Wildfire victims are criticizing a state law that protects utilities from the costs of the disasters they cause

A year after the Eaton fire, survivors and state utilities are at loggerheads over whether state law should continue to protect companies from the costs of the catastrophic fires they fuel.

Southern California Edison says that with the help of those state laws it expects to pay little or none of the cost of damage from the Eaton fire, which owns its equipment. suspected to be sparks.

But in a recent filing by state officials, fire victims and consumer advocates say the law has gone too far and is making utilities unaccountable for their mistakes, leading to more fires.

“You think what’s going to happen if you always protect the fire starters,” said Joy Chen, executive director of the Eaton Fire Survivors Network.

At the same time, Edison and the nation’s two other major power companies are profiting by lobbying state officials for greater protection against future fire costs to reassure their investors.

If federal investigators find that Edison equipment caused the Eaton fire, at least seven of the nation’s 20 most destructive fires could have been caused by three utilities.

The debate over how far the state should go to protect electric companies from the costs of wildfires caused by the works is playing out in Sacramento at the California Earthquake Authority. Authority is in charge comprehensive study, ordered by Gov. Gavin Newsom, aimed at determining how to better protect Californians from catastrophic wildfires.

Chen said he is concerned about the meeting this month that he and another survivor were invited to by the authorities and the consultants they hired to work on the research.

He said the focus of the discussion is how to protect utilities and shareholders from future fire damage, rather than the costs to survivors and other Californians “living with the consequences of utility fires.”

Chen later sent the authorities an e-mail pointing it out the Times story which detailed how four of the top five executives at Edison International were paid high bonuses in the year before the Eaton fire as number of fires caused by the increase in utility equipment.

“The predictable result of continuing to protect shareholders and managers from the consequences of their own negligence is not an idea. It is significant. More catastrophic fires,” he wrote.

“The Eaton Fire was a predictable consequence of this moral hazard,” he added.

A spokesman for the authorities said that Chen and the other victims of the wildfire are “very important” to the authorities as they complete the investigation, which is due to take place on April 1.

He said the authority did not “jump to conclusions” about what the report would say.

Pedro Pizarro, chief executive of Edison International, told The Times last month that he strongly disagrees with allegations that the country’s law has gone too far in protecting utilities.

“The law holds us accountable,” said Pizarro. He went on to say that these laws are necessary to protect appliances from being collected which could increase electricity bills.

In December, Edison and two other utilities told regulators in a filing that they and their shareholders would not have to pay any more. state wildfire fundwhich was created to pay for damage caused by utility fires.

Until now, electricity customers and utility shareholders have split the cost of the fund.

The companies said making their shareholders contribute more to the fund “undermines investor confidence in California utilities.”

They suggested that officials instead find a new way to help pay for catastrophic fires, possibly using a federal income tax, which would require the wealthy to pay a larger share.

“Instead of relying on debt increases to pay for catastrophic losses, something that disproportionately affects low-income Californians, this plan would share the cost more evenly across the community,” the three companies wrote.

Although the investigation into the cause of the Eaton fire has not been released, Edison said the leading theory is that a century-old transmission line that had been decommissioned was briefly energized and caused the fire.

Edison last used that transmission line in Eaton Canyon more than fifty years ago. The company’s management said they kept it because they believed it would be used in the future.

Utilities and state regulators they have known for a long time that old, unused lines were causing fire hazards. In 2019, investigators traced the Kincade fire in Sonoma County, which destroyed 374 homes and other structures, to a defunct transmission line owned by Pacific Gas & Electric.

The legal protection of electric companies from fires caused by utilities has been in effect since 2019 when Gov. Newsom led the effort to pass the measure known as AB 1054.

Then, PG&E was in trouble because of the costs it faced from a series of wildfires, including the 2018 Camp fire. That fire, caused by a decades-old power line, destroyed much of the town of Paradise and killed 85 people.

Under the 2019 law, a utility is automatically considered to be operating intelligently if its equipment starts a wildfire. Then, all fire damage, except for the $1 billion covered by consumer insurance, is covered by the state’s wildfire fund.

The law allows third parties to provide evidence that the utility did not act prudently before the fire, but even in that event, the financial responsibility of the damage company is limited.

Edison told his investors that he believed he had acted prudently before the Eaton fire and that the cost of the damage would be paid in full.

The company says the amount it must pay under the law if it is found to be unreasonable is $4 billion. The dangers of the Eaton fire are estimated to be present up to $45 billion.

Pizarro said the possibility of Edison paying up to $4 billion shows that state law is working to hold utilities accountable.

“If we’re not smart and we end up getting fined $4 billion for the Eaton fire, that’s going to be a very painful day for this company—not just the pain of being told we were stupid, but also the financial cost of a fine of that size,” he said.

Chen’s group is not alone in urging the state to change laws that protect utilities from wildfire costs.

William Abrams of the Utility Wildfire Survivor Coalition explained in detail in the filing how the current rules are designed for utilities and “a small circle of well-resourced legal and financial actors.”

AB 1054 weakened safety regulations, he said, while leaving wildfire survivors across California “undercompensated and struggling to rebuild.”

He suggested that companies should use shareholders’ funds and freeze their dividends to pay for fire damages.

Carmen Balber, executive director of Consumer Watchdog, told state officials that Edison is expected to have the Eaton fire damage covered despite questions about why it did not clear the “ghost line” in Eaton Canyon and failed to shut down its transmission lines, despite high winds the night of the fire.

“We recommend establishing a level of discretion,” said Balber, “where utility shareholders are required to pay.”

Among the consultants the executive hired to help write the study are Rand, a research group based in Santa Monica; and Aon, a consulting firm.

Both Rand and Aon were paid by Edison for other work. Recently, Edison hired Rand to review some of the data and methods it uses to determine how much to donate to Eaton fire victims. its voluntary compensation plan.

Chen said hiring Edison consultants to help prepare the study creates a conflict of interest.

A spokesman for the authority said officials hoped their “open and inclusive learning process” would protect its integrity.

Aon did not return a request for comment.

“Our customers are not affected by our findings,” said Leah Polk, a spokeswoman for Rand. “We follow evidence and maintain strict standards to ensure our work remains objective and unbiased.”

Chen said he was not convinced. “You have a fox guarding the hen house,” he said.