A $10 Billion Fund for California Fire Costs May Dry Up by 2030
During a legislative hearing, an energy advisory firm commissioned by California Governor Gavin Newsom’s office presented a range of options for creating a pool of anywhere from $10 billion to $40 billion. The analysis, outlined by Nathan Pollak of Filsinger Energy Partners, showed that a $10 billion fund had a 98% chance of being depleted by 2030 while a $40 billion fund would have a 7% chance.
The projections were based on fire claims logged over the past five years and underscore just how damaging California’s intensifying wildfire seasons have become. The Camp Fire that broke out in November killed 85 people and destroyed an entire town, becoming the deadliest blaze in state history. While it’s unclear exactly how the state would finance such a fund, a task force Newsom assembled had suggested that utility shareholders and ratepayers could contribute.
All of California’s major utilities, including bankrupt PG&E Corp. and Edison International, have backed the idea of creating a fund to deal with their wildfire damages. A legal doctrine holds them responsible for the costs of blazes that their power lines ignite, regardless of whether they’re negligent. That forced PG&E, which is facing an estimated $30 billion in liabilities, to file for Chapter 11 in January.
Speaking before lawmakers, Filsinger Energy Partners director Pollak said the analysis was intended only to outline different options available to lawmakers and weren’t recommendations.
Californians are already facing a seven percent increase in their monthly bills as utilities take more extreme measures to prevent fires from happening, according to a state report.
©2019 Bloomberg L.P.