California Looks for a Fix for the Wildfire Problem That Burned PG&E
(Bloomberg) -- California is going to start trying to figure out how to keep another one of its utilities from going bankrupt.
PG&E Corp., the state’s largest power company, has already made a Chapter 11 filing to deal with an estimated $30 billion in liabilities from wildfires that its equipment may have ignited. And its peers -- Edison International’s Southern California Edison and Sempra Energy’s San Diego Gas & Electric -- are just one deadly blaze away from similar ruin if a commission set up by California lawmakers can’t come up with a fix. The panel is scheduled to hold the first in a series of public meetings on Monday.
Ratings companies including S&P Global Ratings have already warned that SoCalEd and SDG&E are at risk of having their credit downgraded to junk before the start of the wildfire season in June unless lawmakers take concrete steps to address a legal doctrine known as inverse condemnation. It holds a utility responsible for damages if its equipment ignites a blaze. Citigroup Inc. said in a note this week that legislation may be passed in the next two to three months, citing conversations with officials in Sacramento.
The five-member commission is facing pressure from California Governor Gavin Newsom to conduct a quick review. The panel was originally tasked with delivering recommendations by July, and he’s urged it to come up with a plan sooner.
Chris Holden, the chair of the state Assembly’s committee on utilities and energy, said the panel members may consider options including a wildfire fund to pay victims and a way for utilities to finance the liabilities from a series of devastating fires that ripped through the state in 2018.
“It’s important that they be given the opportunity to deliberate and come up with some directions they think that are appropriate,” Holden said in an phone interview.
The commission will select a chair and define the scope of its planned work on Monday, according to an agenda. The members of the panel, recently appointed by the governor and legislature, is scheduled to hold no fewer than four public workshops.
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