By David B. Rivkin, Jr., and Robert A. Julian
March 11, 2024, in the Wall Street Journal
The September 2020 Archie Creek Complex Fire in Douglas County, Ore., destroyed 138 houses, more than 100,000 acres of land and an entire fishing ecosystem. Hundreds of families lost everything in the blaze and have had to live the past 3½ years, much of it in a Covid lockdown, in trailers.
Three government reports found that Berkshire Hathaway Energy’s PacifiCorp caused the fires. But PacifiCorp has delayed paying victims for their losses. Seventeen Douglas County homeowners have died waiting for a judge to give them a trial date. The Oregonian reported a year ago that the claims were “moving through the court system at a glacial pace, leaving thousands of victims in a debilitating state of financial and emotional uncertainty.” It wasn’t until December that PacifiCorp, facing trial, settled the homeowners’ and timber companies’ claims for $250 million.
Douglas County isn’t alone. Since 2017, wildfires have burned millions of acres, destroyed more than 30,000 homes, and killed more than 235 people in California, Oregon and Hawaii. Damages—economic losses and personal injury—are in the billions of dollars. When old equipment fails because of high velocity windstorms, firefighters simply can’t get to the fires in time.
PacifiCorp went from earning $921 million in 2022 to losing $468 million in 2023, a financial shellacking driven by $1.6 billion in wildfire-related charge-offs. Fires have taken a heavy toll on other investor-owned electric utilities, as Warren Buffett noted in his recently released annual letter to Berkshire Hathaway shareholders. Mr. Buffett argued that investor-owned utilities in many states are unable to raise sufficient capital and are facing bankruptcy. Their customers will experience higher rates and less reliable service.
One reason that utilities face this industrywide crisis is that too many public-utility commissions, or PUCs, require them to fund green projects instead of hardening electrical lines, clearing above-ground lines of vegetation, and creating an emergency shut-off system that would reliably cut power during dangerous storms.
Another problem is the interminable delays in dealing with wildfires’ consequences. There is no evidence that Oregon’s governor, Legislature, PUC or district attorneys have taken any action to determine PacifiCorp’s responsibility for igniting the fires that raged in more than a dozen Oregon counties. Victims’ lawyers have secured judgments against PacifiCorp for recklessly and willfully causing four of the 2020 Northern Oregon fires that didn’t involve the Douglas County fires, but the state government has been missing in action.
California, with a political and regulatory culture similar to Oregon’s, has done better. The California Department of Forestry and Fire Protection, which is responsible for fire protection on state lands, promptly issued reports, finding that California’s largest electric utility, Pacific Gas & Electric, had ignited most of that state’s fires in 2017 and 2018. While this liability plunged PG&E into bankruptcy, many state agencies worked together to ensure that the legal proceedings moved quickly so that victims could obtain timely relief.
District attorneys in seven counties prosecuted PG&E for killing 84 people in the 2018 Camp Fire and structured three civil settlements of its responsibility for three other post-2018 fires. The California PUC investigated the 2017 and 2018 fires, issued a scathing report on the utility’s disregard for safety, and fined PG&E $1.9 billion. The company pleaded guilty to 84 counts of manslaughter, agreed to satisfy the PUC’s fine, and paid roughly $129 million to local jurisdictions pursuant to the district-attorney-driven settlements. The California Legislature adopted an emergency measure establishing a utility-funded wildfire fund to resolve future wildfire claims and encourage PG&E to resolve its claims within 18 months. Gov. Gavin Newsom signed the legislation and then guided PG&E, the PUC, the victims’ lawyers, the shareholders and the courts to resolve the case and pay out a record $13.5 billion to the victims.
Oregon’s government hasn’t done anything similar for its citizens. The situation appears to be the same in Hawaii, where the local utility, Hawaiian Electric, seems to be on the same litigation defensive after the August 2023 Maui fires.
There is a set of straightforward solutions that requires all parties to adopt best practices, resolve legal battles expeditiously and compensate victims promptly. As a first step, state legislatures should direct and fund their agencies to investigate and issue prompt reports on the cause of wildfires. The states should adopt wildfire-fund legislation similar to California’s emergency law that permitted PG&E to reorganize and stabilize the utility market. But states shouldn’t exonerate and protect the utilities from liability for their destruction of the land and homes and killing and injuring people.
Legislatures should create a legal docket system that resolves utility-caused fire claims in a single coordinated proceeding, on a one-year timetable to trial. Utilities should be legislatively pushed to resolve claims within 12 months, via wildfire-fund mechanisms, rather than engage in a prolonged legal fight. And state judges should set trial dates within a year of the claim filing until the legislatures adopt the 12-month legal docket system.
State legislatures should also strip away governmental immunity from PUCs and subject them to liability, creating a powerful incentive for balancing climate-change and fire-safety considerations in the public interest. Finally, states should require utilities to replace their unsafe old equipment by set dates. The end of 2024 would be a reasonable target. This would be expensive, but the costs of the status quo are far greater.
Windstorms will continue, and the aging and increasingly dangerous electric-utility infrastructure will cause fires. Governments and utilities must join together to take necessary measures to update their equipment and ensure that those who suffer injury or loss are quickly and completely compensated.
Messrs. Rivkin and Julian are attorneys based respectively in Washington and San Francisco. They represented the Tort Claimants Committee in the PG&E bankruptcy case and now represent homeowners, commercial landowners and wineries in their litigation against PacifiCorp in Oregon.
Source: https://www.wsj.com/articles/how-to-be-ready-for-wildfires-utilities-update-equipment-and-strip-puc-legal-immunity-6d1290c4