Bill Would Create $1 Billion Fund to Aid Utilities in Paying Wildfire Victims

It is the second bombshell utility bill the moderate Democrat has unveiled in a week. On Tuesday, she introduced House Bill 3666, which would create a wildfire certification program. Critics charge that the bill is an attempt by utilities to shield themselves from wildfire-related lawsuits by pointing to their state certification as evidence they did all they could to prevent conflagration.

One of those utilities is PacifiCorp, which is locked in a debilitating and, so far, losing legal battle with hundreds of its customers for its principal role in the massive Labor Day fires of 2020. 

Marsh confirmed that the concepts for the fund and the certification program came out of the series of meetings from September to January with PacifiCorp, Portland General Electric and senior state officials. Attending at least some of the meetings were Karin Power, then a senior adviser to Gov. Tina Kotek; Andrew Stolfi, head of the Oregon Department of Consumer and Business Services; officials from the Oregon Public Utility Commission; and at least six representatives from two of the state’s largest investor-owned utilities, PacifiCorp and Portland General Electric. 

A summary of the issues circulated among the invitees in September made clear where its sympathies lay. “Wildfire-related civil lawsuits also pose enormous litigation costs to utilities,” the memo read. “In these suits, utilities face an unclear and rapidly changing negligence standard set by juries. The duty of care to which juries may hold utilities responsible may be higher than even industry-leading utilities can meet in practice. This uncertainty, combined with the scale of potential damages and the potential number of litigants, creates a virtually uncapped liability that can outstrip the value of the company’s assets.”

The document, obtained by the Oregon Journalism Project, was authored by Power and Michael Grant, a longtime employee at the PUC. 

At the time, Power was a senior adviser to Kotek. In January, the governor appointed Power to the Public Utility Commission. 

It’s been four years since the cataclysmic Labor Day fires. Strong winds from the east knocked down trees and branches, which in turn knocked down live power lines onto tinder-dry forests. 

As OJP previously reported, PacifiCorp rejected pleas from senior state officials that it shut off the flow of electricity — to effectively deenergize its power lines — given the dangerous weather. Hours later, fire engulfed parts of the Santiam, Umpqua, Clackamas and Salmon river basins. 

In 2023, an Oregon jury found that PacifiCorp was reckless and acted with “gross negligence” in the lead-up to the 2020 Labor Day fires. The jury awarded damages that could eventually mean a $6 million payday for each of the approximately 1,500 plaintiffs, which would make it the most costly litigation in Oregon history.

In December, the U.S. Department of Justice added to PacifiCorp’s legal woes. The feds filed a $900 million civil lawsuit, claiming the utility’s negligence caused a different 2020 fire in Southern Oregon’s Umpqua River Basin.

PacifiCorp says it faces legal claims in excess of $45 billion. Its debt has been downgraded by ratings agencies and its liquidity badly eroded. 

In the document circulated at this fall’s meetings, Power and Grant argue wildfires endanger the entire state’s economic health.  

“This risk is especially acute for utilities, threatening affordability for customers and utilities’ ability to meet customers’ needs for growth, reliability and clean energy,” they write. “As a result, the state economy is at risk if action is not taken to stabilize the situation — both for victims of wildfire and for utilities providing an essential service.”

The same document floats the plan for a catastrophic wildfire fund to provide “payouts to property owners impacted by wildfire.” The fund could be modeled after SAIF Corp., the state’s semi-private workers’ compensation insurance operation.

As to funding such a vehicle, the document is vague. It states only that a fund could be capitalized with contributions from “the state, electric utilities and others (tbd).”

Marsh says the document was an early draft and is no longer entirely accurate. Taxpayer dollars, for example, would not be used in the formation of a victims’ fund. 

Ratepayer advocates hate the idea. Customers are already struggling as utility bills continue to escalate. Disconnects due to nonpayment have soared at both PacifiCorp and PGE. 

PacifiCorp, for example, disconnected 20,662 customers through the first 10 months of 2024, according to the Oregon Citizens’ Utility Board. In all of 2023, it disconnected 7,935. In the year before, 5,355.

Bob Jenks, head of the CUB, says the surging disconnect numbers are strictly a matter of money. In the 28 months ended in January 2024, PacifiCorp rates jumped 35% and PGE’s increased 43%.

What exactly the utilities would get in return for creating a victims’ fund is not yet clear. Talk is rife in green energy and public power circles that PacifiCorp and PGE want some sort of statutory limit on their legal liability in the case of wildfire. 

Jenks says he has not seen the bill. He walked away from the meetings thinking that the utility liability caps  were part of the final version of the proposal. After he was quoted to that effect in an earlier version of this story, he said he was informed by group members that the liability caps had been removed from the final version.

For the hundreds of people who have spent the past four years fighting PacifiCorp in court, the idea of having to contribute to a PacifiCorp victims’ fund is almost beyond comprehension. That was the message from the Oregon Trial Lawyers Association. The powerful attorneys' group said it was not invited to attend the meetings. But it demanded access after getting tipped off that lawmakers and PUC members were meeting with utility officials.

Rep. Marsh has already unveiled one bill coming out of those invitation-only meetings. Her HB 3666 would create a certification program in which the state Public Utility Commission would grant utilities a wildfire mitigation certificate if they were deemed in compliance. Oregon Capital Chronicle first reported on HB 3666 earlier this week.

The measure was widely pilloried by plaintiffs’ lawyers and renewable energy advocates as a thinly veiled effort to shield the utilities from customer lawsuits. 

“The long and short of it is, if the utility gets the gold badge from the PUC, their behavior is deemed reasonable and then they are effectively insulated from legal action,” says Derek Johnson, a Eugene lawyer. 

Others wonder how vigorously the certificate program would be enforced. “I just don’t think the PUC will ever reject one of these applications,” says Carra Sahler, a professor at Lewis & Clark Law School and director of the Green Energy Institute. “So what is this doing, really? At some level, it is protection against litigation. It appears to be a piece of evidence that a utility could use in the courtroom.”

The utilities disagree. 

“The safety certificate legislation is about setting a safety standard, checking the work of utilities with respect to wildfire prevention and keeping customers and communities safe,” says PacifiCorp spokesman Simon Gutierrez. “This legislation is not about immunity from future litigation.”

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This story was produced by the Oregon Journalism Project (oregonjournalismproject.org), a nonprofit investigative newsroom for the state of Oregon.