Utilities Seek $4.3 Billion Cap on Wildfire Liability

California ratepayers may face higher monthly electric bills if state lawmakers adopt a new proposal to permanently limit how much utility shareholders pay for catastrophic wildfires. The three largest investor-owned utilities in the state are pushing for legislation that would freeze a financial shield currently set to expire, a move that could shift more of the cost of future fires onto customers.

According to slides presented to state senators by a Pacific Gas & Electric executive, the utilities want to cap corporate liability at a specific percentage of their equity rate base. For Southern California Edison, that figure is $4.3 billion. For PG&E, the cap would be $5.1 billion, and for San Diego Gas & Electric, it would be $1.5 billion. Any costs beyond these amounts would be added to customer bills.

The push comes as a criminal investigation continues into Southern California Edison’s role in the Eaton fire, which killed 19 people and destroyed large parts of Altadena last year. A government investigation released in August concluded that the fire started when an out-of-service transmission line was briefly reenergized in high winds, creating sparks that ignited dried brush below.

Utility executives argue that the current uncertainty is hurting their credit ratings. Higher borrowing costs are passed directly to electricity customers. Pedro Pizarro, chief executive of Edison International, told Wall Street analysts last week that he believes the utility acted prudently before the fire. He stated that the company does not see a basis for felony liability or allegations of conscious disregard.

Caroline Choi, Edison’s executive vice president of public policy, said the proposal would not change the company’s focus on prevention. She told The Times that safety remains the company’s top priority. PG&E recently sent letters to thousands of customers, warning that projects could be delayed next year as it defers $2 billion in spending. The company said the deferral was necessary to manage its financial risk.

Consumer advocates and lawmakers are pushing back against the plan. Jamie Court, president of Consumer Watchdog, said that if ratepayers are forced to pay the majority of the costs for fires caused by utilities, the companies will lose their incentive to take mitigation seriously. Mark Toney, executive director of the Utilities Reform Network, called the idea of permanently capping shareholder liabilities completely unacceptable.

State Sen. Sasha Renée Pérez, whose district includes Altadena, sent a letter to the California Public Utilities Commission on Sunday. She pointed out that both Edison and PG&E continue to pay millions of dollars in dividends to shareholders while complaining that wildfire risk has weakened their finances. She noted that both companies reported billions of dollars in profits in recent years.

Under current law, known as Assembly Bill 1054, the cap on shareholder liability will end when the state’s $21 billion wildfire fund and an additional $18 billion reserve are depleted. The utilities are now asking Governor Gavin Newsom to call a special session to debate these financial risks. The companies claim that a predictable limit would help them maintain investment grade credit ratings, allowing them to access capital at lower borrowing costs for customers.