Gov. Gavin Newsom last week signed into law a complex bill — sponsored by Assembly Member Chris Holden — that would create a $21 billion insurance fund to pay for damages created by wildfires whose causes are linked to utilities.
The fund would be jointly funded by rate payers and investor-owned companies, if they choose to participate, with rate payers covering $10.5 billion through a 15-year extension of an already-existing charge on their bills.
To tap into the fund, the companies would have to meet certain requirements, including safety investments, infrastructure improvements and passing an annual safety certification by the state.
The utilities — Southern California Edison, San Diego Gas & Electric and Pacific Gas and Electric Company — could tap the fund if a wildfire is attributed to their equipment and causes $1 billion or more in property damage. But the companies would have to repay the fund if any investigation by the California Public Utilities Commission finds there were maintenance issues behind a wildfire’s cause.
Newsom portrayed the new law – which passed as a so-called urgency bill, meaning it will go into effect almost immediately – as one that offers an equitable financial burden on rate payers and utilities and their investors.
“We’re on our way to building a safer, more resilient energy future — one that treats wildfire victims fairly and protects California consumers,” Newsom said.
“The framework … maximizes shareholder contributions to a solution, minimizes ratepayer exposure to sticker-shock rate increases and mandates a culture of safety in our utilities to prevent wildfires.”
For his part, Holden, whose district includes South Pasadena, said, “This package offers a durable solution to the problems arising from utility-caused wildfires in California.’’
“The incredible devastation catastrophic wildfires have inflicted on the lives of Californians, the cost to customers and the impact on solvency of the providers of power to all of us is the reason why this legislation is crucial,” Holden added.
According to the Assemblyman’s office, more than 25 million acres of California wildlands are classified as under very high or extreme fire threat, with about 25 percent of the state’s population – 11 million people – living in that high-risk area.
“This is not a new issue,” said Holden. “We’ve had the opportunity to learn from various hearings, reports and debates, as well as the governor’s Strike Force Report. We must take the necessary steps to ensure that we have fiscally stable electric utilities in this state which can keep the lights on in order to protect customers and our economy.”