trending Market Intelligence /marketintelligence/en/news-insights/trending/nopkbya9pj8sfygfhals8q2 content esgSubNav
In This List

Calif. governor, lawmakers plan to move bill to deal with future wildfires


Infographic: U.S. Solar Power by the Numbers Q2 2023


Infographic: U.S. Energy Storage by the Numbers Q2 2023


Insight Weekly: Bank mergers of equals return; energy tops S&P 500; green bond sales to rise


Insight Weekly: US companies boost liquidity; auto insurers hike rates; office sector risk rises

Calif. governor, lawmakers plan to move bill to deal with future wildfires

California's governor and legislative leaders announced plans to move a bill to a conference committee to "appropriately determine responsibility" for wildfires and strengthen utility preventative measures.

Gov. Jerry Brown, Senate President pro Tempore Toni Atkins, Assembly Speaker Anthony Rendon, Senate Republican Leader Patricia Bates and Assembly Republican Leader Brian Dahle on July 2 announced their efforts to adopt policies to respond to increasing wildfire dangers involving electric utility equipment, indicating they will address liability issues as well as safety and prevention.

However, they said, "Nothing in the bill would affect any potential liability for last year's historic and massively destructive wildfires."

The governor and legislators said they want to continue to ensure that those who cause wildfires are held accountable for damages associated with them but also ensure fair allocation of wildfire prevention and response costs in a manner that protects ratepayers.

The lawmakers centered their efforts on Senate Bill 901, sponsored by Sen. Bill Dodd. The latest version of that bill states that even when utilities operate their systems reasonably and prudently, they face potentially enormous legal exposure even if they are not at fault because of increasing risk of catastrophic losses due to extreme weather and other circumstances.

"Current legal standards should be refined to prospectively allow the courts to determine the liability of electric utilities when they have acted reasonably in installing, maintaining, and operating their transmission systems," the bill said, though it went no further in specifying what the courts should do.

The bill does not address the state court doctrine of inverse condemnation, which holds utilities liable for wildfire damages involving their equipment even when utilities are not found to be negligent.

Still, analysts at Wells Fargo Securities LLC viewed the announcement of further efforts on the bill as favorable, saying, "We consider the development to be a positive for the California electric utilities as it demonstrates there is still momentum within the state to address wildfire (and inverse condemnation) issues on a prospective basis ... In the meantime, we expect the California utilities to continue to work with policymakers to help them better understand the material adverse consequences of the state's inverse condemnation law on the utilities' ability to access capital."

The analysts noted the governor and legislators indicated nothing in the bill would affect potential liability for the 2017 wildfires, and state fire investigators have linked state utility code violations to PG&E Corp. subsidiary Pacific Gas and Electric Co.'s infrastructure in the causes of 11 wildfires.

In addition to addressing utility liability, the conference committee wants to update rules and regulations for utility services to strengthen fire prevention activities. Those activities include vegetation removal, infrastructure maintenance, utility company inspections and temporary shutoff of power during extreme weather, though there are already many rules and company policies in place requiring such efforts.

The legislation would require utilities to annually submit to the state more expansive and detailed wildfire and emergency preparedness plans and help prepare the state to deal with the increasingly extreme weather and natural disasters caused by climate change, Brown and the legislators said.

On May 31, Dodd's measure passed the state Senate 39-0. It was read a third time and amended in the Assembly on July 2. Earlier versions of the bill focused primarily on requiring electric utilities to turn off power to distribution lines in proactive efforts to prevent fires, typically during high winds. The bill also would have required use automated reclosers that work like circuit breakers when abnormal current is detected.

In announcing their plans to work on the bill, Brown and the legislative leaders pointed out that the California Department of Forestry and Fire Protection has already fought more than 53,000 acres of wildfires this year compared to an average of 23,000 acres over the same time in previous years and that four of California's five most destructive wildfires on record have burned in the last 15 years.