Gov. Jerry Brown on Sept. 21 signed a bill granting shareholders of Southern California Edison and the state’s two other investor-owned utilities some relief from potentially billions of dollars in future wildfire damage claims.

The bill, SB 901 by Sen. Bill Dodd, D-Napa, lays out a comprehensive fire prevention and fire damage payment policy for SCE, a unit of Rosemead-based Edison International, and the other investor-owned utilities – San Diego Gas & Electric, a unit of San Diego-based Sempra Energy, and Pacific Gas & Electric, a unit of San Francisco-based PG&E Corp.

All three utilities, but especially Pacific Gas & Electric, pushed hard this legislative session for relief from potentially billions of dollars in damage claims that could have been levied against their shareholders in cases where wildfires were determined to have been caused by transmission wires or other utility equipment.

Wall Street investment houses were concerned that PG&E shareholders could be held liable for more than $10 billion in wildfire damage claims stemming from last fall’s Napa Valley fires and that Edison shareholders could be held liable for more than $4 billion in claims from last winter’s Thomas Fire. In the case of PG&E, some analysts expressed solvency concerns for the utility.

For related story, see “Will Wildfires Scorch Edison?”

The utilities initially pushed for legislation that would have passed virtually all of the damage claims onto their ratepayers. But that bill died in the Legislature last month under pressure from ratepayer advocates and lawmakers concerned this could lead to sharp increases in power bills.

SB 901 emerged in the final weeks of the session as a compromise. On a case-by-case basis, the state Public Utilities Commission will allocate liability for wildfire damage claims against utilities between ratepayers and shareholders. Also, the bill allows for the sale of bonds for wildfire damage claims levied against ratepayers that would be paid back over time by ratepayers.

The bill also requires utilities to implement wildfire prevention plans, including steps such as clearing vegetation near transmission wires and extra shielding for utility poles.

“This new law is the most comprehensive wildfire prevention and safety package the state has passed in decades,” Dodd said in a statement. “It will help prevent further loss of life and property while ensuring ratepayers aren’t left holding the bag. By enacting this law, we’ve laid a solid base to build on as California continues adapting to the ‘new normal’ caused by climate change.”

Economy, education, energy and transportation reporter Howard Fine can be reached at hfine@labusinessjournal.com. Follow him on Twitter @howardafine.

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