting on California issues and policies.
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