While drawing short of eliminating the state’s strict liability legal doctrine, California Gov. Gavin Newsom last Friday made clear a legislative package and state regulatory reform are coming this year.
Newsom made the comments when issuing a progress report on efforts to implement recommendations from a strike force created earlier this year. The recommendations include beefing up readiness for wildfire season. Since 2015, 10 of the state’s most destructive fires have occurred.
Among the recommendations is establishing a utility requirement to invest $3 billion every three years in safety programs with funds on which a utility may not earn a profit. It also calls for a $21 billion Wildfire Recovery Fund for utilities to draw on to ensure their financial health and ability to provide safe, reliable service.
“Climate change has created a new reality in the state,” Newsom said. “It’s not a question of ‘if” a wildfire will strike, but ‘when.’ Our recent, terrifying history bears that out.”
The governor pointed to “support and guidance” ongoing from the state legislature in crafting a “framework” around power company accountability, wildfire safety investments and reform of the California Public Utilities Commission (CPUC).
“In the coming days, I will continue working with the legislature to turn this framework in to a package of bills that makes the changes we need.”
Assemblymember Chris Holden, chair of the Utilities and Energy Committee, has held a series of meetings in recent weeks with the governor’s staff and colleagues in the state Senate that aim to create utility stability and lower wildfire risks, said Holden legislative aide Catherine del Rosario. “They met last Wednesday and are making progress on a bill package” expected to be completed this week, she told NGI.
Holden said that there is “a clear need” to address the issues outlined in the governor’s report. Pacific Gas and Electric Co. (PG&E), which was driven into Chapter 11 bankruptcy in January for its part in many of the recent fires, is called out in one of the five areas of the progress report as needing oversight. Last week the San Francisco-based utility gained approval for a $1 billion settlement with local communities devastated by the fires.
At an annual shareholder meeting last Friday, PG&E Corp.’s board reiterated its commitment to reduce wildfire risks and create utility-wide operating excellence. “We have heard the call for change, and we have put the right leadership in place to drive this change,” said Chair Nora Mead Brownell, who formerly served on the Federal Energy Regulatory Commission.
PG&E CEO Bill Johnson said “we are doing everything we can to prevent another catastrophe like that from ever happening again. Thousands of employees and contractors are working on a scale never before seen in our industry.”
Separately, PG&E officials welcomed the progress report from Newsom, noting that “all options” are being reviewed in the ongoing discussions with state officials, and in the meantime, the utility is committed to resolving fire victims’ numerous claims “fairly and expeditiously.”
Earlier this month, nearly 29,000 Northern California residents in designated high-risk wildfire areas had their power shut off and restored, following a weekend in which PG&E invoked two public safety power shutoffs in parts of eight counties.
The CPUC is being examined by the governor’s Office of Planning and Research in relationship to other regulatory structures for high risk industries, such as the nuclear power sector. At the same time, Newsom is calling on the CPUC to expand its internal safety expertise and overhaul its decision-making process.
In terms of overseeing PG&E, the report calls for supervision of the 2017-18 fire claims, treating its employees fairly and requiring shareholders to contribute to the wildfire solutions, along with assuring it meets all enhanced safety requirements and follows through with decommissioning the Diablo Canyon nuclear plant.
The progress report reiterates that California will evaluate and weigh in on PG&E’s eventual bankruptcy restructuring plan, making sure the plan is lawful and do-able. “The CPUC is actively participating in the bankruptcy proceedings to safeguard state interests,” Newsom said.
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