SACRAMENTO (AP) — A California proposal aimed at stabilizing the state’s electric utilities and putting a renewed focus on safety in the face of devastating wildfires caused by utility equipment passed a key committee Monday, setting it up for a floor vote later this week.
Lawmakers and Gov. Gavin Newsom are rushing to pass a package of wildfire bills by Friday before lawmakers take a monthlong break and as ratings agencies consider whether to further downgrade the credit ratings of the state’s investor-owned utilities. California’s wildfire season has already begun.
The hearing in the Senate Energy, Utilities and Communications Committee on Monday underscored what lawmakers argue is the urgency in passing at least some piece of legislation to grapple with the effects of catastrophic wildfires on California’s infrastructure.
“It is not the proposal I would have done,” said Assemblyman Chad Mayes, a Republican from Yucca Valley, California, and an author of the bill.
But he argued the measure would provide much-needed certainty.
“We must take necessary steps to make sure we have stable electric utilities,” said another author, Assemblyman Chris Holden, a Pasadena Democrat.
The proposal creates a wildfire fund of tens of billions of dollars that utilities can tap to help pay for wildfire damages if they follow certain safety steps, including tying executive pay to safety. Utilities and ratepayers would pay into the fund.
An unlikely coalition of groups has rallied around the measure approved Monday, from labor unions representing utility workers to wildfire survivors, who see the bill as giving them more leverage as Pacific Gas & Electric goes through the bankruptcy process.
A watchdog group, The Utility Reform Network, also supported the bill Monday, praising provisions on wildfire mitigation and tying the CEO pay to safety.
But some lawmakers raised concerns about how the measure would affect utility bills. Backers argued utility rates would still rise, but less than if the state does not act.
That was not enough to persuade Republicans on the committee, each of whom either opposed the bill or did not vote on it.
While it is moving quickly through the Legislature, AB1054 is a sprawling piece of legislation and has turned into a battleground for special interests.
Some lawmakers pointed to specific provisions in the amendments published Friday, a holiday week, that could have broad ramifications. Sen. Scott Wiener, D-San Francisco, argued the legislation would make it harder for municipal electric utilities to buy assets from major power companies, potentially stifling efforts to expand publicly owned electric systems.
Last week Newsom acknowledged the complexity of the issue and said in response to critics that doing nothing would be catastrophic for utility ratepayers.
“None of this is easy,” Newsom said then. “I think it’s the best of all the options and, in the absence of others being presented, I think it’s the one most likely to get the votes.”
The urgency to act comes after California experienced two of its most devastating wildfire seasons in 2017 and 2018, with some of the worst blazes blamed on utility equipment.
PG&E Corp. filed for bankruptcy in January as it stared down potentially tens of billions of dollars in liability costs. Major ratings agencies have already downgraded the bond ratings of the state’s other two investor-owned utilities, Southern California Edison and San Diego Gas & Electric, and have suggested the ratings could drop further if lawmakers don’t act.
Under the plan, utilities would have to get a new safety certification and show their conduct was reasonable in order to tap it. If a utility has the safety certification, it would be presumed to have acted responsibly, shifting the burden to victims or others to show they did not. If victims’ groups raise serious doubt about the utility’s conduct, the burden would then shift back onto the utility.
The bills need support from two-thirds of lawmakers to pass, a high hurdle among lawmakers weary of appearing to bail out the utilities. Nine lawmakers have criticized the legislation recently for failing to include money to help people harden their homes against wildfire risks.
And it creates a new Wildfire Safety Advisory Board with appointees from the governor and legislative leaders to advise the Public Utilities Commission. The Associated Press reported that the original version of the legislation would have automatically exempted all communications between the board and the PUC from public disclosure and exempted it from some portions of the state’s open meetings law.
The bill has been changed to remove the open meetings law exemptions and it no longer includes a blanket disclosure exemption. Instead, the PUC or the board would have to assert privilege in individual cases.
Another proposal would create an Office of Energy Infrastructure Safety to oversee wildfire prevention efforts. An information hearing before the Assembly Budget Committee lasted 10 minutes, and no one from the public spoke.