By admin 
As the Legislature neared its dramatic conclusion last week over a package of utility-caused wildfire legislation, Gov. Gavin Newsom repeatedly invoked the plight of those who survived fires begun by Pacific, Gas and Electric Co.’s equipment in 2017 and 2018, including the Camp Fire that burned down the town of Paradise and killed 85 people.
When Newsom first took office in 2019, PG&E was in bankruptcy as a result of the company’s massive liabilities from the death and destruction those fires wrought. This month, the governor was pushing lawmakers to accept a last-minute deal that would lessen utility companies’ liabilities for future wildfires, particularly toward insurance companies who sue to recoup what they pay out in claims to those whose property burned — a process called subrogation.
“The last thing I wanted to do was go to bat for them,” Newsom said of his approach to utility companies, speaking to reporters during a statehouse visit amid the debate. “And it’s not about them, it’s about the damn victims. They are the ones being screwed, each and every time, they are abused by these groups, and it sickens me, it really does, and they get away with it.”
The abusive groups Newsom was referring to, the governor said, include insurance companies, trial attorneys who take cases on large contingency fees, and Wall Street hedge funds who profited off PG&E’s bankruptcy. All those entities hoovered up the dollars PG&E had available to pay out victims of the Camp Fire, and other blazes including the deadly 2017 North Bay fires that devastated Santa Rosa and outlying communities.
Victims of PG&E’s pre-bankruptcy fires — around 70,000 people — have ultimately received only around 70% of the damages they were owed, and that’s before attorney fees. Newsom’s bid to end subrogation, which was paired with a cap on attorney fees and other changes, failed this session. The governor hit resistance first with state Senate negotiators and then with rank and file Assembly lawmakers, who ultimately rejected even a watered-down version of his package.
With less fanfare, however, the Legislature did pass a bill that takes a step, albeit an uncertain one, in the direction of finding that other 30% for those previous fire survivors.
A grassroots lobbying effort by victims
Behind the legislation, Assembly Bill 2700, is a small group of everyday people who lost homes in Santa Rosa and Paradise and have since, over years, in bankruptcy court, in Washington, D.C., and in the statehouse, become determined advocates. Their effort generated unanimous lawmaker support. Newsom now has the choice whether to let that bill, which is opposed by PG&E and Southern California Edison, become law or to veto it.
The legislation requires the California Public Utility Commission, which regulates PG&E, to provide by January 2028 a report with recommendations for how utility companies can put aside enough funding to pay pre-bankruptcy victims the roughly 30% shortfall in what they’re owed. Those recommendations are not allowed to include raising the money through people’s electrical bills — in other words, the utilities will have to come up with the funding without passing it on to customers.
Instead, the CPUC would look to possible mechanisms such as ordering a reduction in payments to PG&E shareholders or even the utility’s issuing bonds to find money for the fire victims. The bill would not directly lead to the CPUC’s placing any requirements on the utility to pay out more money, however. Any proposals the CPUC comes up with would likely then have to go back to the Legislature, meaning any possible payments are conditional upon further political support and could be years away.
“Without (the bill) there is no pathway,” to making victims whole, Camp Fire survivor and bill advocate Tina Reszler said Tuesday. “There’s nothing else out there that is helping us.”
Reszler was speaking to the Paradise Town Council, which subsequently agreed to sign a letter encouraging Newsom to sign the bill.
Long history
The governor has not signaled his disposition toward the bill, and he often does not comment on legislation before signing or vetoing it. Newsom has until the end of the month to make a decision. The two utility companies argue the bill seeks to circumvent federal bankruptcy court because, under current law, PG&E has shed its liability to those earlier victims through the creation of the Fire Victim Trust, which is nearing the end of its work evaluating and paying out claims with the money available.
The trust has paid out nearly $14 billion, roughly $5 billion to $6 billion short of the claims that have been evaluated.
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The utility companies warned in a letter to lawmakers they would likely sue if the bill becomes law, saying it “invites endless litigation” because it “attempts to rewrite the outcome of those long-settled federal proceedings.”
The letter also stated that the bill would create more “uncertainty, risk, and costs” for utility companies at a time when lawmakers and the governor say they want to stabilize the state’s electricity markets.
In many ways, the state has moved on from those earlier wildfires. PG&E emerged from bankruptcy after creating the Fire Victim Trust, the fund established to pay out victims of the earlier fires which has ultimately come up short. At the same time, Newsom and the Legislature created the California Wildfire Fund, a utility-funded pot of money to compensate future wildfire victims and insulate the companies from immense financial liabilities.
Victims of those first catastrophic Northern California wildfires, though, have been less able to move on. That’s perhaps particularly true in Paradise, where many of those burned out of their homes are retirees with limited incomes who, after attorney fees, received only 40% to 50% of their court-determined losses.
“You can drive through the mountains up there, and you can see all the trailers where houses used to be,” Reszler told The Sacramento Bee during an interview last month. The payments victims did get out of the Fire Victim Trust have come in increments and taken years, making paying for rebuilds difficult.
“It’s just prolonging our pain,” she said.
Newsom owes it to us, some victims say
Some of the fire victims behind the legislation say Newsom should support the bill not just because he has been speaking publicly about the plight of earlier fire survivors but because legislation he backed played a role in the deal that left them in bad straits.
PG&E entered bankruptcy court in January 2019, even as some utility critics accused the company of invoking federal bankruptcy laws to dodge its fire liabilities though it didn’t truly face insolvency. Later that year, the Legislature and Newsom created the California Wildfire Fund through Assembly Bill 1054. As PG&E sought to exit bankruptcy and participate in that fund, pressure mounted on wildfire victims and their attorneys to accept a deal with the utility to create the Fire Victim Trust, which was composed of half cash and half company stock shares.
Fire Victim Trust administrators sold those stock shares off in chunks as the utility’s share price made a slow climb out of a bankruptcy bottoming out, leaving the survivors waiting years for payments. A final payment is scheduled for October but represents a little more than a 1% increase.
Many of those wildfire survivors now feel they signed off on a bad settlement with the utility under pressure created by state leaders, including Newsom, who wanted to set up the state wildfire fund and keep PG&E operational.
“Victims understand that bankruptcy cannot be viewed as a permanent shield against legislative and administrative remedies,” said Will Abrams, a victim of the Tubbs Fire in Santa Rosa who is one of the bill’s architects. “AB 1054 passed in 2019 protected utility financial interests at the expense of true wildfire victim recovery. AB 2700 is the Legislature’s opportunity to protect victim and public interests.”
In a letter to Newsom this week, Abrams quoted the governor’s remarks to reporters about fire victims consistently getting the short end of the stick. “This sentiment and the fight for justice you articulate is exactly why AB 2700 is so important,” Abrams wrote. He noted that many survivors of PG&E’s original fires died waiting for restitution.
“Others continue to live with the daily consequences of a recovery system that treated them as the last priority,” Abrams wrote.
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