San Diego attorney wants to send utilities CEOs to jail if they lie about wildfire prevention measures

23 January 2020

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USA – By state law, the big three investor-owned utilities in California must file a wildfire mitigation plan with the state to tap into a $21 billion insurance fund if their equipment accidentally sparks a big wildfire.

San Diego attorney Michael Aguirre said Wednesday he wants the Legislature to “add teeth” to the California Public Utilities Code by explicitly stating if CEOs of power companies violate “the truthfulness of the factual representations” of their respective wildfire prevention plans, they can end up in jail for up to one year.

“This creates a pretty powerful disincentive,” said Aguirre. “The difference is, it’s holding an individual accountable. The CEO is where the buck stops.”

The proposed language also requires top executive officers to certify that each plan “fairly presents, in all material respects, the company’s fire safety operations” and the plans have been “fully implemented,” in accordance with the California Public Utilities Commission.

“There’s no downside to telling corporate management that you’re going to be held accountable if you don’t tell the truth and you don’t follow through,” the former San Diego City Attorney said at his downtown offices.

The attorney, a longtime adversary of state electric companies, said he would like to see the wording added to existing wildfire legislation, such as Senate Bill 901 that passed in 2018 or Assembly Bill 1054 that zoomed through Sacramento last summer as an “urgency statute,” or adopted as a separate piece of legislation in the current session.

“Hopefully, the leadership — the governor’s office, the speaker and the president of the Senate — will take this up and we’ll leave it to their ingenuity to figure out how to get them passed,” Aguirre said. “Remember, they got 1054 passed in a week.”

The language also calls for the offending CEOs to pay a $10,000 fine per violation, with the money coming from their own bank accounts and not from customers.

Aguirre is now looking for a lawmaker in Sacramento to sponsor a bill with the wording he wants.”We have representatives from our office going door to door at the Legislature,” Aguirre said. “There has to be some urgency on this.”

Working on behalf of a pair of Pacific Gas & Electric customers, Aguirre’s firm has filed a lawsuit to strike significant portions of AB 1054, the bill that created the $21 billion insurance fund.

Half of the wildfire fund’s money is paid by the utilities; the other half comes through an extension of a bond through California’s Department of Water Resources that had been set to expire. But under AB 1054, the $2.50 a month surcharge to every customer across the state was extended.

The surcharge, the suit says, results in an “improper taking” under the U.S. Constitution. The case has been filed in U.S. Superior Court in San Francisco. The state is looking to have the case dismissed. A judge will hear arguments on Feb. 13.

If the Legislature were to pass a bill that would adopt the language Aguirre wants into the Public Utilities Code, would he be willing to drop the lawsuit?

“I definitely would be willing to negotiate something along those lines,” Aguirre said, although he and partner Maria Severson were quick to add that was dependent on the wishes of their clients in the case.

Under AB 1054, utilities must receive a first-of-its-kind safety certification from the state. To qualify, the companies must tie executive compensation to safety performance, establish a wildfire safety committee on their respective boards and meet other financial and safety measures.

SDG&E and Southern California Edison have already received their safety certifications. PG&E must first emerge from its ongoing bankruptcy proceedings by June 30 to access the wildfire fund.

As interpreted by California courts, utilities in the state can be held liable for damages if their equipment sparks a wildfire under the doctrine of “inverse condemnation,” even if the utilities have followed applicable safety rules.

AB 1054’s backers said the bill will help utilities avoid credit downgrades that end up in higher borrowing costs that are passed on to customers and will get money into the hands of victims of recent wildfires more quickly.

PG&E faced criticism last year for shutting off power lines for several days to about 2 million customers to avoid power lines sparking fires in its service territory when high winds blew through Northern California. Gov. Gavin Newsom, who supported AB 1054, said at the time, “For decades, PG&E failed to prioritize public safety.”

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