MOORLACH UPDATE — Wildfire Cost Reverberations — May 9, 2019

I’ve been working on wildfire prevention legislation since the day I’ve been able to introduce bills, starting with SB 1463 in 2016. Since then, the worst utility-caused fires in California history have occurred in 2017 and 2018. Consequently, I was asked to serve as vice chair of the Senate Energy, Utilities and Communications Committee and, in recent weeks, membership on the new Select Committee on the Governor’s 2019 Report: Wildfires and Climate Change — California’s Energy Future.

The new Select Committee held its first meeting yesterday afternoon. It was a hearing with a few members of the Strike Team that prepared the report and two members of the Commission on Catastrophic Wildfire Cost and Recovery, presenting on two panels.

Let’s take an abbreviated inventory of observations, many resulting from prior policies and neglect from Sacramento. California has:

1. Tree mortality issues, with more than 129 million dead.
2. An aging electrical infrastructure.
3. A desire to increase electrification of the state.
4. Limitations on managing forests.
5. A virtual stranglehold prohibition on harvesting lumber.
6. Foot dragging on identifying high risk fire areas for mitigation (thus, the reason for my presenting SB 1463),
7. A Public Utilities Commission (CPUC) that has become bloated, inefficient, and over-reaching.

During my opportunities to participate in the discussion, I focused on forest management and the CPUC. Surprisingly, California Natural Resources Agency Secretary Wade Crowfoot was complimentary of the Federal government’s managing of its 57 percent of forest land. This was quite a different response from the usual D.C. bashing that occurs here in the Capitol. It’s time for Sacramento to have a discussion with D.C. to get federal forests into the possession of California. With such a maneuver, the Capitol would have to stop pointing fingers when the mountains and hills are burning. The Courthouse News Service provides my concerns about the "monolithic" CPUC in the piece below.

No Easy Solutions for Rising Wildfire Costs in California

Matthew Renda

FILE – In this Thursday, Nov. 8, 2018, file photo, the Camp Fire rages through Paradise, Calif. (AP Photo/Noah Berger, File)

SACRAMENTO, Calif. (CN) – About six months ago, the Camp Fire laid waste to the town of Paradise, California, and eventually killed 85 people, destroyed 18,000 buildings and caused an estimated $16.5 billion in damage.

The most destructive wildfire in California history came a year after the second-most destructive wildfire in state history – the Tubbs Fire, which razed a huge swath of Wine Country north of San Francisco, killing 22 people, burning down about 5,600 buildings and wreaking $1.3 billion in damage.

The consecutive large fires have not only devastated families and communities, but both public and private officials continue to grapple with the financial, regulatory and legislative issues.

This wildfire-driven crisis was evident during a meeting of the state Senate Select Committee, convened to discuss Governor Gavin Newsom’s “Wildfire and Climate Change” report.

“We’re trying to get something big done by July 12,” said state Senator Bob Hertzberg, D-Los Angeles, during the hearing. “We need you to help us get there.”

Hertzberg addressed a panel of experts convened to discuss how the state will face the lingering wildfire crisis going forward. While the typical ideas of more money for forest treatment, defensible space, the augmentation of firefighting forces and the like came up, lawmakers and panelists focused on two urgent legislative problems: The need to reform the California Public Utility Commission, and figuring out a way to pay for the enormous damage of the last two fire seasons.

“We believe that stable, well-managed and investible utilities are a benefit to the state of California,” said Nancy Mitchell, a bankruptcy lawyer who presented lawmakers with a range of options for solving the financial issues now and in the future.

While a wellspring of public sentiment focuses on making utilities pay for rebuilding costs associated with fires many believe were caused by negligent utility infrastructure maintenance, Mitchell pointed out the utilities will likely pass on those costs to ratepayers.

Michael Wara, a California energy expert, said ratepayers will likely pay 14 to 16% more in the near term.

Pacific Gas & Electric, whose wires are believed to at least be peripherally involved in the Camp Fire and others, is currently mired in bankruptcy proceedings.

One idea floated during the hearing involves holding investor-owned utilities accountable for costs if they are found to be directly at fault. Presently, utilities are on the hook even if they are found merely negligent.

“It’s about shifting the risk of property loss to insurance companies or underinsured property owners in instances where the utility is not at fault,” Mitchell said.

Another idea involves creating a state-managed fund dedicated to wildfire rebuilding costs, alleviating the need for onerous utility rate hikes.

Judging by the reaction of the senators, both ideas had drawbacks and several details must be ironed out.

“There’s nothing more offensive than asking people who just lost their homes to pay into a fund to bail out utilities that may have contributed to the problem,” said Mike McGuire, D-Healdsburg.

Hertzberg repeatedly demanded a figure, with some estimates coming back for as much as $40 billion – almost a quarter of the state’s entire budget.

Meanwhile, other experts said a needed reform centered on the state’s utilities commission, which has several industries to regulate and has evolved to preside over rates and related issues rather than clean energy transitions and wildfire safeguards.

“The more I look at the CPUC trying to cover so much territory and cover so many industries I am wondering if restructuring, reorganizing and splitting up different divisions might be more appropriate,” said John Moorlach, R-Costa Mesa.

Mitchell acknowledged the scope of the agency is broad.

Other lawmakers also took issue with the public’s ability to meaningfully engage with the commission. Because it is a quasi-judicial agency, if a person wants to participate in a given issue being deliberated, they must file to become an intervenor.

“That is hogwash,” said McGuire, adding any additional funding for the commission to expand its oversight will come with the condition of additional transparency.


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