On January 30, the California Public Utilities Commission (CPUC) released recommendations on wildfire mitigation and victim compensation. The document makes sweeping and transformative recommendations and is intended to inform the California Earthquake Authority’s (CEA) development of a report to the Legislature.
Under last year’s SB 254 (Becker), the CEA is charged with developing “long-term reforms that protect access to insurance, reduce litigation costs, provide fair and expeditious compensation to claimants, support wildfire mitigation, safety, and community resilience, and ensure large electrical corporations are accountable for safety and also have the financial health to attract low-cost capital on behalf of ratepayers.” RCRC submitted comments to the CEA in conjunction with the California State Association of Counties and the League of California Cities, which can be found HERE.
The CPUC, which regulates the state’s investor-owned utilities like PG&E, Southern California Edison, San Diego Gas and Electric, and PacifiCorp, observed that the existing mitigation and compensation framework “places outsized and unsustainable burdens on utilities and utility ratepayers to mitigate the risks of wildfires and pay for wildfire damages.” It observed that the increasing severity and destructiveness of wildfires is not solely caused by electric utilities, but “largely stems from other factors, primarily climate change but also historical land use policies that have placed more people and property in the wildland-urban interface” and “the buildup of vegetative fuel.”
In light of these findings and rapidly increasing utility bills resulting from investments in wildfire mitigation and victim compensation, the CPUC suggests significant changes to California’s core wildfire liability and framework and mitigation responsibilities. In particular, the CPUC recommends exploring:
- Modifying inverse condemnation, though which utilities are responsible for compensating victims harmed during their process of providing a public benefit.
- Capping or limiting utility liability under tort law, which could include outright caps on the amount utilities are responsible for, disallowing noneconomic losses, and prohibiting the imposition of punitive damages.
- Replacing the Wildfire Fund with a catastrophic event fund to broaden the pool of contributors and covered events.
- Shifting responsibility for wildfire mitigation from utilities to the General Fund, Cap-and-Invest proceeds, publicly owned utility customers, etc.
- Addressing permitting challenges and funding barriers for wildfire mitigation activities.
RCRC will continue to engage with the CEA and Legislature on conversations about wildfire liability, mitigation activities, insurance, and permit reform.
For more information, contact RCRC Senior Policy Advocate, John Kennedy.