SACRAMENTO (CBS SF) – California Governor Gavin Newsom on Friday unveiled a report detailing his administration’s ideas for dealing with destructive wildfires in the future and the possibility of massive PG&E rate hikes to cover the utility’s liability.
The discussion centered around PG&E, which filed for bankruptcy earlier this year in the face of billions of dollars in liabilities linked to recent fires.
Two of California’s deadliest and most destructive wildfire seasons in state history hit in 2017 and 2018, with 85 killed in the Camp Fire in Butte County that virtually wiped out the town of Paradise last November. Insurance losses for that fire alone topped $8 billion.
A new report suggests electricity bills could double to cover those costs. State leaders are trying to figure out a way to avoid that.
The governor’s plan could include a statewide risk pool to spread around the cost. During the Friday presentation on the report, Newsom outlined a new approach to covering wildfire costs including a “liquidity-only” bridge fund and a catastrophic wildfire fund as well as adopting fault-based standards.
Newsom also addressed the need for “structure hardening” in at-risk areas as well as a serious evaluation of development in fire-prone areas of the state.
“25 percent of the population in vulnerable parts of the state. This puts, I hope, the magnitude of this moment in perspective,” said Newsom.
Last month, the governor declared a state of emergency, allowing state fire officials to bypass some environmental regulations to clear dead trees and other vegetation ahead of the next wildfire season.
Newsom said that the state would host a California Fire Summit in the near future to further address these issues.
The governor also tied the state’s new approach to addressing wildfires with the issue of power in the California, saying that “everyone is impacted when it comes to the issue of keeping the lights on.”
Newsom explained that two firms have been hired to analyze the issues with PG&E and the utility’s bankruptcy declaration to examine state energy costs and how the government needs to operate within “the new normal” of rampant wildfires amid global climate change.
“I just want folks to know that we’re watching them [PG&E]. I expect that they’re going to get serious about grid enhancements and modernizing,” said Newsom. “The state has suffered because of their neglect.”
Not pulling any punches, Newsom says the utility must assume some of the costs now facing California. When asked to be more specific about his warnings for PG&E, the governor boiled it down to one word.
“There’s a word that drives shivers up people spines,” said Newsom. “I’ll give it to you. It’s called municipalization.”
The report also raised the possibility of changing California’s strict liability standards that require utilities to pay for damages from wildfires caused by their equipment, even when the company is not deemed to have acted irresponsibly. Utilities have repeatedly tried to change the standard with no success.
The report said any changes in utility liability rules should give incentives to utilities to invest in safety and critically, impose penalties for failing to do so. It said any changes also must continue to hold shareholders, not customers, responsible for safety failures. It suggests adjusting how much profit utilities and their executives can make based on their wildfire safety performance.
© Copyright 2019 CBS Broadcasting Inc. All Rights Reserved. The Associated Press contributed to this report.