You certainly don’t need me telling you that the past three years of these prodigiously destructive wildfires are unprecedented chapters in California history.
The last week has seen a series of one ominous event after another.
An insurance risk-rating firm estimates that the Camp Fire in Butte County, where at least 81 people have died and 14,000 homes have been destroyed, has already reached damages totaling $7.5 billion to $10 billion, and they’re mounting.
PG&E stock fell 31 percent in one day last week, and analysts say the shares have lost 45 percent of their value since the Camp Fire was ignited two weeks ago.
In the state legislature, the Sacramento Bee is reporting that a Democratic assemblyman, Chris Holden, D-Pasadena, chairman of the Utilities and Energy Committee, is preparing to introduce legislation that would extend financial protections for PG&E and other utilities beyond what was provided in SB 901, which was signed into law in September by Gov. Jerry Brown.
SB 901 is the so-called PG&E bailout legislation will allow PG&E and other utilities to recover an unknown amount of liability costs from wildfires because utilities could issue so-called “rate recovery bonds” that electrical utility customers would be responsible for repaying through a “wildfire surcharge” on their monthly bills. While the new law appeared to address just the 2017 wildfires and utility companies’ potential bankruptcy due to more than $10 billion in losses, it’s actually a “recovery template” for all current and future wildfires that may “stress” an electrical utility into bankruptcy.
According to the Bee report, Kellie Smith, a consultant for Holden, said that the assemblyman wants that “stress test” protection to be extended to 2018 fires. PG&E’s potential liability from the Camp Fire has raised the specter that the utility could be forced into bankruptcy. That would trigger higher borrowing costs and other expenses that would ultimately be borne by ratepayers, Smith said. Providing protection through legislation, and preventing a bankruptcy, is “the least expensive choice of a lot of bad choices,” she said. Holden’s bill is sure to be controversial.
State Sen. Jerry Hill, D-San Mateo, told the San Jose Mercury News that the legislation represents “a happy Thanksgiving gift” for the utility’s shareholders, directors and executives. And state Sen. Jim Nielsen and Assemblyman James Gallagher, two Republicans who represent the Butte County area, issued a joint statement Wednesday saying it’s too soon to discuss relief for PG&E.
“There will be time in the weeks and months ahead to discuss policy proposals ensuring accountability and the future viability of utilities in California,” they said. “But to do so now is irresponsible and premature. The fire has yet to be contained, 870 people remain unaccounted for, and the deceased have yet to be identified.”
Now here’s something to think about amidst all the chatter about plunging stock prices, bankruptcy, and electrical ratepayers bailing out multi-dollar corporations that have set rates that are highest in the nation.
Outgoing Governor Jerry Brown has left a gift-wrapped package of an operating surplus of about $14.5 billion for the 2019-2020 fiscal year, which is in addition to a cash reserve of $14.8 billion.
Governor-elect Gavin Newsom and the solidly Democratic state Legislature will have at their disposal nearly $30 billion in rainy day funds, according to the latest analysis by the nonpartisan Legislative Analyst’s Office.
Here’s a novel idea for our elected representatives to cogitate on: Prior to the citizens of this state spending a single penny on a bailout for electrical utilities, use that surplus to save them, if the governor-elect and legislators are convinced that the Big Three (PG&E, Southern California Edison, and San Diego Gas & Electric) are on bankruptcy’s doorstop. Don’t forget, that surplus actually belongs to California citizens. I can’t think of a better way to spend it, given the circumstances.
(Jim Shields is the Mendocino County Observer’s editor and publisher, and is also the long-time district manager of the Laytonville County Water District. Listen to his radio program “This and That” every Saturday at 12 noon on KPFN 105.1 FM, also streamed live: http://www.kpfn.org)