Gov. Jerry Brown okays utilities charging Californians to pay for fires utilities may have started
California is now dead to me.
California is dead to me…a smoldering ruin of a once prosperous state. I spent a glorious Thanksgiving week in Michigan, enjoying my first snowfall in many years and escaping coverage of the wildfire disaster. Before leaving, I went through my jewelry collection and packed sentimental favorites and valuable items in the event that San Diego was hit with a fire during my vacation.
While I was organizing my case, my anger at the choices made by both federal and state politicians and bureaucrats that led to the loss of life was heating up as hot as any of those flames. And instead of meaningful change, Governor Jerry Brown’s solution to this is to let the utilities charge us for the fire settlements likely to stem from this disaster.
California Gov. Jerry Brown has signed a measure allowing utilities to bill their customers to pay for future legal settlements stemming from devastating 2017 wildfires.
Brown announced Friday he’d signed the bill, which is aimed at preventing bankruptcy for Pacific Gas & Electric Co. The massive utility faces billions of dollars in liability if investigators determine its equipment caused the Tubbs Fire that destroyed thousands of homes and killed 22 people in Santa Rosa last year.
The measure is the most hotly contested part of a wide-ranging plan to reduce the growing threat of wildfires.
Long-time readers will recall the Legal Insurrection team has been diligently covering the climate-change-centered, environmental-activist policies that have made lumber industries an enemy-of-the state.
Some highlights over the last 5 years I have monitored the state’s blazes include:
- Our review of Scorched Worth: A True Story of Destruction, Deceit and Government Corruption, covers the hard fought legal battle between Sierra Pacific Industries (SPI), the second largest lumber producer in the nation, and the California Department of Forestry and Fire Protection (Cal Fire) and the United States Forest Service.
- In 2016, the state’s electric utility was poised to be the center of bipartisan legislation to enhance fire protection from electrical system that was offered from both state houses, but Governor Jerry Brown vetoed the bill.
- When California’s famous wine country burned, we covered the reports from scientists and land-use experts that local-solutions to site-specific problems that arise when urban areas meet the wild offer more effective protection that taxation to implement untried, expensive regional and global solutions.
- I gave a front-line report the time I was trapped on Interstate 15 while a wildfire raged less than 1 mile ahead.
- We noted that the water restrictions that have been imposed under Governor Jerry Brown are likely to have contributed to the intensity of the wildfires that occur.
Every time there has been a wildfire catastrophe, I have hope that it will be the last. We are taxed, lectured, and regulated to the based on the promise of “fire security”…and all is well until the next Santa Ana or the next arsonist.
Now, Paradise has been literally destroyed. As of this report, the historic and deadly Camp Fire is now 100% contained as 85 are confirmed dead and over 200 are still missing.
My rage at Sacramento has also been fueled by the “Sanctuary State” antics that have helped create the disruption at the border less than 30 miles from my home.
I came to California from Michigan in 1985 because it offered more opportunities for success. Now, my husband and I are planning to move once my son is in college, as the voters, unions, and politicians have incinerated the pathways to life, health, and prosperity that once existed in the state.
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Comments
Of CA, I would say “Let It Burn”, but it’s a little late for that…
Um, of course they’re going to pass the cost on to their customers. The money has to come from somewhere, and the customers are their only source of revenue. Where else should the money come from?
Milhouse: Perhaps I would be a little more receptive if there was an attempt to resolve the problems leading up to this disaster in the past 15 years…when the 2003 fires in San Diego nearly destroyed my home.
Here is a question for you legal types: Would the citizens of Paradise have standing to file a claim against the State of California for implementing policies that lead to the city’s destruction?
Such legal claims must be filed or funded by recognized Left Wing Non-Governmental Organizations. All other claims are subject to dismissal under the FRCP for “Failure to State a Claim” or lack of standing.
the would have a lot better standing then some of the lawsuits against oil companies for agw, and justification.
almost forgot, I wonder how much a stake berkshire hathaway has in the company.
Milhouse: The equity shareholders should be wiped out if the company can’t satisfy the judgments against it. Those harmed by the fire would get an interest in the equity through reorganization in bankruptcy.
Presumably, this approach wouldn’t be sufficient to make whole those harmed by the fire. A fair question then is whether utility customers should make up the difference, given the risk of fires inherent in getting utility service. I don’t know enough about why the fire happened to have any thoughts about that, but it is clear to me that the customers should not be the sole source of payment of the judgments.
If PG&E goes bankrupt the assets would be sold off in pieces. All in progress projects would be scrapped. There would be no new large scale power plants added to the grid because there would be no way to borrow the money for them. It would mean the end of flipping a switch and having the lights come on in California.
That would only speed the arrival of the inevitable.
Chapter 11. There is a well known solution here. Equity shareholders wiped out, also lawsuit claimants probably come ahead of bondholders. I don’t know the details of the Absolute Priority Rule, and the feeding frenzy would be a mess (and end up with compromises of the APR), but that’s freedom and that’s our legal system.
What Jerry Brown should have done was to sign an emergency measure to ensure that PG&E continues operating through any such bankruptcy, if that’s not already guaranteed by existing laws.
Bondholders are secured creditors, so they’ll be ahead of lawsuit claimants, who are unsecured creditors. Debentures are unsecured debt, so they would be paid pari passu with the lawsuits. And as you note, the equity would likely get wiped out.
The Willy Sutton Principle.
PG&E is an IOU (investor-owned utility) with publicly traded stock. The utility company is the leading subsidiary of the holding company PG&E Corporation, which has a market capitalization of over $13 billion. The investors (i.e. stockholders) should bear the brunt of the costs of the company’s negligence, not the captive customers.
I’ve been reorganizing my business for the past two years preparing to make my own escape. I’ve been considering a move to AZ but with their goofy politics, I’m not so sure I want CA lite. TX is out of the picture since our resident TX commenters blame everything on CA people moving there so I don’t get the feeling that Texans may be too superficial to discern who their friends are.
It’s the same everywhere I look. Everyone is blaming anyone but themselves for their predicament when all conservatives (whatever that means these days) are in the same boat and got there the say way for the same reasons… only in different states.
It’s not so much people coming from CA, as those who move to Texas and then do stuff like vote for Beat-o and his buddies.
A lot of those people were brought in by your RINO governor Rick Perry whose main business growth model was based on bribing high tech companies to move to Texas. Those were all liberals who were not Californians. People like me didn’t vote for what CA has become and are taking our “conservative” values elsewhere and will vote accordingly.
It speaks volumes about native Texans that Beto almost beat Cruz. It also speaks volumes about what a lousy candidate Cruz truly is. AZ isn’t exactly producing inspiring candidates either. Or Idaho. Or Wyoming. Or Montana. CA emigres aren’t at fault.
“It’s the same everywhere I look. Everyone is blaming anyone but themselves for their predicament”
You sure do.
Over the past decade we’ve had roughly half a million people move from CA to TX. Add in movement from other blue to purple states and blaming “native Texans” for the vote total of Robert Francis O’Rourke is more than a bit ingenuous. Hell, those people are moving to AZ too, and AZ just elected as Senator a wacko who dissed the people of the state and the state. But then again, they also kept re-electing “Maverick” John What’s his name*.
* I know it, but I’ve decided to launch a personal crusade to eliminate him from the collective memory of as many US voters as possible.
don’t know what happened to the “dis” in disingenuous, but here it is.
Please consider moving to Wichita. There are numerous former Californians here and, to my knowledge, they love it. Lots of opportunity and a very low cost of living.
In Oregon we recognize good Californians and bad Kalifornians. The latter try to inflict their old beliefs on us, the good ones recognize what they have just escaped, but sadly are outnumbered by the others 10:1.
I’m with Milhouse. Where do you think the money is going to come from? Like it or not, that’s how it works. I also think blaming PG&E for the fires may be premature. And even if a spark from the lines ignited brush, the electric company is not responsible for idiotic environmental policies. Why not go after Bill McKibben? Didn’t Brown veto a PG&E plan to bury some of the lines?
OTOH you can kill the power company, force it into bankruptcy. Then where will you get electricity?
Lastly, fires happen, like avalanches and typhoons. Nowhere on earth is safe from the wrath of nature.
The money comes from 4 places: PG&E’s insurers, PG&E’s reserves, PG&E borrowing money to pay the claims, and ultimately, PG&E’s equity owners.
And debt. Don’t forget debt. Those bonds are not necessarily protected in bankruptcy.
which is aimed at preventing bankruptcy for Pacific Gas & Electric Co.
If they go bankrupt nobody will have any power at all. Nobody is going to buy the company, assuming its liabilities. In the real universe (which includes California), power costs. Sometimes it costs rather a lot. Alex Occasionally-Conscious probably thinks that it’s possible to make the fires pay for themselves, but nobody else has any excuse for thinking that money grows on utility poles.
That’s why in bankruptcy you don’t buy the company. You buy its assets, like power plants, offices, and land, which are free of current liabilities such as those that caused the bankruptcy.
Liabilities disappear only if you wait for actual bankruptcy.
When utilities are involved, you probably don’t want to wait that long.
Has nobody heard of “bankruptcy reorganization”, Chapter 11 ? This is all taken care of in the law, if we’d not be afraid to insist on it.
The going concern keeps operating as its shareholders and some or all the debt holders are wiped out, and new people settle their claims for shares of the equity.
I left 3 months ago. Every single day since my escape I read some dumb thing Moonbeam is implementing. The last straw was the water usage plan. Now Cali has a new Gov who’s even worse. My advice is to never look back. The politics are not changing anytime soon.
Being a Upstate New Yorker I empathize and if it weren’t for family and age I would seriously consider one of the 33 states with Republican Governors and with favorable low taxes, 9 which have no state sales tax. The weather is not southern Cal., but the cost of living isn’t either.
For California,. I favor a Hollywood Celebrity income and asset tax rate of 95%. That way they can show they care. Mansions for los ilegales!!!! Viva California.
Pay through your utility bill or your tax bill, those are the choices. Fire is the natural way to renew forests. The artificial way is allow logging companies to maintain forests as a renewable resource and pay for the privilege. Unfortunately, it seems the environmentalists would prefer the natural way with the attendant air pollution and lods of resources. Just like environmentalists can’t gasp that hunters have contributed more to wildlife preservation than any other group, they refuse to accept the timber industry has a vested interest in preserving forests.
Natures fires are not what they have in California. Nature provides fires all the time which burn the underbrush, keeping it a low level. We put out those fires, and then do not allow clearing of the land. The fuel supply builds up until you get the massive fires.
If you’re going to manage the fires (they do), then you must properly manage the forest (California doesn’t).
I wonder if any environmental wack-jobs lost their homes? Or is that a Virtue Signaling event?
By the way, FIRE has the right-of-way.
So California is charging PG&E to pay for the fires and then PG&E are charging rate payers for the fires. Kind of a round-about way for California to raise revenues without raising taxes.
As I understand it. PG&E it is said, caused the fires because they didn’t have a repair crew onsite the same day the sparking lines were were discovered. Is it reasonable to expect a repair crew within hours anywhere in California’s power grid?
How much money is PGL spending on providing electricity for undocumented people, who have the tendency not to pay, or are illegally hooked up to their neighbors power lines?
California spends BILLIONS on Sanctuary Services and that money is NOT going for what the payers think.
Idaho is nice, and we need immigrants who will not Californicate the state. I left in 1992 and never looked back.
Well, I love Idaho and occasionally think of moving there from Blue State Oregon. But, yikes! Boise is booming with out-of-staters arriving, and Ada County is turning Blue. Blaine County (Sun Valley) is as Blue as anyplace anywhere.
If Eastern Oregon would split off from the rest of the state, I’d definitely migrate east across the Cascades.
Residents moving from Blue States which were once ‘Red’, move because they are not happy with what they created by voting in liberal “free stuff” policies and micro-management regulations which comes with large state and local tax bills. So they come to states, with less restrictions and lower taxes. Before you know it, they’re voting in zoning, gun restrictions, more “free stuff” for all programs etc. etc. They live in urban areas and want one size fits all legislation and regulations though the demographics of the state is more than 75% rural. Anyone contemplating being an immigrant should be prepared to integrate to where and why they’re coming to a “new” place, and why they chose to leave the old “country”. With todays’ moving society this does not happen enough. Be careful what you wish for as the color ‘Red’ soon becomes a Divisive Shade of Purple before going BLUE.
Pasadena Phil – You seem to forget that, before Texas “bribed” businesses to move to Texas, California overtaxed and over regulated them. Is it so shocking to you that these firms seek alternatives, that at some point they’d say about California, that they give up? How do you think California lost so much of their tax base, and turned from a red state into a blue one? Hmm?
Pasadena Phil — the way to acclimate after you exile yourself is to keep your mouth shut for several years after moving to a red state. Really give yourself a chance to let the new reality seep in and the old insanity ooze out. Don’t try to convince people that you know better. Don’t run for office. Don’t get upset over lax zoning and building codes. Eventually, you will transition from ex-Californian to an actual resident of the new state. Be patient, it takes time.
All ur dollars are belong to us.
” bill their customers to pay for future legal settlements stemming from devastating 2017 wildfires.”
Gently please because this is not my realm. But people are asking where else is the money going to come from…
If I lose a $30 million settlement, my insurance pays a small %, my bankruptcy a small %, and the rest doesn’t get paid out.
Or in this case, the debt flows back to the people affected and agencies that spent money containing the damage and cleaning up. You telling me there’s not a Sexual Harassment Slush Fund that can’t be raided? A Climate Doom Ver 5.1 Conference that can’t be canceled?
It’s the State’s fault, not the power company’s. If the Government is dousing the forest floor with JP5 aircraft fuel and I make a spark…
As a recent refugee from Venezuela on the West Coast, I say to you and your family: Come to Texas (or, as a California Highway Patrol Officer called it wistfully, “Free America”). I’d recommend East Texas, particularly. Water everywhere, trees, and reasonable regulations, taxes, and people.
Texas is nice. But you had me at 10% sales tax…no thanks.
Sounds like you’d be happy in any former CSA state, Better dead than red
Logically the fires were caused by trees falling on utility lines because of the high winds. You could blame PGE because they didn’t clear enough of the trees to prevent this. If they had cut back the trees sufficiently the power would have been a lot more expensive. The fact that they didn’t made the power cheaper which benefited consumers. It’s logical that the consumers pay for this disaster with higher rates which PGE could use to pay for those damaged by the fire.