Paying for wildfires

Bankruptcy won't make PG&E's long-term wildfire problem—or its costs—go away

U.S. Bankruptcy Court

Facing a cash flow problem stemming from recent wildfire liabilities, PG&E will reorganize its gas and electric business under Chapter 11. The move, which could take two years, would let the utility continue service for 16 million Californians, but could reduce wildfire victims’ claims.

California Public Utilities Commission

The state regulator will need to sign off on any potential bankruptcy settlement. That means the commission will shape PG&E as it emerges from bankruptcy, perhaps as a new company, broken up, sold off or turned into municipal agencies. Most important, the commission decides when PG&E can pass liability costs to customers as ever more destructive wildfires arise from climate change.

California Legislature

State lawmakers can help loosen fire liability laws, but should they? Despite intense lobbying last year, PG&E failed to change strict rules that make utilities responsible for wildfire damage traced to their equipment. Instead, lawmakers carved a path for utilities to spread out some of their massive liabilities to consumers. The Legislature could allow more liabilities to be passed on as bankruptcy proceeds.

California Supreme Court

Under a legal doctrine called “inverse condemnation,” utilities are liable for any wildfire damage traced to their equipment even if they were not negligent. Unless the high court issues a different interpretation or voters approve a constitutional amendment, releasing utilities from this financial responsibility is out of the question.