Dive Brief:

• California Gov. Jerry Brown proposed changes regarding how the state handles utility fire liability, which would direct courts to consider whether the company was negligent or complied with regulations.
• While Brown's proposal would not apply to any fires before this year, Assemblyman Bill Quirk, D, also proposed a bill that would allow a review of last year's deadly wildfires, possibly allowing utilities to escape billions in liability — so long as utilities were not found negligent, the San Francisco Chronicle reports.
• If approved, the proposals would mark a major victory for Pacific Gas & Electric and the state's other investor-owned utilities. Earlier this year, PG&E floated the idea of bankruptcy related to the potential costs of deadly wildfires in Northern California last year. 

Dive Insight:

Last month, California's state fire management agency said electric equipment owned by PG&E caused 12 wildfires that killed 18 people and burned hundreds of square miles. PG&E raising the specter of bankruptcy may have driven the state to consider changes.

California courts have thus far used a "strict liability" interpretation of the state's "inverse condemnation" doctrine, which places full liability on utilities for wildfires caused by their equipment — even if the utility was not negligent. After devastating wildfires, and the expectation they will be a constant and worsening challenge for the state, officials are moving to make the changes PG&E and other utilities have pleaded for.

Gov. Brown, in a letter to a legislative conference committee, wrote that Californians increasingly rely on electrical power but "the increasingly destructive and costly wildfires and natural disasters have the potential to undermine this system, leaving our energy sector in a state of weakness at a time when it should be making even greater investments in safety."

His proposal would double fines for utilities found out of compliance with state rules, from $50,000 to to $100,000 for each violation. But most importantly, the proposal would direct courts to consider whether the utility was negligent or followed all state fire regulations. 

In June, PG&E announced it will take a $2.5 billion pre-tax charge related to deadly wildfires in Northern California last year, a figure that does not include potential government penalties or fines, or the impacts of seven other fires where the utility may also be found liable. This week, the company announced its wildfire costs amounted to $1.59 billion in the second quarter of 2018 alone.