California’s 9th Circuit Court of Appeals to Hear Utility Wildfire Bailout Case

After the Public Utilities Commission denied three Investor Owned Utilities in California – Pacific Gas and Electric, San Diego Gas and Electric, and Southern California Edison – the cost of wildfire repayments in 2019, the utilities filed a lawsuit in the Federal District Court in California and took it to the U.S. Supreme Court, claiming that their tens of billions in wildfire liabilities should be paid for by utility customers – despite that Cal Fire repeatedly found electric utility safety violations to be the cause of the wildfires which led to the tens of billions in liabilities.

Following rejection of the utilities’ appeal by the U.S. Supreme Court, the California Legislature and Governor gutted-and-amended an existing bill, AB 1054 by Assemblyman Chris Holden (D-Pasadena) lightening-fast, seeking to authorize the bailout of these investor owned utility companies from financial and legal consequences, despite their culpability in the wildfires.

Prior to passage of AB 1054, the lawsuit shows PG&E made massive campaign contributions to nearly every member of the Legislature and to Governor Newsom to secure the bill’s passage, the Globe reported in early 2020.

San Diego attorneys Mike Aguirre and Maria Severson submitted several California Public Records Act (CPRA) requests to Governor Gavin Newsom’s office, seeking documents which would shed light on the rationale behind specific provisions of AB 1054, but they were denied and thwarted by the governor. Severson at the time said the Governor’s opposition shows that State officials, under the direction of Governor Newsom, are now engaged in a pattern of delaying or denying the public from gaining access to the relevant public records.

9^th Circuit Court of Appeals

Currently, the 9^th Circuit Court of Appeals has scheduled argument for April 12, 2021 in San Francisco to hear the case challenging AB 1054, the utility bailout bill that burdens utility customers with $13.5 billion for damages from fires caused by the big utilities (PG&E, SoCal Edison, SDG&E).

Plaintiffs sued because the bill is an unconstitutional taking of customers’ property (in the form of rates), and because there was no due process given. Instead of stopping utility-caused wildfires, the bill instead funded them. Since the bill’s July 2019 enactment, PG&E has caused more fires and killed more people – all while on felony probation for the San Bruno gas explosion that killed eight. Also since the bailout bill, felon PG&E pled guilty to 84 counts, one for each death that resulted from its utility-caused fire.

“The Ninth Circuit hearing comes almost two years after the utility bailout bill was rushed into law, requiring utility customers, not shareholders, to pay for damages from fires the utilities cause up to $13.5 billion,” Severson said Monday. “The imposition of rates is an unconstitutional taking, forced upon them without due process.”

“Much has happened during this time: PG&E pled guilty to 84 counts relating to the death of 84 people who died in a PG&E-equipment related fire,” Severson said. “Just last fall, 4 more died in the Zogg fire in which PG&E equipment has been implicated. Customers want these fires stopped, not funded.”

In 2019, Severson said AB 1054 should have served as a last chance warning against further utility disasters. Instead, AB 1054 became a bailout of the investor owned utilities, both financially and legally, from the consequences of their continued intransigence against prioritizing safety.

“AB 1054 provides for an endless amount of bonds to be issued and an endless amount of rate increases to meet the revenue requirement of the DWR charge fund so that the bonds to capitalize the wildfire fund are paid off, which in turn pays for whatever wildfire liabilities are incurred by the IOUs.”

“Worse, AB 1054 redefined both the burden of proof and the legal standard by which an electric utility could be found imprudent,” Severson said. “It is now nearly impossible for utility customers to prevent an investor owned utility from passing uninsured wildfire liabilities onto them.”

Severson told the Globe last year about a Wall Street Journal report in July 2019 had records obtained from the U.S. Department of Forestry showing PG&E Corp. knew for many years that hundreds of miles of high-voltage power lines could fail and spark fires, yet the investor owned utility repeatedly failed to perform the necessary upgrades. “The WSJ article explained many of PG&E’s transmission towers are past their life expectancy. Worse, PG&E had such poor record keeping that it was unaware of exactly how old most of its transmission lines and towers were: Even before November’s deadly fire, the documents show, the company knew that 49 of the steel towers that carry the electrical line that failed needed to be replaced entirely. In a 2017 internal presentation, the large San Francisco-based utility estimated that its transmission towers were an average of 68 years old. Their mean life expectancy was 65 years. The oldest steel towers were 108 years old.”

Yet, California’s utility regulators, the PUC, “paid little attention to the condition of PG&E’s transmission system and have largely left it up to the company to decide what to upgrade and when.”

For background and the entire story, read:

Lawsuit: California Utility Customers Forced to Bail Out Utilities for Wildfires They Cause, and

Is Governor Newsom’s Office Trying to Keep Documents Secret Over Rushed Passage of Utilities’ Bailout?

Here is the 9^th Circuit Court of Appeals Opening Brief and Reply Brief: