Calif. bill would stop negligent electric utilities from passing costs to customers
SACRAMENTO, California – Several state senators introduced legislation January 3 to prevent electric utilities from passing costs that result from negligent practices onto customers by raising rates.
State Senator Jerry Hill, joined by Senators Ben Allen, Bill Dodd, Mike McGuire and Scott Wiener and Assemblymembers Marc Levine and Jim Wood introduced Senate Bill 819, which was prompted by utilities’ efforts to recover costs resulting from long-past wildfires by seeking permission to increase rates, even if found at fault in the fires.
The much-criticized practice came under sharp scrutiny as one such effort, by a San Diego utility, came up for review by the California Public Utilities Commission as wildfires raged last fall in Northern California’s Wine Country.
While the cause of those fires is still being investigated, several legislators want to ensure that the electric utilities serving California cannot recover the costs that result from the utilities’ negligent practices by raising rates for customers
“The practice is an outrage and it’s time to stop allowing utilities to push the burden of their negligence onto the backs of customers,” said Senator Hill, D-San Mateo and Santa Clara Counties. “Victims of devastating fires and other tragedies, and ratepayers in general, should not be forced to pay for the mistakes made by utilities.”
Senator McGuire, D-North Coast/North Bay, whose district includes communities ravaged by the wildfires in October, said: “Thousands of North Bay residents have lost their homes and businesses and many escaped these devastating fires with nothing but the clothes on their backs and their family’s safety. While there is an active fire investigation taking place, there is absolutely no way residents who are suffering from this massive tragedy should ever pay for a corporation’s potential negligence. It’s simply unconscionable and I’m grateful to join with Senator Hill on this important piece of legislation.”
Before ratepayers bear any cost incurred by a utility, the California Public Utilities Commission is required to evaluate whether those costs are just and reasonable. For example, if a wildfire occurs in a utility’s service territory, the utility will incur costs to repair and replace equipment damaged by the fire.
The CPUC has the authority to determine if the utility acted reasonably in responding to the fire – in preventing the fire from occurring, in mitigating the fire’s spread, and in recovery efforts during and after the fire – before allowing the utility to increase rates to pay for the damage.
SB 819 provides the CPUC with full authority to apply a reasonableness review to electric utilities’ requests for cost recovery. In addition, the bill clarifies that fines, penalties, or uninsured expenses resulting from negligent behavior are not recoverable in rates.
Gas companies are already prevented from shifting the burden of fines and penalties onto customers as a result of legislation by then-Assemblymember Hill in response to the PG&E gas pipeline explosion that leveled a San Bruno neighborhood in 2010. The legislation, Assembly Bill 56, was approved by the governor in 2011.