PG&E, Edison May Not Get California Help on Fires by July 12
(Bloomberg) -- California’s biggest utilities -- PG&E Corp., Edison International and Sempra Energy -- may not get the help they need to deal with multi-billion dollar wildfire liabilities before lawmakers adjourn July 12 for recess.
Governor Gavin Newsom signaled that pending legislation may not be finalized by then, a date around which S&P Global Ratings has indicated it might downgrade the utilities to junk absent state action. “The bond-rating agencies have marked the 12th and 13th as important days,” Newsom said Wednesday at an unrelated bill signing event, according to CALmatters, a nonprofit news organization. “But if we make a tremendous amount of progress in the next two weeks and it bleeds over for a few days, I imagine that will be considered.”
Asked about the comments Friday, Newsom spokesman Nathan Click said the administration was “continuing to work toward the 12th” but that it’s “also important to get it right.”
California’s utility giants are counting on the legislation to save them from mounting liabilities tied to wildfires that their equipment keeps igniting. The state’s largest power company, PG&E, was forced to declare bankruptcy in January to deal with an estimated $30 billion in fire damages. Both Edison International’s and Sempra Energy’s utilities face junk ratings should the state fail to come up with a fix in time.
In California, a legal doctrine known as inverse condemnation holds utilities liable for wildfires that their equipment sparks, even if they aren’t proven negligent. Newsom has proposed a sweeping plan to help power providers pay for future wildfire damages and make it easier for them to recover costs if they obtain a safety certification. The bill is scheduled for a committee hearing Monday after being postponed twice.
S&P said in June that it may cut Edison’s Southern California Edison and Sempra’s San Diego Gas & Electric to below investment grade “on or about July 12” absent legislative action reducing the exposure to fire liabilities.
“The downgrades would reflect the higher wildfire risks that California’s electric utilities are facing without adequate regulatory protections to effectively reduce those risks,” the company said.
Legislative leaders, who like Newsom are Democrats, on Friday pointed to the work on the bill underway. “Substantial progress has been made,” said Kevin Liao, a spokesman for Assembly Speaker Anthony Rendon.
Senate President pro Tempore Toni Atkins said in a statement that the Senate is “unified” with the governor to finish the legislation “as quickly as possible.”
“We know wildfire season is upon us and we must move quickly to resolve all of these issues,” she said. “We trust that the progress we have made is clear indication that we are taking this seriously.”
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