California Wildfires — Governor Newsom’s Push to Limit Utility Responsibility

In the closing days of the California Legislature, Governor Gavin Newsom continues to push the body to limit what utilities have to cover for wildfire damage their equipment causes.

At the beginning of his first term in office in 2018, the Camp Fire killed 85 people and burned 18,000 buildings to the ground. Pacific Gas & Electric equipment caused the fire and it faced billions in liability.

That’s a big hit for a utility and it caused Newsom and the California Legislature to create a $21 billion fund to offset wildfire damages caused by a utility. That money is generated through assessments to the utilities to stockholders and ratepayers.

The fund will be empty once the bills are paid for the 2025 Los Angeles wildfires.

Since the coffers need refilling the governor wants to change the way the plan works and limit the amount of money electricity and gas companies have to give to lawyers and victims of a wildfire they cause.

He’s urging the Legislature to act quickly and adopt his plan. So are the utilities.

“Status quo is not going to work,” Newsom said. “It’s not going to work for victims, who consistently are last in line. And that’s at the core of this reform.”

Newsom’s idea is to make insurance companies cover more of the property damages. It will also force utility company CEOs to forfeit their annual bonuses if their company causes a wildfire with assessed damages of over $1 billion. Shareholders will be fined as much as $10 million for the company violating wildfire prevention requirements.

Even though the current plan, and wildfires caused by the utilities are pushing energy rates sky high, many of the survivors just don’t see it that way and do not want any changes. The victims say the governor is putting utilities ahead of them.

Insurance companies and insurance associations and groups — obviously — contend Newsom’s plan will put more responsibility for covering damages on them.

Personal Insurance Federation of California President Rex Frazier says his group represents property insurance companies in California. He said he current plan needs to stay in place. The utilities cause the fires and they need to continue to be responsible.

“Being responsible for your actions is something that parents tell children,” Frazier said. “Hopefully the Legislature will tell this to the utilities.”

The Legislature adjourns on August 31st. If they don’t pass the plan, Newsom can call them back and into a special session,

“I’m not going to walk away and hand a real mess to the next governor,” Newsom said.

Source link: Associated Press — https://bit.ly/4hUxP4g