What others are saying about the utilities’ attempt to shift liabilities onto Californians

Don’t Make Ratepayers Pay for PG&E Wildfire Negligence

The Mercury News Editorial Board 

PG&E is a convicted felon with a reputation as the least-trusted utility in California. Cal Fire’s announcement Friday blaming the company for multiple Northern California fires last October adds to the outrage. … When PG&E rakes in profits, shareholders reap the benefits. But if PG&E fails to perform to state standards, if its actions lead to fatalities and property devastation, shareholders — and not ratepayers — should bear the cost.

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PG&E Doesn’t Deserve a Bailout

San Francisco Chronicle Editorial Board 

Despite Cal Fire’s conclusions, PG&E maintained that its “overall programs met our state’s high standards." Given the gathering evidence to the contrary, lawmakers should look to protect the public from PG&E instead of rushing to rescue the company from itself. 

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Be Careful, Legislature: Utilities must be responsible for mistakes

San Diego Union Tribune Editorial Board

"The San Diego Union-Tribune Editorial Board has vigorously opposed efforts to make ratepayers pay for mistakes made by California’s three giant investor-owned utilities. Giving electricity providers an incentive to cut corners on safety is an awful idea. … The state Legislature should do absolutely nothing to make PG&E, Edison or SDG&E think that their obligations to operate safely have been reduced in any way." 

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Letter on Behalf of Major California Electric Utility Ratepayer Interests

An open, deliberative discussion of wildfire liability and management is required before actions by this Legislature impose additional costs on utility customers, large and small. A range of solutions should be considered as alternatives to rendering already financially strained electric utility customers the “insurers of last resort” for the utility industry. A full understanding of options available for all interests will lead to more sustainable solutions.

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Local Government Coalition Letter to Governor Brown and Legislative Leaders

"For decades, local governments could rely on the law and the courts to make cities and counties, and their constituents and businesses, whole after a disaster caused by a utility. This is alarming as it attempts to change our long-standing constitutional protections. We, therefore, believe it is highly inappropriate to suggest legal changes that could deny the rights of those who sustained losses from the fires before a full assessment of cause and determination can be made."

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Agricultural Coalition Letter to Governor Brown and Legislative Leaders

PG&E and other investor owned utilities are aggressively challenging current practices surrounding utility liability. Insurance costs are rising and victims, counties and their attorneys are seeking billions of dollars in wildlife related claims. As needed reforms are considered, policy makers must insure that ratepayers are not unfairly held responsible for utility negligence.

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PG&E Faces Reckoning Over Wildfire Liability

E&E News

“The problem is that PG&E has been brandishing the threat of bankruptcy for years. … What we're really upset about is PG&E brandishing bankruptcy and the fear around bankruptcy to get legislation that lets them off the hook."

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Power Companies’ Mistakes Can Cost Billions. Who Should Pay? 

New York Times

On a recent walking tour in San Jose, the state’s third-most populous city, a former state regulator showed the issues that are raised when the wooden poles that hold power lines and communication cables are not attended to. Some cable lines dangled in front of houses. Workers had tied some wires to the poles with rope — a violation noted by the tour’s guides. Power lines ran through thickets of trees to connect to houses. Overloaded poles have caused wildfires,” said Catherine Sandoval, the former regulator who had organized the tour.

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PG&E May Try to Shift Liability for North Bay Wildfires to Governments

The Santa Rosa Press Democrat

As Pacific Gas & Electric Co. braces for the possibility that its power lines will be named by investigators as the cause of the North Bay wildfires, the utility’s legal strategy appears to involve trying to spread the blame for billions of dollars in fire losses on local governments. The San Francisco utility company has filed claims with Sonoma County, the city of Santa Rosa and other agencies saying that if PG&E is found liable for the fires, then those governments may share responsibility because of the “inadequacy” of the local fire response and preparations.  

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PG&E Equipment Tied to Some of Deadliest Wine Country Fires

Bloomberg

In a Friday interview, California State Senator Jerry Hill challenged the idea that climate change was to blame for the Wine Country fires, saying “climate change and the new normal don’t ignite fires.” 

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Cal Fire Attributes More Fires to PG&E

KQED

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DOWNLOAD A FACTSHEET

What liability do utilities have for the wildfires?

When a utility’s equipment causes a wildfire, the utility is financially responsible for the damages suffered by governments, businesses, and homeowners. Investor Owned Utilities (IOUs) are seeking ways to protect shareholders from wildfire costs by shifting them to taxpayers, the uninsured, and insurance customers.

Wildfires can cause shocking death and destruction. State, county, and local governments sustain massive financial loss, including damage to vehicles, buildings, pipes, and other infrastructure. Businesses can lose buildings, equipment, crops, and animals. Homeowners can lose their biggest asset of all. Many, but not all wildfire victims have insurance. The California Department of Insurance (“CDI”) calculates that the October and December 2017 fires resulted in over $11 billion in insured losses.

Those without insurance recoveries will seek recovery from the responsible party. Napa, Sonoma, and Mendocino counties, in addition to hundreds of affected homeowners, have already filed suits against PG&E for the North Bay fires.

Those who do have insurance will work directly with their insurer. After the claim is fully paid, the insurer is permitted to “step into the shoes” of that homeowner and file their lawsuit against the responsible party in a process called “subrogation.” Subrogation is a basic tenet of insurance law: a responsible third party must pay for the damage they cause. The CDI requires insurers to use these subrogation recoveries to offset claims costs and reduce insurance rates.

Insurers routinely use subrogation for all types of insurance. For instance, when a fully-insured customer crashes a car, the auto insurer pays to repair the car and then seeks reimbursement, if any, from the at-fault driver who caused the customer’s crash. The same applies to homeowners insurance, after a third party causes a fire. It is important to note that subrogation recoveries are not profit for insurers; rather, they are factored into rates. Therefore, limiting subrogation will limit the ability of consumers to recover their deductibles.

Subrogation provides a great customer convenience. Instead of being forced to battle an at-fault party, the customer immediately proceeds with an insurance claim, and the insurer will spend the time and money needed to recover from the at-fault party. In the case of utility-caused wildfire, this recovery typically takes years – which an ordinary homeowner could not withstand.

If IOUs escape liability for fires that they cause, taxpayers could face higher taxes, and insurance consumers could be subjected to this insurance rate cost-driver. Whether it is a direct lawsuit by governments or a subrogation lawsuit by an insurer, lawmakers should protect the current system that keeps the responsibility for wildfires where it belongs.