State Legislators Introduce Bill to Prohibit Electric Utilities from Pushing Costs Resulting from Negligence onto Ratepayers

January 03, 2018

For Immediate Release – Office of State Senator Jerry Hill – January 3, 2018

State Legislators Introduce Bill to Prohibit Electric Utilities from Pushing Costs Resulting from Negligence onto Ratepayers

Prompted by Attempts to Recover Costs for Wildfires, Senators Jerry Hill, Ben Allen, Bill Dodd, Mike McGuire and Scott Wiener and Assemblymembers Marc Levine and Jim Wood Author SB 819

SACRAMENTO – State Senator Jerry Hill, joined by Senators Ben Allen, Bill Dodd, Mike McGuire and Scott Wiener and Assemblymembers Marc Levine and Jim Wood, introduced legislation today to prevent electric utilities from passing costs that result from negligent practices onto customers by raising rates.

Senate Bill 819 was prompted by utilities’ ongoing 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.”

“California’s utilities must be held fully liable when their negligence causes damage in our communities,” said Senator Wiener, D-San Francisco. “You don’t burn someone’s house down and then raise their rates to help pay for the damage you caused. I want to thank Senator Hill for leading this effort to protect California’s ratepayers.”

Senator Allen, D-Santa Monica, said: “Utility customers shouldn't be stuck paying the bill for a problem they did not cause. This legislation is a fair response that will protect the public and hold companies accountable for the damage they’ve caused.”

Assemblymember Levine, D-Marin County, said: “The cause of the North Bay fires is still under investigation. Regardless, ratepayers should never be stuck with the bill if negligence is determined. That's why I am coauthoring legislation with Senator Jerry Hill to prohibit utility companies from charging ratepayers for costs if a utility is found at fault for a fire. The public yearns for accountability and we must have it here.”

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.

The CPUC’s ability to determine reasonable behavior, and to allow or disallow cost recovery in rates based on that review, is a central tenet of the CPUC’s authority.

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.

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Resources:

Fact Sheet: http://sd13.senate.ca.gov/sites/sd13.senate.ca.gov/files/sb819_factsheet_1-3-18.pdf

The text of the bill will be available within 24 hours at http://leginfo.legislature.ca.gov/

Media Contacts:

Leslie Guevarra for Senator Hill, 415-298-3404 cell, leslie.guevarra@sen.ca.gov
Colleen Beamish for Senator Allen, 916-6521-4026 office, colleen.beamish@sen.ca.gov
Ezrah Chaaban for Senator Dodd, 916-651-4003 office, ezrah.chaaban@sen.ca.gov
Kerrie Lindecker for Senator McGuire, 707-319-3654 cell, kerrie.lindecker@sen.ca.gov
Jeff Cretan for Senator Wiener, 916-651-4011 office, 415-308-6782 cell, jeff.cretan@sen.ca.gov
Minnie Santillan for Assemblymember Levine, 916-319-2010 office, minnie.santillan@asm.ca.gov
Cathy Mudge for Assemblymember Wood, 916-319-2002 office, cathy.mudge@asm.ca.gov