Dive Brief:
- California lawmakers are abandoning a proposal to change utility fire liability rules, with one senator calling the issue a "distraction," according to the Los Angeles Times.
- Lawmakers on the California Wildfire Preparedness and Response Legislative Conference Committee had been considering a proposal from Democratic Gov. Jerry Brown to reduce electric utility liability in instances if the company is not found negligent.
- Meanwhile, legislators are completing a plan, which could be issued as soon as Tuesday night, to potentially allow PG&E to issue bonds to cover wildfire-related expenses, Bloomberg News reports.
Dive Insight:
As wildfires continue to rage with smoke traveling 2,000 miles from California to Ohio, lawmakers were unwilling to take any actions possibly seen as a bailout of the power companies.
"It clearly became a distraction ... it just felt like the ultimate bailout of the utilities," Democratic state Sen. Bill Dodd, told the Los Angeles Times.
In July, Brown suggested directing the courts to consider whether the company was negligent or complied with regulations. The changes would not have applied to last year's destructive fires, but lawmakers were still wary of the optics, according to the San Francisco Chronicle.
California courts use a "strict liability" interpretation of the state's "inverse condemnation" doctrine, which places full liability on utilities for wildfires caused by their equipment. A lack of utility negligence is not a mitigating factor — something Brown wants to change.
California's three largest investor-owned utilities support updating the liability rules, but for PG&E there is an existential danger. The utility's wildfire costs amounted to $1.59 billion in the second quarter of 2018.
PG&E Corp. even raised the specter of bankruptcy as it faces billions in potential liability from the wildfires, and is considering restructuring to protect some assets. Some analysts say the utility could face up to $17 billion in liability.
Shares of PG&E traded down about 1% on Monday.
