California governor proposes a $21 billion wildfire fund

Photo By REUTERS/Gene Blevins/File Photo

LOS ANGELES (Reuters) – California Governor Gavin Newsom has proposed helping utilities create a fund of up to $21 billion to compensate future victims of wildfires sparked by the companies’ equipment or employees, an aide said on Friday.

The proposal by the Democratic governor follows the bankruptcy filing earlier this year of San Francisco-based utility PG&E Corp, which anticipates $30 billion in liabilities from wildfires that have been blamed on its equipment, including the state’s deadliest blaze which killed more than 80 people last year.

The state’s other two large utilities, Southern California Edison and San Diego Gas & Electric, have seen their credit ratings downgraded over wildfire concerns.

Since 2000, California has endured 15 of the 20 most destructive wildfires in state history. Newsom has blamed climate change for much of the increased risk from fires.

“Wildfires don’t discriminate – they are a rural, suburban and urban danger,” Newsom said in a statement.

His plan is part of an effort by political leaders in the state to shore up the utilities, protect electricity rate payers and cut the risk of new fires.

Newsom has proposed the $21 billion fund to compensate wildfire victims in blazes tied to utilities, such as when a downed power line sparks a blaze. Half the fund would come from extending a surcharge on electricity bills and the other half would come from a new massive, utility-funded insurance policy, said an aide to the governor, who declined to be named.

The proposed fund would need to be created by the state legislature. The state could issue bonds to securitize over 15 years the portion of the fund underwritten by extending the rate hike, the aide added.

Utilities would have to spend a combined $3 billion on wildfire safety measures to qualify for aid from the fund.

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