California utilities agree to pay $10.5 billion into new wildfire fund
SACRAMENTO — California’s investor-owned utility companies have agreed to open up their wallets to pay into the state’s wildfire fund in exchange for less financial responsibility when blazes are linked to their equipment.
The unprecedented decision to spend billions of dollars from shareholders under a new model to pay for damages championed by Gov. Gavin Newsom speaks to the immense financial threat that power providers face as they operate in a state that endured the worst blazes in the country last year.
The fund, propped up by $21 billion split equally between utility customers and shareholders, is meant to act as a second insurance policy for publicly traded electricity companies and to offset concerns from Wall Street about massive monetary liabilities that have threatened to upend the energy market in California.
“The reason it makes sense is that the risk could be so great, and the stocks have been hit so hard, that the value of getting better certainty made it worth putting up money with no return,” said Steve Fleishman, a senior utilities analyst for Wolfe Research. “But in the normal course of the utility, no one would ever do this.”
Read more: https://www.latimes.com/california/story/2019-07-25/california-utilities-agree-to-pay-10-5-billion-into-new-wildfire-fund