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California Wildfire Bill Awaiting Governor’s Signature

In the wee hours before adjourning last Friday, the California legislature passed an amended version of state Senate Bill (SB) 901 addressing various wildfire issues, including planning and foliage management as well as some protections for the major electric utilities.

The Senate okayed the measure on a 29-4 vote and the Assembly passed the bill, 45-10. The measure, hammered out earlier in the week, is awaiting a signature from Gov. Jerry Brown, who is expected to sign it into law later this month.

State Sen. Bill Dodd, co-chair of the conference committee that crafted the bill, said it protects utility ratepayers against unfair future charges while authorizing the use of ratepayer protection bonds (securitization) for utilities.

In addition, Dodd said the measure would lead to better forest management practices, increased fuel reduction efforts, de-energizing electric utility power lines in extreme weather, and a hardening of the state's power grid.

Victims of the wildfires now "can recover all they are entitled to for the damage they suffered," Dodd said, and protect the state from future wildfires. He also credited the legislation with "holding utilities accountable and protecting the long-term interests of ratepayers.”

Conference committee lawmakers emphasized that without the debt stabilization mechanism for utilities, those corporations could face higher borrowing costs or even bankruptcy, and that would translate into significantly higher rates.

Without the bill, "ratepayers will be left holding the bag and communities will needlessly suffer,” Dodd said.

Lawmakers did not come up with a solution to the state's application of inverse condemnation regarding the utilities. "However, SB 901 appears to meaningfully alleviate the potential risk of bankruptcy or utility instability arising from exposure to both future and some past wildfires," said ClearView Energy Partners LLC analysts. "We view the legislation as a significant initial step toward addressing the increased incidence of wildfires in California, and expect state legislators to continue debating wildfire mitigation and wildfire damage liability in the 2019-20 legislative session.”

However, San Francisco-based utility consumer watchdog The Utility Reform Network (TURN), said the legislation would allow Pacific Gas and Electric Co. and other major power utilities to realize "not only an unprecedented bailout on future wildfire liabilities, but unlimited rate hikes for decades to come."

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