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California Lawmakers Retreat on Wildfire Liability Solution

California legislators indicated Tuesday that they are setting aside efforts to find a legislative solution to the wildfire liability problem for the state's major utilities, according to a co-chair of the conference committee for state Senate Bill (SB) 901.

The spokesperson for State Sen. Bill Dodd, Paul Payne, told NGI that the conference committee is meeting Wednesday, and it plans to discuss, among other things, stepped up preparedness for wildfires and the concept of allowing securitization of some utility liabilities.

Analysts with Height Capital Markets on Tuesday reviewed efforts on securitization that have to be completed prior to a Monday (Aug. 27) deadline for legislation to pass before the session ends Aug. 31.

Height noted the Pacific Gas and Electric Co. (PG&E) wildfire liability issues and said the legislative text “allowing securitization of prudently incurred costs related to Pacific Gas and Electric Co.'s wildfire liabilities could come together before the end of this week.”

However, there is still considerable opposition to the use of the state-backed secured bonds, particularly when there is still no final California Department of Forestry and Fire Protection report on last year's Northern California fires to give the full picture of PG&E's potential liabilities.

SB 901 remains the main legislative proposal aimed at wildfire related issues. On Monday the state legislature passed SB 1040, also sponsored by Dodd, to improve in-home supportive services for people hit by natural disasters, including wildfires. The measure provides care to disabled and elderly in the wake of fires and other disasters.

Last weekend, Dodd told news media that the liability issue "clearly had become a distraction" as the legislature geared up for a final push before adjournment.

Major utilities, led by PG&E, which has the most immediate financial risk from last fall's wildfires in Northern California, contend they cannot live with the state's current application of inverse condemnation. However, state lawmakers now intend to focus on expanding wildfire preparedness and management planning requirements for the future.

Earlier this summer, Gov. Jerry Brown offered a draft proposal that would have given judges new discretion in assessing liability, but it has drawn criticism in the legislature.

Dodd indicated that the legislature doesn't have enough interest in tackling the liability issues, but it is addressing other parts of the governor's proposal, such as regulations focused on vegetation management around power lines.

Last week in his role a co-chair of the conference committee Dodd said that "as we watch unprecedented fires break out across the state is has become increasingly clear that fuel reduction and better forest management practices are essential; it is absolutely imperative that we stop fires before they start."

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