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California Gov. Signs Bill Forcing Residents To Pay Wildfire Litigation Damages


California Gov. Signs Bill Forcing Residents To Pay Wildfire Litigation Damages

California officials have now confirmed that 59 people have died as a result of the devastating Southern California Woosley fire. Officials say the Northern California Camp Fire has now destroyed at least 9,000 homes and forced 52,000 residents to evacuate.

As bad as this is, for Californians, things are going to get worse following a deceptive move by its governor, Jerry Brown.

Camp Fire Potentially Started By Pacific Gas and Electric Company

California’s resources are not only battling several major destructive fires, but they are also intensely investigating potential causes.

Yesterday, I wrote up an article on potential cause of the Woosely fire, which California denies. Wildfire blame in California can mean billions in litigation. The state doesn’t want to get it wrong, or misplace blame, or even, honestly apply blame. It’s a mess.

Brown Screwed The State (And May Screw It More)

Last September, Gov. Jerry Brown signed a bill that allowed utility companies to increase service costs to customers as a way to make up for likely billion-dollar settlements and judgments resulting from catastrophic wildfires in 2017.

This gets a bit complicated, so allow me to explain deeper.

California officials, while determining the cause of Yuba County’s fatal Cascade Fire., preliminarily determined that  Pacific Gas & Electric Co. could have caused the blaze.

campfire pg&e power poles

PG&E’s sagging power poles the likely cause of Campfire

Eventually, officials did determine that PG&E was to blame for the massive blaze due to crumby power lines. But while the investigation was ongoing and the outcome became more clear, Brown protected PG&E from the likelihood of billions in settlements.

Brown decided that PG&E could suffer a state of bankruptcy due to the large settlements.

This is complicated stuff because it puts on display an overreaching state government’s socialistic ideals screwing residents using socialistic ideals. Its socialist cannibalization at its finest.

PG&E is governed by the state in terms of what it can charge. But California decided to protect PG&E from ensuing litigation by allowing it to charge customers more.

Hence, the customers suing would be the customers paying.

Even for those living in socialist ‘LA LA’ land, such a concept is infuriating.

Many people who don’t like full-on socialism don’t want privatized utilities. But if isn’t privatized, should the state really push a lawsuit by the people and for the people onto the people?

For Brown, he wanted to prevent a major state institution from going bankrupt. This means reaching into his socialist bag of tricks.

But things may get worse.

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PG&E On May Be On Hook For Campfire

Now, PG&E may be on the hook again for the Camp Fire. Their stock took a dive today as investors began to fear more potential billion-dollar litigation. At 1:00 pm eastern time today, it was down 30% in a massive sell-off. But should it be? Investors need to understand California-nomics.

pg&e stock crash

Citigroup estimates that the total dollar amount in damages that PG&E would assume could be upwards of $30 billion.

PG&E is insured against wildfire-related damage assumption for $1.4 billion. That’s not even close to what’s likely to end up being leveraged against them.

The current Campfire debacle is likely to be the same cause, crappy power poles, which means the new litigation is slam-dunk stuff.

Gov. Brown’s bill allowing PG&E to pass on any resulting damages cost to customers is for 2017, not 2018. However, let’s be real, Brown set the precedent, so he likely extends the protection.

Brown signed Senate Bill 901into law, this is the bill the protects PG&E while screwing customers. But oddly, the bill grandfathers in 2017 while starting in 2019. Meaning, the protectionist act doesn’t cover the 2018 wildfire catastrophe.

“It is our expectation that regulators will utilize the tools or framework outlined in S.B. 901 to address any potential 2018 wildfire-related costs,” Jeffrey Cassella, an analyst at Moody’s Investors Service, wrote in an email to the NYTimes.

PG&E Bankruptcy Option

Ah, the free market. For those living in California, such a term can almost feel rather unsettling (and sometimes a bit evil). But it is possible that the state allows PG&E to go bankrupt.

It most certainly will without intervention.

In this case, insurance companies take on the debt from legal damages. And another entity likely buys the fledgling PG&E.

The company almost certainly reinvents itself.

The utility company is likely to screw its customers anyways. But, there’s a beach.

Please read my wildfire survival guide for information on wildfires.

Photo by Neon Tommy

Author: Jim Satney

PrepForThat’s Editor and lead writer for political, survival, and weather categories.