Dive Brief:

  • California lawmakers yesterday approved legislation to create a $21 billion fund to help utilities pay for wildfire damages, capping a week of rapid debate over the bill.
  • AB 1054 passed through three committees this week and was approved Monday by the Senate before Thursday’s 63-10 Assembly vote. Gov. Gavin Newsom, D, is expected to sign the bill today. The plan will have utility shareholders and ratepayers equally split the costs to establish the fund.
  • Wildfires have devastated portions of the state in recent years, killing scores and destroying towns, and California’s strict liability rules have utilities on the hook for billions. Pacific Gas & Electric (PG&E) earlier this year declared bankruptcy, citing fire liabilities as a primary reason.

Dive Insight:

Newsom’s expected approval will help bring financial stability to utilities struggling to deal with wildfire costs. But the legislation’s breakneck pace, sailing through five votes this week, has raised questions about whether it has been properly vetted.

The bill will make rate increases all but inevitable, according to Michael Aguirre, an attorney who represents utility customers in a pending wildfire case. Customers “are not even an afterthought,” he told Utility Dive.

The Los Angeles Times editorial board has called the legislation “badly vetted.” Advocacy group Food & Water Watch (FWW) called the measure a “bailout” for investor-owned utilities.

The bill “weakens PUC oversight, while virtually guaranteeing that our electric bills will go up, since ratepayers are left holding the bag for billions in bonds and future wildfire costs,” FWW California State Director Alexandra Nagy said in a statement.

But lawmakers pressed to quickly approve the bill, to help bring some certainty to utility finances. And Newsom issued a statement highlighting the urgency of the issue.

“The rise in catastrophic wildfires fueled by climate change is a direct threat to Californians,” Newsom said, adding that strengthening prevention, preparedness and mitigation efforts “will continue to be a top priority.”

PG&E’s Official Creditors Committee has been supportive of the legislation, and in a statement said AB 1054 “will help provide security for those we represent.”

If signed into law, AB 1054 will direct utility ratepayers to contribute $10.5 billion to the fund, with shareholders contributing the same amount. Customers would pay into the fund through a $2.50 monthly charge that has been on bills since the state’s energy crisis. The charge had been scheduled to come off, but will now remain.