California utility giants PG&E Corp. and Edison International are one step closer to changing a state law that has exposed them to billions of dollars in wildfire liabilities.
Late Tuesday, California Gov. Jerry Brown proposed a bill that would require a court to consider whether a utility acted “reasonably” when deciding whether it should end up on the hook for fire damages. Brown said the proposal wouldn’t affect the potential liabilities PG&E and Edison face for blazes that devastated the state in 2017. Still, it’s a win for PG&E, which has been lobbying hard to change a policy that holds utilities responsible for the costs of wildfires their equipment caused, even if they weren’t negligent.
California investigators have already named PG&E equipment as the ignition source of 16 of the swarm of fires that swept Northern California wine country starting in October, destroying thousands of homes and killing 44 people. The probes alleged violations of state law in 11 of those incidents. PG&E said in June that it will take a $2.5 billion pretax charge tied to some of those blazes. The San Francisco-based utility owner could be on the hook for billions more, and the uncertainty has wiped out more than $13 billion of the company’s market value.
Under California law, utilities can be held liable for costs if their equipment is found to have caused a fire, regardless of whether they followed safety rules, based on a legal principle known as “inverse condemnation.”