Brad Kuhn and Willis Hon Comment on Impact of California Wildfire Fund

Brad Kuhn and Willis Hon were quoted in the Daily Journal article, “A Year On, Wildfire Fund Is Still Debated” (subscription required). The article examines whether utilities in California have less incentive to dedicate money to wildfire prevention now that—thanks to AB 1054—there is a $21.5 billion wildfire insurance fund.

Commenting on the issue, Willis said, “With the passage of AB 1054, we think we’re in a better place overall, but it’s too early to see if the benefits of the legislation will pan out.”

“The law was never meant to directly change the regulatory requirements applicable to investor owned electric utilities,” said Brad. “Instead, it was supposed to create a regulatory framework better suited for a scenario of year-round wildfires to allow the [California Public Utilities] commission and stakeholders to efficiently work though these issues.”

Willis added, “The end result is that AB 1054 has created a more coherent framework for the state to navigate the questions of wildfire safety…there is tremendous work to be done still as demonstrated by the catastrophic wildfires that we did experience [last] year that were potentially attributable to utility equipment. The real test for AB 1054 has not happened yet, as investments in wildfire safety are still being implemented and we have not yet tested the cost recovery mechanisms before the CPUC implemented under AB 1054.”

Both Brad and Willis noted that the “law does not address larger questions around inverse condemnation liability.” Willis explained, “In comparing whether we are better off with or without AB 1054, we questioned where things would be right now without it…with the financial uncertainty of 2020 and the impacts of COVID-19, absent AB 1054 we believe it would have been incredibly difficult for utilities to raise capital needed to make adequate wildfire safety improvements.”