As fires continue, state officials ponder wildfire liability again

SACRAMENTO -- As firefighters battle deadly blazes across California, wildfire liability promises to be one of the biggest issues in the state Legislature again next year.

Extensive negotiations earlier this year led to SB 901. The law will spend millions toward fire mitigation and allows utilities to sell bonds to offset fire liability costs and, under certain conditions, pass some of this expense to ratepayers.

But the law did nothing to address fires in 2018, a tally that now includes the most devastating single fire in California history. Now one legislator said he's considering putting a breakup of Pacific Gas & Electric Co. on the table. Many expect PG&E to attempt to raise the issue of the state's unusual inverse condemnation law again.

Fire dominated a press conference with outgoing Gov. Jerry Brown and Gov.-elect Gavin Newsom on Tuesday morning.

"This transition started off with a reality check -- shootings, obviously these fires, that puts everything in perspective," Newsom said.

He added that there "was a lot of concern" that PG&E would go bankrupt. Newsom also called SB 901 "a good first step."

PG&E failed at a major longterm goal -- overturning California's inverse condemnation liability standard. This holds that utilities are liable for fires caused by their equipment, even if the company wasn't negligent.

PG&E's stock price has dropped sharply over the past five trading days from the high 40s to $32.72 per share as of Tuesday's close.

SB 901 was largely passed to help PG&E deal with the billions in liability it suffered for fires in 2017. A version of these rules will also apply after Jan. 1, but fires this year were left out in part due to ongoing litigation. Companies would also have to pass a stress test in order to sell these bonds.

But the rules allowing utilities to spread and share liability only apply if the company is not at fault.

PG&E spokesperson Tamar Sarkissian stated in an email Tuesday evening, "First and foremost, our hearts are with the communities impacted by the Camp Fire. " He added, "The cause of the Camp Fire has not been determined."

"If it turns out they are negligent, they have to pay that money back," said Steven M. Campora, a partner at Dreyer Babich Buccola Wood Campora LLP in Sacramento.

The firm, veterans of previous legal battles with PG&E, is already gathering plaintiffs for a suit relating to the Camp Fire in Butte County. The blaze, which started Thursday morning, has killed at least 42 people and destroyed 7,000 homes, essentially obliterating the town of Paradise.

While facts are still being gathered, Campora said, he thinks the company will be shown to be at fault. He pointed to an email from the company, received the day before the fire started, by the owner of the property where the attorney said PG&E lines started the fire, informing her crews needed to come clear trees. PG&E was also evaluating whether to shut down power lines in the area, but did not do so.

PG&E has spent $10.5 million on lobbying since the beginning of 2017, an amount that is likely to rise once it files end of the year disclosure statements.

This includes money spent lobbying the California Public Utilities Commission. The commission is scheduled to hold a hearing in San Francisco Wednesday to discuss implementing SB 901.

Sen. Jerry Hill, D-San Mateo, has recently raised the idea of legislation to break up the utility. His district was the site of a 2010 PG&E gas line explosion that killed eight people.

Gerald Singleton of the Singleton Law Firm in Solana Beach said smaller utilities likes Sempra Energy and San Diego Gas & Electric "haven't had these problems" after suffering their own power line fires more than a decade ago.

The issue came up Tuesday, when Brown was asked about "reclosers" installed on lines by these Southern California utilities. These are circuit breakers installed on lines designed to prevent them from starting fires when hit by trees in high winds.

"That's a very good question," Brown responded.

Observers said the state could negotiate help on infrastructure to PG&E and Southern California Edison, which may face liability for the Woolsey Fire in Malibu.

Michael A. Kelly, another veteran of battles with PG&E, said he also opposed changing the liability rules.

"It's never very good idea to excuse people for responsibility," said the partner at Walkup, Melodia, Kelly & Schoenberger in San Francisco. "Let's figure out a way to incentivize them."