SACRAMENTO, Calif. — In the end, the California Legislature concluded that some companies — namely utilities — are just too big to fail.
You wouldn’t ordinarily think that about a leftist, heavily Democratic Legislature not known for being business-friendly.
But the lawmakers agonized and decided that private utilities should be allowed to raise customers’ electricity rates to help cover 2017 wildfire liabilities if that’s deemed necessary to forestall bankruptcy. They’d need to sell the rate increase the California Public Utilities Commission.
“We’ve done everything we can to protect ratepayers,” Democratic Senate leader Toni Atkins said in a statement. But without higher rages, she said, the utilities “face the dire prospect of bankruptcy. If we allowed that to happen, ratepayers would suffer deeper as rates spike (and energy) reliability is lost.”
Consumer advocates said the legislation is a bailout.
The utilities — especially Pacific Gas & Electric Co. — didn’t like the legislation either. They had sought a more generous formula for determining financial liability when wildfires are sparked by their equipment, such as fallen power lines. PG&E says it faces up to $2.5 billion in liabilities from last year’s devastating wine country fires.
The bill did contain a more utility-friendly liability formula for catastrophic wildfires starting next year. Utilities could also seek rate increases to help cover liability costs for those fires.
The legislation included a lot of other things too — mainly aimed at increasing the state’s fire prevention efforts by removing combustible fuel from woodlands.
Legislators allotted $200 million annually for that purpose from the state’s greenhouse-gas reduction fund.
With devastating blazes raging for weeks throughout California, legislators were under pressure from constituents to pass significant prevention and firefighting bills.
It was personal for many legislators who were threatened by flames the last two years, or feared the future “new normal.”
“We’re going into fire season when I go home,” Republican Assemblywoman Marie Waldron said during the House debate, referring to the peak fire months of September and October. “And I dread what that’s going to be when the Santa Ana winds blow.”
The fire legislation passed both houses late Friday night, just before lawmakers adjourned their two-year session.