California Governor Proposes Safety Steps For Utilities

SACRAMENTO, Calif. (AP) — California Gov. Gavin Newsom is willing to throw a financial lifeline to the state’s major utilities dealing with the results of disastrous wildfires — but only if they agree to concessions including tying executive compensation to safety performance.

A proposal unveiled Friday by Newsom’s office aims to stabilize California’s investor-owned utilities and protect wildfire victims as the state faces increasingly destructive blazes. Regulators say some previous fires were caused by utility equipment.

Pacific Gas & Electric Corp., the largest of the three investor-owned utilities, filed for bankruptcy in January as it faced tens of billions of dollars in potential costs from blazes, including the November fire that killed 85 people in the Paradise area.

Newsom’s plan still needs support from lawmakers and he hopes to strike a deal in just three weeks.

His proposal would give California’s two other big utilities — Southern California Edison and San Diego Gas & Electric — power to decide which form of financial aid they want.

They could choose a liquidity fund to tap to quickly pay out wildfire claims or a larger insurance fund that would pay claims directly to people who lose their homes to fire.

The liquidity fund would be about $10 billion while the insurance fund would top $20 billion, said Ana Matosantos, Newsom’s cabinet secretary.

The smaller fund would be paid for by the state and a charge on electric users, while utility shareholders would need to pitch in to the larger fund.

PG&E would not get a say in which fund the state uses nor be able to tap a fund until it resolves its claims from the 2017 and 2018 wildfire seasons and emerges from bankruptcy.

The utilities would have to implement a number of safety measures to tap into the fund, such as tying executive compensation to safety, forming a safety committee within its board of directors and complying with wildfire mitigation plans.

State legislators voted last year to require California’s electric companies to adopt those plans. Southern California Edison told legislative staff last year the company wants to spend $582 million to improve power lines and deploy new cameras in high-risk areas.

PG&E has said it will inspect 5,500 additional miles of power lines and build 1,300 new weather stations to improve forecasting. Most of its inspections are done, officials said this week.

The state would also require power companies to spend a combined $3 billion on safety over three years. This would include upgrading utility infrastructure as well as developing new early warning and fire detection technologies.

Companies would be able to pass on the actual costs of these measures to consumers but could not make a profit off the steps.

The California Public Utilities Commission, which regulates utilities, would decide how that $3 billion is split up. Newsom’s plan would also create a Wildfire Safety Division and Advisory Board at the CPUC.

Matosantos described the draft requirements for additional safety spending as unprecedented and argued that mandating companies meet those guidelines to tap into the fund protects electric customers from paying for the costs of a catastrophic wildfire.