State regulators today planned to hear a proposal to bill customers for all costs of any catastrophic fires that exceed a utility’s insurance coverage.
The proposal, which has been backed by PG&E, comes in the wake of the deadly San Bruno gas-line explosion, though it was proposed more than a year ago, according to SF Weekly.
The measure was first introduced by San Diego Gas and Electric Co. in 2009 in order to cover for fires in 2007 that totaled $1 billion in damage. State investigators blamed the utility for causing three of those fires.
It is not clear whether the plan, if approved by the state Public Utilities Commission, would trigger rate increases to PG&E customers to pay for the San Bruno fire. But even if PG&E has enough insurance to cover claims for future fires — they have nearly $1 billion in insurance — the proposal would make rate hikes more likely if PG&E caused future fires, according to the San Francisco Chronicle.
Currently, utilities can ask for a rate increase if the costs of a disaster exceed their insurance coverage. But the Public Utilities Commission can veto the request, forcing utility shareholders to pay the tab.
PG&E and other investor-owned utilities say the change in policy is needed because disaster insurance is getting harder to obtain and more expensive. Opponents say the plan favors shareholders and may increase the risk for future fires by reducing the incentives for utilities to maintaining safe conditions. Nicholas Sher, a lawyer in a staff division for the state utility commission opposing the bill, said the proposal would allow utilities to charge customers for the costs of past fires.
The hearing will take place in San Francisco, presided over by a state utilities commissioner and a hearing officer. It will be the first step in a process that could see a commission vote next spring or summer.
