It was a split decision for two marquee measures on the last day of California's 2017-2018 legislative session.
Just ahead of an Aug. 31 midnight deadline, lawmakers passed a proposal, Senate Bill 901, intended to reduce the growing risk of wildfires in the state and limit fire-related costs for utilities and their customers. Meanwhile, legislation that would have enabled the California ISO to transition into a regional transmission organization for the western United States failed to come up for a floor vote as time lapsed.
Ratepayer advocacy groups blasted the wildfire bill as a bailout for PG&E Corp. utility Pacific Gas and Electric Co. and Edison International's Southern California Edison Co., which are at the center of investigations and lawsuits over their roles in igniting some of the state's worst-ever wildfires in 2017.
But bill backers and a legislative analysis highlighted the measure's ratepayer protection aspects.
"Make no mistake – Senate Bill 901 is necessary," Sen. Bill Dodd, a Napa Valley Democrat who introduced the legislation in 2018 after fires scorched California's wine country in October 2017, said in a news release. "Without it, ratepayers will be left holding the bag and communities will needlessly suffer."
"We have worked hard to make sure we do the right thing in our response to the devastating wildfires that ravaged our state and to protect ourselves from future catastrophes," Assemblymember Chris Holden added in an emailed statement. "Senate Bill 901 provides comprehensive safety solutions to protect ratepayers, make our electric system safer, and stabilize the utilities."
'A common-sense solution'
The measure authorizes the California Public Utilities Commission to issue financing orders to support the issuance of "recovery bonds to finance costs, in excess of insurance proceeds, incurred ... by an electrical corporation, excluding fines and penalties, related to wildfires." The financing, which applies to 2017 and future fires, would be underpinned by asset-backed securities in the form of dedicated fees on utility bills.
"The bonds could help reduce bill shock by allowing the payments of the expenses (plus interest) to be spread over a longer time period," legislative analysts William Craven and Nidia Bautista wrote. Without the recovery bonds, utilities could face higher borrowing costs or even bankruptcy, Dodd said, echoing concerns voiced by PG&E.
The bill also authorizes spending $200 million each year through the 2023-2024 fiscal year from the state's greenhouse gas reduction fund to improve forest health and prevent future fires.
The Senate approved the bill on a bipartisan 29-4 vote, while the Assembly passed the measure with a 49-14 margin.
Gov. Jerry Brown, who encouraged lawmakers to address issues related to utilities' fire liabilities, is expected to sign the bill. The measure, however, did not address the thorny legal issue of utility liability for wildfires caused by their electrical equipment, even if the utilities were in compliance with state laws. In June, PG&E Corp. CEO Geisha Williams said she saw no upper limit to the the company's fire liabilities. A bill that proposed to reform the issue of liability failed earlier in August.
In an email, a PG&E official nevertheless praised the bill's passage as "a common-sense solution that puts the needs of wildfire victims first, better equips California to prevent and respond to wildfires, protects electric customers and preserves progress toward California's clean energy goals." The utility called for "ongoing investment in climate resiliency and clean energy, and to combat the devastating threat that extreme weather and climate change pose to our state's shared energy future."
Clock expires on regional grid bill – again
For the second consecutive year, time ran out on Assembly Bill 813, an initiative backed by Brown, the California ISO and numerous clean energy and environmental groups, to transition the grid operator into a multistate regional transmission organization for the West.
The proposal stumbled in part due to ongoing fears over federal intervention, the loss of state control over the ISO and doubts over favorable cost analyses of regionalization. Among the opponents were California's municipal utilities, including the Los Angeles Department of Water and Power, the Sierra Club and ratepayer advocates.
A spokesman for the Natural Resources Defense Council, which backed the bill, called it a "temporary setback" and said proponents "will keep pushing for changes to the fragmented western grid." While the western energy imbalance market has already created an expanding real-time energy market, with benefits totaling more than $400 million, a fully integrated western power grid would be even more beneficial, supporters said.
The proposal could "reduce Californians' utility bills by up to $1.5 billion annually, and boost renewable energy production to meet the state's climate and clean energy goals," the NRDC spokesman said.