Lawmaker in California Working on Fire Relief Legislation for PG&E

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A bill that would help PG&E Corp. absorb liabilities from this year’s fatal wildfires in California is being drafted at the request of a state assemblyman who helped shepherd earlier legislation on the issue.

Kellie Smith, an adviser to assemblyman Chris Holden, said she is writing the bill that could be introduced as early as Dec. 3.

“He is concerned about the instability of the utility and the adverse effect it could have on ratepayers and the ability to deliver services at a reasonable cost,” Smith said by telephone Monday. Holden was out of the country and unavailable for comment.

Holden’s bill may serve as a framework for lawmakers to consider relief for PG&E from the billions of dollars it faces in potential liability for death and property damage in Northern California’s Camp Fire, the deadliest in state history. Other proposals may also emerge, and Michael Picker, president of the agency that regulates the giant utility, has publicly raised the possibility it may consider breaking up the company.

News of the bill sent PG&E shares up as much as 5.8 percent in after-hours trading. The stock has plunged by more than half since the Camp Fire broke out on Nov. 8.

The blaze, about 150 miles northeast of San Francisco, has consumed about 150,000 acres, torched thousands of homes and killed at least 79 people, with another 1,000 listed as missing. Damages may exceed $15 billion, according to Citigroup Inc.

In response to deadly fires in 2017, lawmakers approved a legislative package that allows PG&E to sell bonds backed by customers to cover liabilities. It also gave utilities a mechanism for recovering some wildfire costs starting next year, so long as the fires weren’t caused by company negligence. There were no provisions for 2018 blazes.

That package came out of a special committee convened by Governor Jerry Brown and legislative leaders of both houses to address wildfires and utilities. Under California law, utilities can be held liable for costs if their equipment is found to have caused a fire — regardless of whether they followed safety rules.

Brown had pushed a proposal that would have given utilities relief from the rule, which was opposed by insurance companies, trial lawyers and fire victims. Holden was named as the co-chairman of the committee that held hearings on the matter and ultimately didn’t act on that provision.

Smith said Holden’s new bill may likely extend the securitization provisions of that legislation, known as SB901, to 2018.

Bloomberg News had previously reported that California policy makers are informally weighing legislation that would let PG&E sell bonds to cover any possible liabilities.

“There will be a time and a place for all this, but right now, we are solely focused on helping the first responders and helping our customers recover and rebuild,” said Lynsey Paulo, a spokeswoman for San Francisco-based PG&E.

It’s likely that any formal state action wouldn’t occur until 2019. A bill must be in print in 30 days before it moves through the legislative process. Consideration of the bill could be expedited, but requires a two-thirds vote of the legislature to do so. The legislature is only scheduled to be in session one day in December, the 3rd.

Ali Bay, a spokeswoman for Brown, said the office doesn’t comment on pending legislation.

PG&E already faces up to $17.3 billion in potential liabilities for wildfires in 2017, according to JPMorgan Chase & Co., bringing its total potential liability from blazes above $30 billion.

While Picker on Friday said the California Public Utilities Commission will examine whether PG&E would be better off broken up, he stressed he does not want to drive the company into bankruptcy. Any changes, he said, would need to be made carefully.

“This is like rebuilding the plane while it’s still in flight — you don’t want to crash the plane while you’re trying to make it safer,” Picker said.

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