State Shores Up PG&E in Wake of Wildfires, But Second Bailout Bill Stalls

The 2019 California legislative session was marked by desperate moves backed by Governor Newsom and the California Public Utilities Commission (CPUC) to bail out PG&E and the other monopoly utilities, while undermining Community Choice energy programs.  However, there is some good news as a second bailout bill fails to move forward in 2019.

 

Legislators passed AB 1054 and AB 111, which sets up a state wildfire insurance fund to reimburse utilities for damage claims from wildfires they cause. By strengthening the utilities and the role of the CPUC in propping up their outmoded energy model, these laws are undermining Community Choice. 

 

However, a last-minute gut and amend bill designed to cover PG&E’s massive liabilities for the 2017-2018 fires by allowing them to issue $20-$40 billion in tax-exempt bonds, met with enough stiff opposition that it will not move forward this year, but will be reintroduced for the 2020 legislative session.  Those bonds would have been backed by rate payer-provided revenues.

 

Moves by state leaders to rescue the for-profit energy system are particularly disturbing in light of the critical need to address accelerating climate change, combined with the demonstrated failure of the monopoly utilities to keep the public safe in the face of worsening disasters. Furthermore, California’s for-profit utilities have done almost nothing to address the urgent need to shift to a resilient, clean energy system.

 

Despite massive PR moves to try and convince the public that AB 1054 was not a bailout, the language in the bill says otherwise. Ratepayers will directly bear half of the $21 billion to establish the wildfire insurance fund. The remaining half, to be paid from utility shareholder profits, will ultimately be provided by ratepayers, given that investor-owned utility profit margins are guaranteed through CPUC-approved rate increases. The utilities are all currently requesting huge increases in their rate of return on investment.

 

The increase in utility bills to pay off the wildfire fund will especially hurt low income communities and communities of color. It will lead to a marked increase in utility shut-offs and subsequent homelessness as folks already struggling to pay rent get caught in a situation that renders them powerless.

 

Perhaps most troubling is that AB 1054 increases the risk of wildfires. While removing any incentive for the utilities to invest in public safety, the bill includes no mechanism to enforce compliance with wildfire mitigation plans outside of utility self-reporting! 

 

At the same time the legislation diminishes already lax CPUC transparency and public oversight, explicitly sidestepping existing state law, and shifting the burden of proof of utility negligence onto wildfire victims.

 

Local Clean Energy Alliance is fighting back. We are in the process of organizing and launching a Utility Justice Campaign to oppose the bailouts and begin the effort to restructure California’s energy system into a publicly accountable model that promotes social and racial equity. 

 

We are excited to have added two new staff members to center this historic effort: Campaign Coordinator Mari Rose Taruc, a 25-year veteran of environmental justice campaigns, and Campaign Organizer Nishikant Sheorey, an activist in No PG&E Bailout protests. You can read more about them here and sign up to get involved in the Utility Justice Campaign here.