Consumers may be forced to foot the bill for California wildfire costs after a new bill reduces liability for utility companies.

Assembly Bill 1054 was introduced, passed, and signed into law all over the course of this summer but carries significant repercussions for Californians. Under the law, utility companies can charge their ratepayers for wildfire damages as long as they meet certain requirements.

In order to pass costs onto consumers, utilities must have a wildlife mitigation plan and must have received a “safety certification” from the California Public Utilities Commission.

“If the electrical corporation has that valid safety certification, the electrical corporation’s conduct would be deemed reasonable unless a party to the proceeding creates a serious doubt as to the reasonableness of the electrical corporation’s conduct,” the new bill states.

The bill also creates a $21 billion insurance pool which can provide funds for utilities to pay liability claims following California wildfires. Unfortunately, this fund will be paid for by California residents and business owners – who will be charged around $2.50 a month. This extends a bond previously issued by the California Department of Water Resources.

The law follows a 10 year battle by San Diego Gas & Electric to charge customers millions for the losses they sustained due to three California wildfires started in 2007 which were linked to the company’s equipment. The U.S. Supreme Court declined to take up the case in October, following previous standards by finding that they could not pass along $379 million in costs to consumers if these costs were not in consumers’ interests.

The newly passed law changes standards that have been in effect in California for over 100 years.

Response to the New California Wildfire Law

The passing of Assembly Bill 1054 has been faced with outcry from consumers and consumer advocates. These critics say that the new law takes power away from the California Public Utilities Commission as regulators can’t consider past practices or past violations of the utility when they look to who covers damage costs.

“It’s eating the chickens and saying that as long as the chickens are dead you can’t look at who killed them,” said California Public Utilities Commission President Loretta Lynch. “This is as close to a blank check as it gets.”

Other advocates have called the California wildfire law unnecessary, saying that prior laws and regulations did the same job with better results.

Consumers have also expressed outrage that they are being ordered to pay extra to utility companies for the multi-billion dollar insurance pool, reportedly claiming that the costs are unfair. This is on top of their risk of losing their homeowners insurance.

Opposition to Bill 1054

According to the San Diego Union-Tribune, 13 parties voiced their opposition to the bill in October before the California Public Utilities Commission. The parties reportedly included lawyers, consumer advocates, energy users, a labor union, and one victim of the 2017 North Bay wildfires.

One lawyer argued that extending the $2.50 charge without “just compensation” is in violation of constitutional law.

“You’re acting without due process of law, in violation of the 14th Amendment, you’re not permitting any evidentiary hearings, no cross-examination and you’re making determinations of fact without any evidence,” one attorney told the California Public Utilities Commission in October.

This article is not legal advice. It is presented
for informational purposes only.