Wildfire liability bill dies without a vote on final day of session

After nearly a month of intense closed-door negotiations, California lawmakers on the last day of session killed a compromise bill that failed to insulate utilities when they cause catastrophic wildfires.

Gov. Gavin Newsom and the utilities had fought to significantly reduce what utility companies pay when they cause a wildfire. Last week Newsom struck a compromise with Senate and Assembly leaders that would have imposed no limits on fire survivors’ compensation or lawyers’ contingency fees for individuals’ lawsuits. It also would have retained insurance companies’ ability to sue utilities to recoup their costs for claims, and would have barred private equity firms from investing in insurance claims. The utilities’ stocks plunged since the deal was reached. The Assembly did not take up the bill on Tuesday, effectively killing it.

“The proposal before us does not yet deliver the relief, accountability or meaningful reform that Californians deserve,” Assembly Speaker Robert Rivas said in a statement on Tuesday, referring to “hundreds of hours” spent on the effort in the past few weeks.

'Here until January'

Newsom had hoped the bill would address his concerns over rising electricity rates and the potential for another utility bankruptcy in California in the event of more catastrophic wildfires. He hinted to reporters Monday night at the Capitol that he’s “here until January” and wasn’t done with his effort.

“I know we all hate utilities, so no one wants to defend a utility, but you’ve got to deal with reality," Newsom said. “This thing’s not going to get better on its own.”

His office did not immediately respond to a request for comment after the deal fell apart.

The compromise legislation, Senate Bill 492, was seen as a victory for some Los Angeles County fire survivors, consumer advocacy groups and insurance companies, all of whom urged the governor and lawmakers not to shift utilities’ possible costs to them.

“It’s tragic the way this all played out,” said Jamie Court, president of advocacy group Consumer Watchdog. “They negotiated a deal, and renege when the utilities didn’t like it.”

“We have invested hundreds of hours to fight back the utility bailout and the attacks on victims’ rights,” said Joy Chen, executive director of Every Fire Survivors Network. “If the speaker says his focus is on survivors, then we would expect that those attacks don’t come back in any legislation that comes out of any special session.”

Utility stocks drubbed

The high-profile campaigning in the past few weeks cost the state’s investor-owned utilities dearly. Pacific Gas & Electric and Southern California Edison stock plummeted and San Diego Gas & Electric shares fell in the past few days as Wall Street investors digested what some analysts called a “Sacramento strikeout” for utilities.

The chief executives of PG&E and Edison wrote to Senate Pro Tem Monique Limon and Assembly Speaker Robert Rivas on Monday, telling them that the utilities had collectively lost $20 billion in market value since Thursday. They warned of possible waning investments and financial risks that “will have cascading impacts” on the state’s economy and climate ambitions.

The utilities did not immediately respond to requests for comment Tuesday.

Lobbyists and some lawmakers likewise lamented Monday that decreased investor confidence in the utilities will lead to higher borrowing costs, which could mean job cuts and less investment in critical energy infrastructure.

“Workers got screwed, ratepayers got screwed, lawyers and insurance companies win,” said Scott Wetch, a lobbyist for the California Coalition of Utility Employees and the State Association of Electrical Workers, at an Assembly Utilities and Energy committee hearing.

“It is a big disaster that we were not able to come up with that structural reform,” said Assemblymember Jacqui Irwin, a Democrat representing Thousand Oaks.

'Folks miscalculated'

Some lawmakers pushed back Monday, referring to the limited amount of time they had to work on the bill, which they said centers the interests of fire survivors.

“If you expect to back us into a corner, and then approve something without an opportunity to amend it, to talk to our constituents, to talk to groups that are impacted by it, this is the outcome,” said Assemblymember Chris Rogers, a Ukiah Democrat, at the hearing.

Assemblymember John Harabedian, a Pasadena Democrat, on Monday called the Wall Street reaction “hysteria.”

“The market had false expectations,” he said at the hearing. “Folks miscalculated exactly what could get done” in the last few weeks of the legislative session, he added.

But on Tuesday, Harabedian said the bill does not help survivors and issued the following statement: “This proposal only rearranges the chairs on the deck of the Titanic when all Californians are desperate for meaningful utility reform.”

Yue Stella Yu and Kate Wolffe contributed to this report.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.