California is establishing a fund totaling as much as $21 billion to help rescue utilities from a wildfire crisis that has in the past two years burned thousands of homes, left more than 120 people dead and led to the collapse of its largest power company.
The state Assembly passed legislation on a 63-8 vote that will set up a state-backed fund to help utility giants including Pacific Gas & Electric Corp. and Edison International cover future liabilities when their equipment ignites catastrophic blazes. Less than seven months ago, a series of these power line-sparked fires forced Pacific Gas & Electric into bankruptcy, saddling the company with $30 billion of estimated damages.
The prospect of another devastating blaze -- and utility collapse -- touched off a race in Sacramento to come up with a fix before California enters the peak of its wildfire season. Gov. Gavin Newsom has spent the past two weeks pressing lawmakers to move the legislation forward before a monthlong recess begins today. The state Senate approved the bill earlier this week and Newsom is expected to sign it into law.
Newsom thanked the Legislature for "taking thoughtful and decisive action to move our state toward a safer, affordable and reliable energy future" while providing "certainty" for fire victims, according to a statement Thursday.
The bill is crucial for Edison's Southern California Edison and Sempra Energy's San Diego Gas & Electric, which were facing junk ratings if the state had failed to act. It's also a win for Newsom, who took office in January just two months after a Pacific Gas & Electric power line sparked the deadliest blaze in California history, killing 85 people and destroying an entire town.
Under the legislation passed, the state will use $10.5 billion in bonds to finance the fund. Power companies will borrow from it as they seek to recover costs from their customers. The utilities have the option of kicking in another $10.5 billion to turn the account into a larger, insurance-like pool.
Southern California Edison has voiced its support for the bill. Pacific Gas & Electric and San Diego Gas & Electric said earlier this week that they didn't have a position on the measure.
Information for this article was contributed by Emily Dooley of Bloomberg News.
Business on 07/12/2019