Here's Exactly What PG&E Wants California to Do About Fires

(Bloomberg) -- Virtually everyone who’s been following the multibillion-dollar problem that California’s power companies are facing in the wake of last year’s devastating wildfire season knows that the biggest among them -- PG&E Corp. -- is lobbying the state hard to change its wildfire policies.

And California lawmakers seem receptive: Governor Jerry Brown formed a committee this month to consider changes to regulations that hold utilities liable for the costs of wildfires that their equipment ignite -- even if they weren’t negligent. In a telephone interview Thursday, PG&E’s senior vice president of strategy and policy, Steve Malnight, laid out exactly what the company’s lobbying Sacramento for. Here’s the utility’s wish list:

  • A change in the way the state applies its so-called inverse condemnation law -- the one that holds utilities strictly liable for fire damages regardless of negligence. PG&E thinks it should take into account whether a company acted in a “reasonable way.” Malnight said that’s how local flood control districts are treated today when the state considers flood damage liabilities. “We think that’s a fair standard,” he said.
  • A bill that would allow PG&E to issue bonds backed by customer bills that would help pay for costs tied to the deadly Wine Country wildfires last year. (California investigators have already determined that PG&E’s equipment caused several of the blazes.) The legislation wouldn’t shield the utility from costs associated with potential negligence, Malnight said. He estimated that a bond issuance would save PG&E’s customers about a third of the costs of covering damages compared with traditional financing means, such as issuing equity.
  • More “comprehensive solutions” to preventing future wildfires. Malnight said the company supports state regulations that go beyond liability rules and speak to the resiliency of infrastructure. He said the committee that Brown formed has already called for the need for broader solutions including forest management.

Malnight said PG&E has been building a “broad-based” coalition of investor-owned and publicly owned utilities and labor unions to push for reforms.

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