California Gov. Gavin Newsom gave legislators just three months to address a multibillion-dollar wildfire liability problem that has forced the state’s largest power company, PG&E Corp., into bankruptcy and threatens the same fate for its other utilities.
The governor issued a report Friday outlining possible solutions for how costs for destructive wildfires will be covered, including a possible fund that utilities can tap into, that sent the clearest signal yet that the state will move to keep its power companies solvent. He called for legislation to be passed before lawmakers take a month-long summer recess on July 12, sending shares of PG&E and its peers soaring. It was made known two weeks ago that Newsom was also drafting plans to respond to wildfires more broadly, and his proposal has been expected.
The wide-ranging report gave Wall Street optimism that California will work with utilities to solve an intractable problem: who pays for wildfires as climate change threatens to make them deadlier and more frequent. Now, the task of developing a concrete approach falls to lawmakers, who need to work quickly as another fire season nears.
“There were a lot of positives for utility investors in the report,” said Travis Miller, an analyst for Morningstar Inc. Still, “the governor does have an aggressive timeline that might not match up with the timeline of other stakeholders.”