Two weeks after PG & E, California's largest electricity supplier, filed for bankruptcy protection (its second bankruptcy in 20 years), Bloomberg is sounding the alarm: two other great Californian utilities are only at a forest fire, which has been emphasized. last month, when S & P reduced its credit rating to the rank of quasi junk.
And to the chagrin of California residents, Governor Gavin Newsom has done nothing to quell these fears, leaving large swathes of the largest state in the Union without solvent utilities (a situation that would entail probably massive rate hikes in the already heavily taxed California country (consumers).
The two companies in question are Edison International's California Southern Edison Co. and Sempra Energy's San Diego Gas & Electric Co. The two companies have asked the California legislator to reconsider the state's view of the legal concept of conviction on the other hand. In simple terms, this legal principle allows public services to be held responsible for forest fires caused by their equipment – even if utilities have followed all safety rules. But until now, their pleas have fallen into the ears of a deaf person (for the record, the requested changes would have no impact on the division of liability if public services are declared negligent).
"This is a very serious problem that could harm the health of public services in this state," Pedro Pizarro, Edison's chief executive officer, said in an interview. "I do not want to speculate on bankruptcy, but it's serious, and the current approach is just not sustainable."
But, as Bloomberg points out, there are several easy fixes that the legislator and the governor's mansion would have no difficulty in looking for. The legislator has the power to change the norm. But until now, they have chosen to do nothing.
Here is an overview of the available options (text provided by Bloomberg):
California lawmakers spent much of last year looking for a solution. In August, they passed a bill to help utilities cover the liabilities of a wave of fires in 2017. But it does not offer help for the fires of 2018, a critical problem after the November campfire, the deadliest in the state's history. Since PG & E's equipment is considered a possible source of ignition, the company estimated that it faced a $ 30 billion liability at the time of the bankruptcy.
California's new governor, Gavin Newsom, convened an advisory group and urged them to accelerate their efforts; he wants a report before July. Public services and legislators all offer ideas, but there is no guarantee that they will find a solution that will help utilities without becoming a financial burden for the state, or angering taxpayers and voters.
Since the doctrine of reverse conviction is rooted in California's constitution, any direct change would require a constitutional amendment, according to the state's legislative council office. An amendment should garner two-thirds of the majorities in both the state assembly and the senate, and then be approved by voters. Given the public anger against PG & E, this avenue is closed, lawmakers said.
"There is no sense in anyone who plans to do it, at least in the Democratic caucus," said Senator Jerry Hill.
The utilities say that another option is that the legislator changes the way reverse conviction is applied. Instead of using a strict liability standard, the state could instead determine whether the utility has acted reasonably in operating its equipment. There is a precedent: a 1997 Supreme Court decision that used this standard in a district water case.
"We have examined the issue very closely and believe that, according to the law, the legislature does have the power to modify this norm", Pizarro said. "We are not trying to get around here if we are being negligent, if we are being negligent we should be held accountable."
However, utilities have already launched this idea in Sacramento last year, without success. Legislators have said that electric utilities and water supply districts are too different to make this connection plausible.
Some lawmakers are focusing on other ways to compensate fire victims, thereby relieving the financial pressure on public services.
Assemblyman Chad Mayes introduced a bill in January to create a wildfire disaster fund in California. Public services would contribute to the fund each year and a public authority would monitor it. The money would guarantee the bonds and the utilities could use the proceeds of the sale to settle the claims relating to the wildfires.
Many details have to be settled, said Mayes. Can utilities charge some of the costs to customers? If yes how much? Should the government start the fund with money from its cap-and-trade program? Sacramento is nevertheless committed to solving the problem "because we have to keep the lights on," he said.
"The idea is to pre-finance the disaster, not after the disaster," said Mayes, a Republican representing the desert communities around Palm Springs. With the law passed last year, "We tried to post-finance the disaster."
But for some reason, the political will to protect the state's public services is virtually non-existent. And the only solution that lawmakers and the State utility control authority have retained so far – at least with regard to PG & E – is to dissolve the recognized public services responsible for forest fires and placing them under the control of the state. And while public services have been the main source of the press, the fact remains that 95% of state fires are caused by negligent and magnified human errors – not by related to climate change – but by the terrible lands of the state. management policies.