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Income Insights

California’s Fire Deal: A Lifeline With Conditions

By Roger S. Conrad on Sep. 2, 2018

Governor Brown and the utilities had pushed for an end to California’s inverse condemnation law. That proved a bridge too far for legislators with elections approaching in November.

Instead, this new law puts the ball squarely in the CPUC’s court. Customers whose property is damaged by wildfires can still recover losses thorough the inverse condemnation rule. But regulators will have the power to allow securitization to keep companies financially whole.

That didn’t set well with many ratepayer advocates. And the added surcharge comes as the state is spending heavily to “decarbonize” how it gets its electricity, as well as to build electric vehicle infrastructure to reduce vehicular fossil fuel usage.

That makes this package a delicate balancing act. Fail to pass along enough costs in securitization and utilities will be too financially weak to advance California’s clean energy goals. Pass along too much and the cost of electricity will greatly increase customers’ incentive to self-generate their electricity. That too would undermine utilities’ ability to make the needed investment in a decarbonized grid.

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