Bill by Senator Hill Would Block PG&E from Taking $1.675 Billion Tax Write-Off on Wildfire Settlement

February 20, 2020

For Immediate Release – Office of State Senator Jerry Hill – Thursday, February 20, 2020

Senator Jerry Hill Introduces Bill that Would Block PG&E from Claiming a State Tax Write-Off for the $1.675 Billion Settlement of the 2017 Wine Country and 2018 Camp Wildfires

SACRAMENTO – State Senator Jerry Hill introduced legislation to bar electric and gas companies from taking a state tax deduction for any expense resulting from a decision by state regulators to penalize a utility for safety violations.

State law prohibits tax deductions for fines imposed by the government for a violation of law. Senator Hill’s SB 1139 acknowledges and underscores the existing law, and it extends the prohibition to any attempt to write off fines, expenses paid or expenditures incurred as a result of a decision by the California Public Utilities Commission to penalize a gas or electric company in a safety violation case. The legislation, introduced Wednesday, would affect any CPUC-regulated electric or gas company that finds itself in the described situation. The bill does not specify a particular utility.

However, if it becomes law, SB 1139 would immediately apply to PG&E. In a January filing with the CPUC regarding the $1.675 billion settlement agreement PG&E reached with regulators for the 2017 Wine Country and 2018 Camp wildfires, the company said: “For California state tax purposes, PG&E’s current best estimate is that the full $1.675 billion in financial obligations will be deductible.”

PG&E was not fined in the deal. The settlement agreement, which awaits final approval, closed the CPUC’s examination of the fires that killed 120 people, destroyed 14,000 homes and ravaged Northern California’s wine country and the town of Paradise. Instead of being fined, PG&E agreed that it would not attempt to pass along to customers $1.625 billion in “wildfire-related expense and capital expenditures.” PG&E also agreed to use shareholder funds to pay for $50 million worth of “system enhancement initiatives.”

“It’s obscene for PG&E to contemplate a billion-dollar-plus tax break on the financial obligations the company agreed to shoulder as its penalty for the deadly wildfires its equipment caused,” said Senator Hill, D-San Mateo and Santa Clara Counties. “We should not allow PG&E, or any other electric or gas company, to claim a tax savings windfall for failing to make their systems safe.”

SB 1139 follows legislation Senator Hill attempted five years ago to prevent PG&E from taking a tax deduction on the $1.6-billion fine the CPUC imposed on the utility for the 2010 explosion of a PG&E natural gas pipeline that killed eight people and leveled a neighborhood in San Bruno, which the senator represents. That bill did not survive the legislative process.

“In the 10 years since PG&E’s shoddily maintained pipeline ripped apart families and a neighborhood, we have seen many other devastating examples of PG&E’s abysmal safety practices – and we’ve seen how PG&E tries to turn each tragic case to its advantage,” said Senator Hill. “We have an opportunity to prevent that with SB 1139.”

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The text of SB 1139 is available here: http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200SB1139

Media Contact: Leslie Guevarra, 415-298-3404, leslie.guevarra@sen.ca.gov