A bill that critics claim could bail out PG&E for its strict liability regarding last year’s wildfire is moving forward in the California legislature.
Assemblyman Bill Quirk (D-Alameda) used parliamentary procedure to gut and amend AB 33 to change California law so that utilities, like PG&E, are only liable for wildfire and other damages if they are found to have been negligent in their actions.
California law currently follows a precedent, referred to as inverse condemnation, that assigns strict liability for all property damage, and awards attorney fees, if equipment from utilities is a substantial cause of damage. It is irrelevant, for liability under the precedent, if a highly-government-regulated utility follows every established inspection and safety rule.
The new legislative move follows a June 21 financial disclosure, called an 8-K, which was filed by PG&E with the U.S. Securities and Exchange Commission, stating the company intended to take a record $2.5 billion inverse condemnation liability loss reserve for the June 30, 2018 quarter, associated with 14 Northern California wildfires in 2017.
PG&E warned that the charge exceeds the company’s $1.6 billion of profit in 2017 and corresponds to the lower end of the range of its estimated liability, which could be as high as the $10 billion in estimated insured property losses from the fires. With a current stock market capitalization of only $22 billion, PG&E has been telling state lawmakers that the wildfire liability could make the company insolvent, according to the East Bay Times.
AB 33 would insure that PG&E is able to issue California state-secured bonds with low interest rates to finance payments to the families of the 44 people who died in the fire, and 45,000 claims of up to $10 billion in damage losses. But AB 33 would also pass along the financial burden for wildfire damages to the monthly bills of PG&E electric and natural gas customers if the company is not found to have been negligent in its action.
Quirk told the local East Bay Times that his bill would make sure that fire victims are paid quickly and that PG&E shareholders would still be liable if the company was negligent.
PG&E spokeswoman Lynsey Paulo told the Times that the legislation was in customers’ and victims’ best interest: “Securitization, as proposed by AB 33, provides a balanced path forward in the wake of one of the worst climate-driven wildfires in state history.”
California Senator and known PG&E critic Jerry Hill (D-San Mateo) told the San Jose Mercury News that AB 33 is an effort by the utility to escape financial liability: “Bankruptcy is being used as a bogeyman so PG&E can force the Legislature to bow down and do what the company wants.”
Hill’s Senate district is adjacent to San Bruno, where a PG&E gas pipeline exploded in 2010, killing eight people and destroying 38 homes in 2010. A federal jury in 2016 found PG&E guilty of 11 counts of violating pipeline safety regulations and obstructing investigators after the blast. PG&E said in a statement regarding the decision: “We want our customers and their families to know that we are committed to re-earning their trust by acting with integrity and working around the clock to provide them with energy that is safe, reliable, affordable and clean.”