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Plan to Fine California Utilities for Power Shutoffs Clears First Hurdle

California regulators could levy hourly fines on private utilities like Pacific Gas and Electric for cutting off power during wildfire season under a proposal approved Wednesday by a state Senate committee. 

SACRAMENTO, Calif. (CN) – California regulators could levy hourly fines on private utilities like Pacific Gas and Electric for cutting off power during wildfire season under a proposal approved Wednesday by a state Senate committee.

In the latest move by the state to crack down on PG&E and other utilities that have been blamed for sparking multiple catastrophic wildfires over the last decade, Senate Bill 378 would allow the California Public Utilities Commission to level hourly fees on utilities if it deems a pre-emptive shutoff was unreasonable or preventable. The bill also creates a process for residents, businesses and local governments to quickly petition to recover financial losses tied to planned blackouts.

“Other than through political pressure, the utility does not have to pay any attention to the costs and harms inflicted on people,” said state Sen. Scott Wiener, D-San Francisco. “This is about life and death in a lot of situations.”

Last fall, the state’s largest utilities shut down power on several occasions to reduce the chance of high winds sparking and spreading wildfires. The unpopular decisions touched millions of Californians across the majority of the state’s counties, with local officials reporting durations ranging from two days up to 11 days.

Critics accused PG&E of botching the blackouts, investors sued and the utilities commission opened up a formal investigation.

After meeting with residents and mayors of cities left in the dark last fall, Wiener hatched a plan that he says will prevent utilities from making knee-jerk decisions by threatening their bottom lines. He told the state Senate Energy, Utilities & Communications Committee that the aim is not to take away utilities’ ability to conduct pre-emptive blackouts, but make sure they use a “scalpel” not a “sledgehammer.”

Wiener’s proposal cleared its first hurdle Wednesday. But based on the mixed reaction it received from many of the committee members, SB 378 faces an uncertain future as it moves through the Senate.

Several of Wiener’s fellow committee members called the bill “premature” and warned that utilities would likely find a way to pass the cost of the fines down to ratepayers.

Senate Majority Leader Bob Hertzberg, D-Van Nuys, said the Legislature should wait for the utilities commission’s report and take a stronger look at the state’s inverse condemnation law, which holds public entities liable for damage caused by its equipment even if it did not act negligently.

“Here we are working around the edges, not looking at the tough issue directly in the eye,” Hertzberg said.

Hertzberg ultimately voted to advance Wiener’s bill but reiterated that he may vote differently if the bill comes up for a floor vote before a Jan. 31 deadline.

State Sen. Steven Bradford, D-Gardena, blasted the bill and said the Legislature is partly to blame for pressuring utilities to embrace pre-emptive blackouts. Bradford, who once worked for the utility Southern California Edison, said the fines would be passed on to ratepayers “no matter how we frame it.”

“We’re setting the table up for another energy crisis in the state of California,” Bradford warned.

Representatives from the utilities testified that SB 378 would punish them for acting responsibly and prudently amid windy wildfire weather. Edison, which provides electricity to approximately 14 million people and is the state’s second largest utility, said its October 2019 shutoffs likely prevented fires as crews found trees and other debris in power lines following windstorms.

“These examples could have ignited a fire, but they didn’t,” said Edison lobbyist Adam Smith. “That’s precisely because employees de-energized those lines pre-emptively and took the time to repair them safely.”

In order to get the committee’s approval, Wiener did accept a series of amendments that scale back the hourly fines and remove a clause that would have barred utilities from lobbying against alternative energy sources and providers. He called the bill a “work in progress” meant to boost public safety.

The committee of 10 Democrats and 2 Republicans ultimately approved SB 378 in a 10-1 vote, and it advances to the Senate Appropriations Committee.

Wiener has been a vocal critic of PG&E over the last several years as it has trudged through a line of high-profile controversies. He says he intends to introduce legislation that would turn San Francisco-based PG&E into a public utility.

“SB 378 I think is a good faith effort to try to grapple with these blackouts that are having horrendous consequences for the people of California,” Wiener said.

Utilities along with the California Chamber of Commerce and Coalition of California Utility Employees oppose the bill, while supporters include Alameda County and Bay Area cities like San Jose, Oakland and Pleasanton.

The measure would additionally require utilities to pay potential fines with funds generated from shareholders – not ratepayers – and force them to redistribute any profits made during planned blackouts to ratepayers. The original version proposed a penalty of “not less than $500,000” for every hour of a blackout performed by a utility with more than 2.5 million customers, but Wiener agreed to cut the rate in half.

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