Two PG&E customers have filed a lawsuit in an attempt to stop the new California wildfire compensation law, claiming it unfairly places the burden of restoration and prevention on ratepayers.

The bill passed by overwhelming majorities in both houses of the state legislature, easily clearing the two-thirds majority required by law for “urgency bills,” or laws that go into effect as soon as possible. That urgency has raised questions about what some consider to be a “badly vetted wildfire bill” and why Governor Newsom and the California Legislature were in such a hurry to get it passed.

What the California Wildfire Bill Will Do

Assembly Bill 1054 was introduced near the end of June 2019. It establishes a $21 billion fund for future wildfire recovery, including assistance for victims going forward. Responsibility for paying into the fund would be divided equally between PG&E shareholders and ratepayers, who will see a $2.50 surcharge on their bills.

Executive compensation will be tied to whether or not the utility companies achieve specific safety objectives. Furthermore, utilities will not be allowed to profit from ratepayer-funded safety upgrades.

There is one provision in the law that critics particularly take issue with: how negligence is determined.

Going to a “National Standard”

Under the new California wildfire law, a new standard would be used in determining whether or not a utility company is liable when its equipment is determined to be the cause of a fire, by bringing it into line with the federal standard. Furthermore, outside investigators will be required to prove that there was “serious doubt” that the utility company took all reasonable steps to prevent a conflagration. This, say critics, will make it harder for victims to prove that negligence was indeed involved.

Making Ratepayers Bear the Costs

Another bone of contention is a provision that allows utility companies that achieve safety goals to pass on the cost of wildfires to ratepayers. This, argue the plaintiffs, makes it easier for utilities to raise their rates to pay for damage caused by company equipment.

Even though ratepayers’ contribution to the $21 billion California wildfire fund is only $2.50 a month, plaintiffs in the wildfire legislation lawsuit argue the fee constitutes an illegal gift of public money to a corporation owned by private shareholders. That particular surcharge was instituted in the wake of the crisis caused by Enron in 2001, and was scheduled to expire in 2020. Under the new California wildfire law, the fee will continue until 2035.

Governor is Confident

Governor Newsom, a staunch supporter of the new legislation, told the media that the law will assist the state in moving toward “a safer, affordable and reliable energy future” while providing “certainty for wildfire victims.”

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