DISASTERSAs Wildfires Intensify, Utilities Want Liability Protections. But Then Who Pays?
As climate change drastically increases the frequency and severity of wildfires, power companies say they’re facing growing risk for payouts that could bankrupt them or require massive rate hikes on customers.
As climate change drastically increases the frequency and severity of wildfires, power companies say they’re facing growing risk for payouts that could bankrupt them or require massive rate hikes on customers.
Across the West, electrical utilities are pushing state lawmakers to grant them legal immunity or limit damage payouts if their equipment sparks a blaze.
They’re backing bills, which have passed or been proposed in at least eight states over the past few years, that would require the utilities to follow plans to limit their risks of causing a fire, such as trimming trees or burying power lines. In exchange for taking those steps, lawmakers would give utilities protection from lawsuits that could expose them to billions of dollars in damage claims.
“We’re only one wildfire away from bankruptcy,” said Shawn Taylor, executive director of the Wyoming Rural Electric Association, a group that represents electrical cooperatives. “Even if we avoid bankruptcy, we’d have huge rate increases to cover the cost of a lawsuit.”
Already, utilities are facing soaring insurance premiums because of the magnitude of claims they would face if they caused a fire. Taylor and other industry leaders argue that power companies should be granted relief if they take actions to limit their risk.
In 2019, Pacific Gas and Electric Company in California declared bankruptcy over its roughly $30 billion liability from a series of wildfires caused by its equipment, including the devastating Camp Fire. And in Oregon, PacifiCorp is facing billions of dollars in damage claims due to its role in the state’s 2020 Labor Day fires. PacifiCorp has been a key player backing liability bills in five states, the Oregon Capital Chronicle reported.
The proposals face strong opposition from wildfire victims, insurance companies and trial lawyers. Those groups say the bills don’t do enough to protect residents from dangerous electrical infrastructure. And insurers say their own customers could pay the price if lawmakers protect utilities.
“When you push in one side of the balloon, it comes out somewhere else,” said Greg Van Horssen, a representative for State Farm Insurance, delivering testimony before the Montana House Judiciary Committee in February. “If we have a problem with recovering costs for burnt-down houses in Montana, from an insurance company’s perspective, we only have one option, and that’s to raise the rate of homeowners’ insurance.”
