Bankruptcy-immersed Pacific Gas and Electric Co. (PG&E) last week committed to a five-year program undergrounding its distribution electricity system in Paradise, CA, and establishing a $105 million housing fund for victims of the state’s severe wildfires in 2017 and 2018.

Separately last Friday, the California Public Utilities Commission (CPUC) issued a proposed methodology for a wildfire financial "stress test" called for in state Senate Bill (SB) 901, as a way to determine the maximum amounts investor-owned utilities can pay for catastrophic wildfires, over some of which PG&E is facing possible criminal charges.

PG&E officials said many factors were considered in deciding to put all electric distribution power lines underground in Paradise and its surrounding area, where the massive Camp Fire originated and wiped out the town. 

"Paradise is well suited for the underground build as PG&E needs to replace 74 miles of damaged natural gas pipelines, and this provides opportunities for joint trenching," said electric operations Vice President Aaron Johnson.

The Camp Fire burned 153,336 acres, destroying 18,804 structures, killing 85 people and injuring several firefighters. An investigative report has been forwarded to Butte County District Attorney Mike Ramsey, who may file criminal charges against PG&E, similar to the 2010 San Bruno gas transmission pipeline explosion that killed eight people.

Johnson said the amount of engineering, design and construction required for the undergrounding makes the project a five-year joint gas-electric undertaking. "It is part of our commitment to help this community recover and to harden our electric system to protect against wildfires." The underground backbone system would be installed simultaneously with temporary overhead wires to provide service for the needed individual and neighborhood rebuilding.

A federal bankruptcy court in San Franciscohas given PG&E approval to create the wildfire housing assistance fund. CEO Bill Johnson said the fund is aimed at helping those displaced by wildfires, "specifically for people who are either uninsured or need assistance with alternative living expenses or other urgent needs." 

The California Assembly Appropriations Committee earlier in May stripped out a proposal for a $1 billion financial assistance fund for people in high-fire risk areas to harden their homes against future fire threats.

Several other developments recently have taken shape legislatively and legally. ClearView Energy Partners LLC noted the Assembly committee unanimously approved an amended version of Assembly Bill 235 to set aside the proposed wildfire liability fund and would instead extend the "bankruptcy stress test" provision in SB 901 to cover wildfires in 2017 through 2019.

As protection for the investor-owned utilities, ClearView analysts expect the state to fail to resolve its use of inverse condemnation. An upcoming report from the Commission on Catastrophic Wildfires and Recovery due July 1 "likely will put other reform options in play."

A wildfire cost recovery fund for the utilities could be one of the items in the commission's recommendations, ClearView noted.

Sempra Energy's San Diego Gas and Electric Co. (SDG&E) filed what ClearView characterized as a "long-shot" appeal to the U.S. Supreme Court, seeking to reverse California court decisions upholding the CPUC's denial of $379 million in settlement payments for three 2007 wildfires. ClearView expects the Supreme Court to rule against SDG&E.

Such a denial would "reinforce our view that relief for investor-owned utilities from inverse condemnation doctrine lies squarely in the hands of the state legislature," analysts said.