Dive Brief:

• At a hearing focused on inverse condemnation last week, lawmakers on the California Wildfire Preparedness and Response Legislative Conference Committee expressed skepticism about the governor's plan to reduce electric utility liability in instances where the company is not found to be negligent.
• The state is dealing with a devastating series of wildfires as lawmakers are considering ways to mitigate the risks. But utilities say the current rules put them at risk of financial ruin even when they follow the rules.
• Democratic Gov. Jerry Brown last month proposed changes to utility fire liability, including factors such as directing courts to consider whether the company was negligent or complied with regulations. While the changes would not apply to fires before this year, lawmakers are wary of anything thar looks like a bailout, according to the San Francisco Chronicle.

Dive Insight:

It's bad timing. As utilities are pleading for changes to fire liability, a chunk of California is burning. One of the Mendocino Complex fires now burning has been declared the largest fire in California's history.

Lawmakers are considering changes to fire liability rules but won't go for anything resembling a bailout. At the same time, Pacific Gas & Electric (PG&E) is considering a company restructuring to shelter some of its units' liability related to last year's round of fires.

At last week's committee meeting, lawmakers expressed reticence to make changes to liability rules, according to the San Francisco Chronicle. State Sen. Jeff Stone, R, told utility representatives advocating for the changes that "the path that you’re asking us to embark on is not constitutional."

California is struggling to deal with a new reality of destructive wildfires, which the state's utilities say imperils their very existence. The state's courts use a "strict liability" interpretation of the state's "inverse condemnation" doctrine, which places full liability on utilities for wildfires caused by their equipment. And there are no mitigating factors, including a lack of utility negligence.

Californians increasingly rely on electrical power but "the increasingly destructive and costly wildfires and natural disasters have the potential to undermine this system," Brown wrote in a letter to a legislative conference committee, along with the proposal.

Brown's proposal would double fines for utilities found out of compliance with state rules, from $50,000 to to $100,000 for each violation. But the real impact would hit the courts, which would have new directives to follow regarding whether the utility was negligent or followed all state fire regulations.

PG&E is now making the case that climate change is to blame for the increasing frequency and intensity of the fires.

PG&E CEO Geisha Williams told Bloomberg, “climate change is no longer coming, it’s here ... and we are living with it every day.”