Since California legislators in July passed the utility bailout plan known as AB 1054, the deal wangled by lobbyists for companies like Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric looks worse every day.
It’s not only that the utilities quickly volunteered to contribute more than $10 billion as their share of the bankroll for the state’s new Wildfire Fund, but also that the state can now issue unlimited bonds to pay off liabilities rung up by the utilities, which have been found at least partially responsible for several of the firestorms which hit many parts of the state in 2017 and 2018. Utility customers will have their rates raised whenever needed to pay off those bonds. There’s no limit on this, either.
Here’s one reason the deal looks so bad even before it’s had to be activated: It turns out this bill was spurred not only by Gov. Gavin Newsom, who accepted more than $200,000 in campaign money from PG&E last year, but also because of that company’s heavy spending on the lobbyists who actually wrote AB 1054.
According to a lawsuit seeking to strike down the new law on grounds it amounts to an unlawful gift of public funds to the privately-owned utilities, PG&E alone spent more than $12 million lobbying legislators and another $14 million lobbying Congress.
That was after contributing $550,000 to sitting legislators, $1.32 million combined to the Republican and Democratic state and county political parties – plus that $200,000 to Newsom during the 2018 election cycle in which he was elected. All this from a company that was in bankruptcy through much of the election cycle and the spring and summer legislative session.
If this does not sound quite pure, that’s probably because it’s not.
Then there’s what the bill also authorized, in fact demanded: Power shutdowns whenever the utilities think there could be a danger of fire caused by their power lines. The shutdowns can last more than a week; some might linger even longer. This pressures homeowners and businesses to buy expensive generators or solar paneling to produce their own electricity at times whenever utilities try to protect themselves from new liabilities caused by their inadequate maintenance practices of the past three decades.
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Meanwhile, the law sets no standards for conditions that must exist in order for power to be cut off in potential fire areas.
This represented an enormous show of trust by Newsom and legislators for the very companies that have been shown to be repeatedly irresponsible. PG&E has even been convicted in federal court of criminal negligence, but not a single executive or manager served a day in prison or paid a penny in fines for the conviction, which therefore had little or no sting.
At the same time, state officials continue refusing to provide lawyers and reporters the fiscal impact report required of the state Department of Finance prior to the very brief, very greased legislative hearings that preceded passage of AB 1054.
Attorney Michael Aguirre of San Diego, who has represented fire victims in several cases, demanded those fiscal reports because they are the only fairly reliable forecast of how much AB 1054 is likely to cost Californians. Said Aguirre in a court filing, “There was a compelling public interest in a timely…production of those records because (Newsom) imposed a deadline of July 12 for passage of AB 1054.” That date was just one week after the bill got an almost total rewrite.
The upshot is that no one knows how much any of this will cost utility customers individually or as a class, nor how much it will cost citizens to prepare for prophylactic power outages. Property owners in potential fire zones also have no way to know which of their trees or shrubs will be chopped off by utility crews doing power line maintenance that should have been completed years ago, as consumers have long paid a monthly maintenance charge via their bills.
It adds up to a terrible law passed on a wave of utility spending and government panic, one whose negative consequences may far exceed any fire prevention benefits it might eventually provide.