Immediately after firefighters put out the nearly 9,000 separate blazes that scorched more than 1 million acres of California last fall and winter, homeowners began filing lawsuits against the state’s largest electric utilities, Pacific Gas & Electric Co. and Southern California Edison Co. Now cities like Ventura and Santa Rosa have joined in.
The essence of those suits is that utility equipment played a major role in starting the wildfires, as alleged arcing and sparking flew from transmission lines to brush that hadn’t been cleared adequately. The claims total about $19 billion against the two regional behemoths.
That’s one reason stock in both companies has performed poorly over the last few months.
But not to worry too much, shareholders. Your companies have a long history of making hay when times are bad, as when PG&E entered what some called a phony bankruptcy during the energy crunch of the early 2000s, emerging much stronger afterward.
Right now, both companies are demonstrating precisely the same kind of gall (Yiddish word: chutzpah) they have in other previous tough situations. Just last year, at the very moment PG&E was being assessed a $14 million fine for failing to report discovery of flawed records on its gas pipelines, that company began asking for well over $1 billion in rate increases to pay for repairs to the very same pipeline system. Those were the same kind of pipelines that exploded in San Bruno in 2010, killing eight and causing large damage.
The California Public Utilities Commission, favoring utilities over their customers as usual, eventually gave PG&E a boost of more than $100 per year from each average residential customer.
The PUC also consistently gives favored treatment to Edison, as when it assessed customers well over half the cost of shuttering the San Onofre Nuclear Generating Station, closed in large part because of an Edison action.
That trend continued this spring, when PUC President Michael Picker told a reporter he attributes the massive fires largely to climate change and not to utility negligence.
His remark very likely sets up a future PUC ruling to let utilities recoup much of their wildfire losses through rate increases imposed on consumers – most of whom do not live in wildfire-prone areas, but will have to fork over anyhow just to keep their lights on. Such increases would be authorized by a bill now advancing through the Legislature.
This is one clear utility goal as the companies work with similar chutzpah both in the courts and Sacramento.
As an example, the state Senate’s Insurance Committee has already advanced a bill that might make it easier for homeowners to collect on their insurance policies when utilities cause fires that destroy covered homes. This would lead to less claims against utilities, which want to fob off part of their responsibility onto insurance companies.
They are also in court seeking to avoid paying gigantic sums for firestorms allegedly spurred by their crews and equipment. California law now lets homeowners collect from insurance companies when utility equipment causes fire damage, even when the equipment is well maintained. The companies urgently want that changed.
One thing is certain: Both in court and in the Legislature, the deep pockets of the big electric companies give them huge advantages over less well funded and staffed consumer lawyers, many of whom won’t get paid unless they win for their clients.
And the companies figure to get continued favored treatment by the PUC, which will determine how much they get in future rate increases. Picker’s climate change remark came soon after his agency fined PG&E well over $1.6 billion for actions connected to the San Bruno disaster and its actions before and afterwards.
Which means that the commission’s kabuki-like rate-making process will soon resume, again seeing both the commissioners and the utilities act like Japanese dancers breathlessly performing a dramatic dance – with the outcome predetermined.
The utilities will once again ask for astronomical sums, and the commission will cut those requests down a little. But the net effect on consumers’ wallets will still be substantial.
So it appears that no matter what errors or negligence the utilities may have committed, they’ll still do fine financially, at serious expense to their customers.
