The onset of another wildfire season in California is spurring activity in legislative, regulatory and judicial hearing rooms.
State lawmakers and regulators have expressed concerns about bankruptcy-bound Pacific Gas and Electric Co.'s (PG&E) ongoing attempts to deal with billions in liability from the past two years of savage wildfires.
Meanwhile, Southern California Edison Co. (SCE) on Monday filed with the California Public Utilities Commission (CPUC) to significantly boost utility authorized earnings on a temporary basis until some permanent solutions are implemented by regulators and/or the state legislature.
In the cost-of-capital filing, SCE asked for an increase in its return on equity (ROE) to 10.6% from 10.3% as a base and proposed a 6% hike to reflect the current increased risk from wildfire liabilities to a 17.6% ROE.
The filing is consistent with an earlier filing to the Federal Energy Regulatory Commission for a wildfire risk adjustment on the 20% of SCE's rate base, which is federally regulated. If the CPUC were to approve the cost-of-capital and wildfire risk filing, SCE estimated its average residential customer would see a monthly increase of slightly more than 12%.
"Credit-worthy investor-owned utilities are critical to the future of California," said SCE’s Caroline Choi, senior vice president for corporate affairs. The utility, she said, will continue to work with state officials on long-term solutions to the wildfire cost recovery and liability issues.
In related news, a state Senate Housing Committee on Monday voted 8-3 to pass Senate Bill (SB) 182, to toughen local government requirements for housing developers in high-risk fire areas. The legislation would increase requirements for fire protection, evacuation plans and options for residents who may need sheltering in the midst of fires. SB 182 was headed next to the Appropriations Committee.
State Sen. Hannah-Beth Jackson, the bill’s sponsor, said the measure had conditions for construction in identified high-fire risk areas in cities and counties; required the local jurisdictions to verify ongoing compliance; and directed counties, in tandem with updating their general safety plans, "to develop a comprehensive retrofit strategy for infrastructure vulnerable to wildfires."
The state’s wildfire strike team report included a recommendation for more restrictions on building near high fire risk areas. However, Gov. Gavin Newsom earlier this month expressed a reluctance to follow that path, reportedly saying "there is something truly Californian" in wanting to live in the wilderness with a wild and pioneering spirit.
Newsom indicated he would work with legislators to come up with a plan by mid-July regarding wildfire mitigation and consider a statewide disaster fund supported by the major utilities, investors, insurance companies and state taxpayers.
The utilities' collective troubles are "literally about the economy of the state and our ability to attract business," Newsom said.
Meanwhile, PG&E on Monday added Fred Buckman as another outside director to its board and accepted the resignation of acting Chairman Richard Kelly.