NORTHERN CALIFORNIA – Several state lawmakers – including Lake County’s state senator – have introduced legislation to prevent electric utilities from passing costs that result from negligent practices onto customers by raising rates.
State Sen. Jerry Hill, joined by Senators Ben Allen, Bill Dodd, Mike McGuire and Scott Wiener, and Assemblymembers Marc Levine and Jim Wood, introduced legislation SB 819 on Wednesday.
Senate Bill 819 was prompted by utilities’ ongoing efforts to recover costs resulting from long-past wildfires by seeking permission to increase rates, even if found at fault in the fires.
The much-criticized practice came under sharp scrutiny as one such effort, by a San Diego utility, came up for review by the California Public Utilities Commission as wildfires raged last fall in Northern California’s Wine Country.
While the cause of those fires is still being investigated, several legislators want to ensure that the electric utilities serving California cannot recover the costs that result from the utilities’ negligent practices by raising rates for customers.
“The practice is an outrage and it’s time to stop allowing utilities to push the burden of their negligence onto the backs of customers,” said Sen. Hill, D-San Mateo and Santa Clara counties. “Victims of devastating fires and other tragedies, and ratepayers in general, should not be forced to pay for the mistakes made by utilities.”
Sen. McGuire, D-North Coast/North Bay, whose district includes communities ravaged by the wildfires in October – including Lake County – said: “Thousands of North Bay residents have lost their homes and businesses and many escaped these devastating fires with nothing but the clothes on their backs and their family's safety. While there is an active fire investigation taking place, there is absolutely no way residents who are suffering from this massive tragedy should ever pay for a corporation's potential negligence. It's simply unconscionable and I'm grateful to join with Sen. Hill on this important piece of legislation.”
“California’s utilities must be held fully liable when their negligence causes damage in our communities,” said Sen. Wiener, D-San Francisco. “You don’t burn someone’s house down and then raise their rates to help pay for the damage you caused. I want to thank Senator Hill for leading this effort to protect California’s ratepayers.”
“Utility customers shouldn't be stuck paying the bill for a problem they did not cause. This legislation is a fair response that will protect the public and hold companies accountable for the damage they’ve caused,” said Sen. Allen, D-Santa Monica.
“The cause of the North Bay fires is still under investigation,” said Assemblymember Levine, D-Marin County. “Regardless, ratepayers should never be stuck with the bill if negligence is determined. That's why I am coauthoring legislation with Sen. Jerry Hill to prohibit utility companies from charging ratepayers for costs if a utility is found at fault for a fire. The public yearns for accountability and we must have it here.”
Before ratepayers bear any cost incurred by a utility, the California Public Utilities Commission is required to evaluate whether those costs are just and reasonable.
For example, if a wildfire occurs in a utility’s service territory, the utility will incur costs to repair and replace equipment damaged by the fire.
The CPUC has the authority to determine if the utility acted reasonably in responding to the fire – in preventing the fire from occurring, in mitigating the fire’s spread, and in recovery efforts during and after the fire – before allowing the utility to increase rates to pay for the damage.
The CPUC’s ability to determine reasonable behavior, and to allow or disallow cost recovery in rates based on that review, is a central tenet of the CPUC’s authority.
SB 819 provides the CPUC with full authority to apply a reasonableness review to electric utilities’ requests for cost recovery.
In addition, the bill clarifies that fines, penalties, or uninsured expenses resulting from negligent behavior are not recoverable in rates.
In response to SB 819’s introduction, on Pacific Gas and Electric Co. released a Wednesday written statement.
“While there has been no determination on the causes of the Northern California wildfires that took place in October, it is clear that California needs much broader reforms that recognize the mutual interests of customers, utilities, investors, insurers and others as we work together to address the impacts of climate change including more frequent and more damaging wildfires,” the PG&E statement said.
“California is one of the only states in the country where the courts have applied inverse condemnation liability to events caused by a privately owned utility’s equipment. This means that if a utility’s equipment is found to have been a substantial cause of the damage in the event like a wildfire – even if the utility has followed established inspection and safety rules – the utility may be liable for property damages and attorneys’ fees associated with that event,” the company said.
“Allowing essentially unlimited liability undermines the financial health of the state’s utilities, discourages investment in California and has the potential to materially impact the ability of utilities to access the capital markets to fund utility operations. All of these are bad for customers and bad for the state of California,” PG&E said in the statement.
The company concluded, “And, at a time when California is asking privately owned utilities to invest billions of dollars to meet the state’s greenhouse gas reduction goals, these risks pose real consequences for the state’s environment, economy and communities.”
Gas companies are already prevented from shifting the burden of fines and penalties onto customers as a result of legislation by then-Assemblymember Hill in response to the PG&E gas pipeline explosion that leveled a San Bruno neighborhood in 2010.
That legislation, Assembly Bill 56, was approved by the governor in 2011.
State legislators introduce bill to prevent ratepayers from paying for negligence of electric utilities
- Lake County News reports
- Posted On