Gov. Newsom proposes $21 billion fund to compensate future victims of California wildfires, stabilize utilities

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Gov. Gavin Newsom on Friday proposed creation of a $21 billion wildfire recovery fund to help PG&E and other California utilities pay for damages to victims from future wildfires, but set limits on PG&E’s ability to tap the fund, which would have to be approved by state lawmakers.

Newsom’s plan would require utility investors and ratepayers to contribute to the fund that would “provide ready dollars” to pay future claims and allow power companies to “stabilize their financial health” in order to provide safe and affordable energy, his proposal said.

PG&E, the state’s largest utility, would be prohibited from accessing the fund until it resolves claims from the 2017 and 2018 wildfires and exits bankruptcy with a reorganization plan that is “neutral to ratepayers” and concluded by June 30 of next year, the proposal said.

PG&E equipment was deemed responsible for causing 17 of 18 of Northern California wildfires that broke out in October 2017, according to Cal Fire. The exception was the Tubbs fire, which was linked to privately owned and maintained power equipment.

The utility filed for bankruptcy protection in January facing billions of dollars in liabilities from the past two years of wildfires, including the largest, deadliest and most catastrophic on record in California.

Of the state’s top 20 most destructive fires, 13 have come in the past 12 years, and at least eight of those have been sparked by utility- or privately owned power equipment, according to Cal Fire.

“Climate change has created a new reality in the state of California,” Newsom said in a statement. “It’s not a question of ‘if’ wildfire will strike but ‘when.’”

In the past two years, more than 16,000 wildfires have charred nearly 3 million acres statewide.

Patrick McCallum, a Sacramento lobbyist and co-chairman of the wildfire victims group Up from the Ashes, said the governor’s plan merits support.

“It protects future victims and their constitutional rights,” said McCallum, who lost his Fountaingrove home in the Tubbs fire. The plan also “brings financial stability to the state’s energy markets” and will in the long run reduce rates.

“It’s very ratepayer friendly,” he said.

Separately, however, PG&E and the state’s two other investor-owned utilities have asked regulators to increase the profit they are allowed to make to cover wildfire costs.

PG&E has asked that its roughly 12 percent return be increased to 16 percent, compared with the average 10.5 percent return allowed nationwide. The combined requests from the three power companies would cost ratepayers $2.27 billion a year, according to the Utility Reform Network, a consumer advocacy group.

“They’re going to move the goal posts and pretend that the shareholders are paying for it,” said Loretta Lynch, a former president of the California Public Utilities Commission told the New York Times. “It’s just so ugly.”

Ratepayers would not pay for liability from wildfires attributed to utility negligence. In those cases, the wildfire fund would be reimbursed by shareholders.

The plan offers nothing for victims from the 2017 and 2018 wildfires, and McCalllum said his group will continue to work with the governor and lawmakers on that issue.

State Sen. Bill Dodd, D-Napa, who has chaired the legislative committees working on wildfire policy last year and again this year, said he looks forward to “carefully vetting the details” of the governor’s plan and “engaging in a collaborative process to develop a solution.”

Dodd, whose district was hit by the North Bay wildfires of 2017, said he is intent on “protecting ratepayers from undue costs, ensuring victims are compensated and on improving safety for all Californians.”

Check back for updates on this breaking story.

The New York Times contributed to this report. You can reach Staff Writer Guy Kovner at 707-521-5457 or guy.kovner@pressdemocrat.com. On Twitter @guykovner.

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