New Law Provides Utilities Some Relief from Wildfire Liability

Gov. Jerry Brown has signed a bill granting shareholders of Southern California Edison and the state’s two other investor-owned utilities some relief from potentially billions of dollars in future wildfire damage claims, including those for last year’s Thomas Fire. The bill, SB 901 from Sen. Bill Dodd, D-Napa, lays out a comprehensive fire prevention and fire damage payment policy for SCE, a unit of Rosemead-based Edison International, and the other investor-owned utilities – San Diego Gas & Electric, a unit of San Diego-based Sempra Energy, and Pacific Gas & Electric, a unit of San Francisco-based PG&E Corp. All three utilities pushed hard this legislative session for relief from potentially billions of dollars in damage claims that could have been levied against their shareholders in cases where wildfires were determined to have been caused by transmission wires or other utility equipment. Wall Street investment houses were concerned that PG&E shareholders could be held liable for more than $10 billion in wildfire damage claims stemming from last fall’s Napa Valley fires and that Edison shareholders could be held liable for more than $4 billion in claims from last winter’s Thomas Fire in Ventura and Santa Barbara counties. The utilities initially pushed for legislation that would have passed virtually all of the damage claims onto their ratepayers. But that bill died in the Legislature last month under pressure from ratepayer advocates and lawmakers concerned this could lead to sharp increases in power bills. SB 901 emerged in the final weeks of the session as a compromise. On a case-by-case basis, the California Public Utilities Commission will allocate liability for wildfire damage claims against utilities between ratepayers and shareholders. Also, the bill allows for the sale of bonds for wildfire damage claims levied against ratepayers that would be paid back over time by ratepayers.