California utility customers sue over wildfire law

July 20, 2019 GMT

SACRAMENTO, Calif. (AP) — Two Pacific Gas & Electric customers want the federal judge overseeing the company’s bankruptcy to strike down a new California law that Gov. Gavin Newsom has championed as a way of shoring up the state’s major electric utilities in the face of disastrous wildfires.

A lawsuit filed Friday argues that the law violates the rights of utility customers and taxpayers by making it easier to raise electric rates to cover the costs of wildfires caused by power company equipment.

Rushed through the Legislature in the last week before summer recess, Assembly Bill 1054 will allow electric utilities meeting new safety standards to pass on the costs of wildfires to customers by raising rates unless customers create “serious doubt” that a power company acted reasonably. Currently, a power company must prove to regulators that it acted prudently — a higher standard.

“They have found a way to finance how to pay for the fires, not how to stop the fires,” said attorney Michael Aguirre, who filed the lawsuit Friday with the federal district court in San Francisco.

Aguirre also argued plans to use money from a fee on utility bills to create a fund that will cover utilities’ costs from wildfires in some circumstances amounts to an unlawful gift of public money from the state government to power companies owned by private investors.

The lawsuit targets, too, a provision of the law that would allow a new Wildfire Safety Advisory Board to keep secret its communications with state regulators, arguing that section of the law does not provide the sort of justifications usually required for granting privilege to a government body.

Newsom had argued that the law is key to maintaining confidence in major electric utilities in the face of another wildfire season. PG&E is already in bankruptcy amid billions of dollars in claims for damages from wildfires caused by its equipment.

The law calls for major electric to utilities to spend more on safety measures.

The proposal ended up drawing bipartisan support as well as backing from labor unions, wildfire survivors and at least one major consumer advocacy group.

The lawsuit filed Friday, however, also detailed hundreds of thousands of dollars in campaign contributions from PG&E to lawmakers and the governor, underscoring the political sway of the behemoth company.

Filed on behalf of PG&E customers Alex Cannara and Gene Nelson, the lawsuit names as defendants departments in Newsom’s administration, members of the Public Utilities Commission, the state treasurer, state controller and others.

The governor’s office said it does not comment on pending litigation.