Recent California wildfires have spurred the creation of a $21 billion wildfire insurance fund.

California State Assembly Bill 1054 was expected to be signed by Governor Gavin Newsom on Friday, July 12—a legislative action designed to force the establishment of the fund, according to Law360.

The assembly bill forces California-based utility companies to disperse $21 billion into a wildfire protection fund. The two biggest investor-owned utility companies in the state stand behind the project as do numerous utility consumers and former victims of recent California wildfires.

In the wake of damages from recent California wildfires like the Tubbs Fire in October 2017, the Thomas Fire in December 2017, and the Camp Fire in November 2018—Governor Newsom is hopeful the fund will provide securely for future fire victims while allowing the state to pursue its goals of moving toward clean energy, according to Law360.

Pacific Gas & Electric (PG&E) was forced to register for Chapter 11 bankruptcy this past winter after a determination was made its equipment was responsible for the Tubbs Fire.

The Tubbs fire caused the deaths of 22 people, leveled 5,643 homes, buildings, and other structures, and consumed 36,810 acres of land in Napa and Sonoma Counties. PG&E ran up liabilities in excess of $30 billion.

The Thomas Fire sparked just a couple of months later in December 2017, according to NBC Los Angeles, devastating 281,893 acres in Ventura and Santa Barbara counties. Its cause is yet to be determined, but it took the life of at least two people and took down 1,063 structures in its path.

The Camp Fire—which started in Butte County in Northern California—erupted in November 2018. It was responsible for 85 civilian deaths, five firefighter deaths, and 12 injurious situations involving civilians. Two potential victims are missing to date. The fire enveloped 153,336 acres and was responsible for the destruction of 18,804 structures.

California State Assembly Bill 1054

California wildfire damages reached $12 billion according to insurance claims over the map of the state.

As indicated by Law360, California utility companies must contribute $10.5 billion to the wildfire insurance fund established by assembly bill 1054 and cannot pass those costs onto consumers. A matching $10.5 billion will also be funneled into the fund, but be allowed to be passed on to utility rate payers.

A second part of the bill indicates that California-based utilities cannot turn a profit off of the next $5 billion which they invest in safety upgrade projects. Simply translated, upgrade costs cannot be passed onto California residents by rate hikes, saving consumers $2.5 billion overall.

The fact that shareholder profits are being limited when safety upgrades are being undertaken is believed to be a positive step forward by many, according to the Law360 report.

A final aspect of the bill, and one that’s geared specifically to PG&E, concerns its access to the fund. In order for PG&E to do so, the utility giant must have a plan to compensate victims of fire without passing those costs onto consumers when it comes out of bankruptcy June 30, 2020.

The first wave of California wildfire lawsuits are also scheduled to start in 2020.  All wildfire claims against PG&E must be filed by victims by Oct. 21, 2019.

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