By admin 
A special session of the California Legislature to reduce utility companies’ financial liabilities when their equipment starts wildfires might still come this year. But Gov. Gavin Newsom implied Wednesday a deal was more likely to become law under the next governor than in the few months remaining in his tenure.
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“I do hope that we move and move quickly,” he said while fielding questions from reporters in his Sacramento office. “But the conditions have to present themselves, and I’m not naive about how difficult that was near the end.”
Newsom had previously suggested he could call a special session to finish the deal he pushed for but watched fall apart in the final days of the session that ended Sept. 1. Newsom said he had hosted more than a dozen meetings on the subject since the session ended — but he did not appear optimistic those discussions would end with lawmakers returning to Sacramento and voting on a wildfire package this year.
Instead, Newsom said he hoped the issue of wildfire liabilities will be “front and center” for his successor.
“I may not be the one to put pen to paper on a bill,” he said, but, “I’m very confident this state will land it in a responsible way, in a matter of months.”
Executives of two of California’s major investor-owned utility companies said in recent days they wanted to see a special session.
“We’re really hoping and putting the call out that we need to finish the job here this legislative session and make sure we’ve got a liability framework that can serve people that are harmed by fire but enable us to power California’s economy,” Pacific Gas and Electric Co. CEO Patti Poppe told a CNBC broadcaster the same day as Newsom’s remarks.
Southern California Edison CEO Pedro Pizzaro also said he still hoped for a special session, Reuters reported.
Insurance company lawsuits at issue
The main sticking point in the negotiations today is the same issue that derailed attempts at a deal during the legislative session. Newsom wants to end or at the very least sharply limit insurance companies’ ability to sue California’s big investor-owned utilities after wildfires to recoup what they pay out in claims to people whose property burns.
Newsom has pushed to end those lawsuits. He said they left the utility companies vulnerable to the kinds of massive financial liabilities that put PG&E into bankruptcy following Northern California fires, including the deadly Camp Fire that burned down Paradise and were set off by the company’s equipment.
“Unless you address that issue, you’re playing in the margins,” Newsom said on Wednesday.
It’s not clear to what extent lawmakers have participated in Newsom’s negotiating sessions. An inquiry to his press office on Wednesday about who was included in the meetings he’s held went unanswered.
Senate President pro Tem Monique Limón, D-Santa Barbara, has not spoken with the governor about calling a special session for wildfire liability, a spokesperson for her office told The Sacramento Bee. A spokesperson for Assemblymember Cottie Petrie-Norris, D-Irvine, who played a pivotal role in negotiations during the legislative session, said she also had not discussed a special session with the governor.
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A spokesperson for Assembly Speaker Robert Rivas, D-Hollister, did not respond to a request for comment.
Critics of Newsom’s bid to protect utilities from insurance companies have accused the governor of trying to insulate the former from accountability for wildfires — including from the kind of punishing lawsuits that might drive better safety practices.
Insurance companies bring those lawsuits in an effort to recoup the funds they pay out in claims after fires burn homes and properties, in a process called subrogation. During the legislative session, insurance company executives said ending subrogation would drive up insurance premiums and cause more people living in wildfire-prone areas to lose coverage — problems California homeowners already face.
“We cannot support a reform that would transfer utility wildfire costs to California homeowners and businesses,” said 15 insurance company CEOs in an Aug. 26 letter.
Investors and financial analysts who set credit ratings for utilities have all pointed to ending subrogation as critical for the companies’ long-term financial health. After the deal fell apart in the Legislature, Poppe said PG&E would pause $2 billion in new investments because its interest rates for borrowing the money would be too high.
The $2 billion in work — not for wildfire mitigation or safety, but for housing developments, renewable energy projects and other efforts — represented about 15% of what the company was planning to spend.
Company critics accused Poppe of trying to hold policymakers hostage with the investment pause.
The two sides are getting closer on subrogation, Newsom said.
“We’re closing the gap, but there’s still a gap,” he said. “And the fact that we’re having those (meetings) is indicative of my desire to still be at the table for those conversations and not walk away from them.”
Newsom worried that a deal won’t be firmed up before a new governor and many new lawmakers take their seats in January, which could stall out the negotiations. Then, he said, “we have to wait till an actual crisis to address it and I think that would be a major mistake. So I’m continuing to put as much pressure as I can.”
Newsom and others have argued the state is just one massive, utility-caused wildfire away from another big bankruptcy that could destabilize electricity markets.
California remains in wildfire season.
“We’ve just been blessed by not having kind of wildfire activity that really would have exacerbated things and put us in a code red,” said Newsom, who has led the state through the recovery of several major wildfires. As he spoke, he sat behind a wooden desk that he did not then knock on.
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