The California Commission on Catastrophic Wildfire Cost and Recovery created by SB 901 last year issued a Draft Report on May 29. The key issues addressed:
Inverse condemnation/strict liability: The draft report states that this policy has “destabilized the state’s energy sector with the largest utilities facing increasing costs of capital and an imminent threat of bankruptcy… SB 901 does not do enough to manage the systemic risk from wildfire to the state’s major utilities.”
Cost recovery: “The financial mechanisms for paying wildfire liabilities associated with utility-caused fires are strained and not sustainable.” So, “the prudent manager standard for electric utilities must be modified to bring clarity to the cost-recovery process.”
Homeowner issues: “We must not incentivize risky behavior, including the risks many Californians take by continuing to move into the most fire-prone areas of the WUI; by remaining un-or underinsured; or by neglecting to maintain proper home hardening and fire safety standards.”
Wildfire fund: The Commission recommends a “modest” fund if inverse/strict liability is reformed and a “large” fund if it is not.
The Governor, President Pro Tem of the Senate, and Speaker of the Assembly issued a statement in response saying that they intend to resolve the prudent manager/cost recovery issue along with bridge financing of wildfire costs, while they would continue to explore the issue of inverse condemnation. They will also focus on a utility culture of safety and on affordability for ratepayers.