California’s Commission on Catastrophic Wildfire Cost and Recovery recently released a draft report recommending that California change its current liability standards relating to when utilities can be held responsible for wildfires. The report was called for by SB 901 which was enacted last year to address the escalating danger that wildfires present to California residents and utilities. As the liability rules currently stand, utilities can face billions in charges regardless of whether or not they have been negligent in operating their electric grid. The Commission’s draft report recommends changing the current liability regime to a fault-based standard in the hopes of reducing the risk of bankruptcy in the future and decreasing the cost of capital.

The Commission also recommended that California consider establishing a “large and broadly sourced” wildfire victims fund as well as the establishment of an electric utility wildfire board to govern the mitigation and prevention of utility-caused wildfires, separate from the California Public Utilities Commission. The draft report further concluded that new developments in wildfire-prone areas “that will put more lives and property at risk” should face additional impact fees in order to fund mitigation efforts.

The Commission on Catastrophic Wildfire Cost and Recovery was created last September through SB 901 in order to assess how to manage the long-term costs and liabilities of wildfires caused by utilities and to make recommendations for future changes to the state’s laws to ensure the equitable distribution of costs among affected parties. ( xml ==