Edison, Other Utilities Fail to Limit Liability for Wildfires

The effort by Southern California Edison and the state’s two other investor-owned utilities to reduce billions of dollars in potential liabilities from wildfires died in the Legislature on Aug. 18, according to news reports quoting the key lawmakers involved. Edison, PG&E and San Diego Gas & Electric were pushing for action on several bills that would reduce or eliminate their liability for billions of dollars in damages from destructive wildfires if the cause of those fires could be traced to utility wires or other equipment. Under the legal doctrine of inverse condemnation, the utilities could be held liable for those damages even if the utilities complied with all existing fire safety rules and regulations. A state Public Utilities Commission ruling last fall squelched San Diego Gas & Electric’s bid to have ratepayers pick up the tab for $380 million in damages caused by three wildfires in 2007. According to Fitch Ratings of New York, shareholders of SCE parent, Rosemead-based Edison International, could be forced to pick up as much as $4 billion in liabilities from last December’s Thomas Fire in Ventura and Santa Barbara counties, the second-largest fire in state history. PG&E Corp. shareholders could face even larger liabilities. Several bills to reduce utility wildfire liability were on the table for action in the final weeks of the current legislative session ending Aug. 31 and Gov. Jerry Brown had indicated his support for some utility liability relief for fires starting after Jan. 1 of this year. But the utilities’ effort stalled amid fierce opposition from insurance companies, homeowner groups and local elected officials who all expressed concern that they would be forced to pick up the costs for fires whose cause is traced to utility equipment instead of the utilities. On Aug. 13, Sen. Bill Dodd, D-Napa, the co-chair of a legislative conference committee set up to address the state’s wildfire problems, indicated in a press release that the committee was “shifting its focus from utility liability to fire prevention.” Dodd and other lawmakers confirmed to statewide media on Aug. 18 that the effort to address utility wildfire liability was dead for this legislative session, saying there was not enough time to hammer out a compromise in the two weeks remaining in the legislative session. The utilities could renew their effort next year, but by then, Brown will be out of office, so they would have to persuade his successor to back legislation to reduce their liability.