Alex Brown, stateline.org
As climate change significantly increases the frequency and severity of wildfires, utilities say they are facing an increased risk of payments that could lead them to bankruptcy or require customers to raise interest rates at scale.
In the West, utility companies are urging state legislators to grant legal immunity and limit payments for damages if equipment causes flames.
They are bills that have been passed or proposed in at least eight states over the past few years, which would need to follow plans that limit the risk of causing a fire, such as trimming trees and burial of power lines. In exchange for taking these measures, lawmakers will protect utilities from lawsuits that could be exposed to billions of dollars in damages claims.
“We’re just wildfires away from bankruptcy,” said Sean Taylor, executive director of the Wyoming Rural Electrical Association, a group representing the electric cooperative. “Even if we avoid bankruptcy, it will still go up significantly to cover the costs of the lawsuit.”
Already, the utility is facing rising premiums due to the magnitude of the claims they face if they cause a fire. Taylor and other industry leaders argue that if they take action to limit risk, utilities should be allowed to bail out.
In 2019, California’s Pacific Gas and Electric Company declared bankruptcy over approximately $30 billion liability for a series of wildfires caused by equipment, including catastrophic camp fires. And in Oregon, Pacificorp faces billions of dollars in damages claims due to its role in the state’s 2020 Labor Day fire. Pacificorp is a leading player in supporting liability claims in five states, Oregon’s Capital Chronicle reported.
The proposal faces strong opposition from wildfire victims, insurance companies and trial lawyers. These groups say the bill is not doing enough to protect residents from dangerous electrical infrastructure. And insurance companies say their customers can pay the price if lawmakers protect the utility.
“If you push it into one side of the balloon, it comes out somewhere,” Greg Van Horsesen, the state’s farm insurance representative, testified before the Montana House Judiciary Committee in February. “From an insurance company’s perspective, if you’re having trouble recouping the costs of a burnt-out home in Montana, you have only one option: increase the percentage of homeowners’ insurance.”
Utah became the first state to limit liability for utility utilities when it passed the law in 2020. The law can protect businesses from claims of negligence, and limit the damages that victims can collect, and can well be below the full cost of reconstruction if they have a wildfire mitigation plan.
This year, Idaho and Wyoming enacted similar measures, with Montana lawmakers sending proposals to the governor. Arizona bill cleared the House and North Dakota bill passed the Senate, but was defeated slightly in the House. Oregon’s measures are still on the committee. Alaska has also been considering liability laws in recent years.
Republican Utah Rep. Carl Albrecht, who sponsored the state’s liability law, said he forced the utility to mow, bury and take other measures to ensure they were compliant with their safety plans. He said utility is a frequent goal of litigation.
“People see the utility as a deep pocket where you can pay a lot of damage,” he said. “They have the best lawyers and can sell their cases in court.”
Michele Beck, director of the Utah Department of Consumer Services, serves as an advocate for Utah Energy’s clients. She said it would be difficult to protect electric customers and wildfire victims at the same time.
“The fee payer costs are substantial and it makes sense to try to balance these very high ju umpire awards,” she said. “I admit, that’s a catastrophic loss for those affected (by wildfires), but someone is paying for the other side too.”
In Oregon, consumer advocates are being torn apart as well.
“There’s a utility that’s close to bankruptcy and you can’t make the investments you need to provide services, that’s a difficult place,” said Bob Genks, executive director of the Oregon Citizens Utility Committee, a nonprofit that represents fees. “At the same time, the principle that customers should not bail out utilities for bad practices is an important standard.”
Pacificorp says it faces more than $45 billion in debt caused by the 2020 Labor Day fire in Oregon. Several ju apprentices have found that the company is responsible for not cutting power on its lines. The massive costs facing Pacificorp are limiting its infrastructure and ability to invest in clean energy, Jenks said. Pacificorp did not grant Stateline interview requests, but the company has been involved in the formation of laws in several western states.
Oregon Rep. Pam Marsh, a Democrat, said her bill would not give utilities legal immunity. Establish a certification process to ensure that the utility mitigates the risk of wildfires.
“The utility needs someone else to help identify the risks they have,” she said. “If we got a safety certification in April, it wouldn’t mean we’d do bulletproof for all sorts of wildfire liability next year.”
However, some legal experts told Oregon’s Capital Chronicle that the utility is likely to use compliance with the certification process in legal defense against wildfire claims.
In Arizona, liability measures have passed through the House and advanced in Senate committees. The bill protects businesses from lawsuits if they follow the mitigation plan. Utility leaders say they need to make sure they can continue to provide services.
“We have an obligation to serve our customers unlike other companies that may quit their business in areas where there is too high of risk,” said Joe Barrios, senior media relations specialist at Tucson Electric Power. “The liability costs and higher insurance costs for wildfires are passed to the customer through fees they pay. (This bill) will help keep the service affordable.”
But Republican Rep. Alex Colodin believes the proposal violates the state’s constitutional provisions that prohibit residents from limiting their right to appeal. He then said that by limiting liability for utility services, it would reduce incentives to implement safety measures.
“I wouldn’t want to be a lawmaker who voted for this, and its practicality will cause a fire that will burn 200 homes in my district,” he said. “Then I have to explain to my members why they can’t recover the damages.” Sorry, that’s because your lawmaker is an idiot. “”
Brandon Vick, regional vice president of the National Mutual Insurance Trade Group, said the utility group made coordinated pushes to several western states in the session. He said that increasing numbers of residents in fire-prone areas are moving forward without insurance coverage and that if they can’t seek damages from public works, they can’t count on them.
“The utility is concerned about doing something that will cause a devastating wildfire,” he said. “The question we’ve been raising is who should be responsible when it finally happens (these bills) are really pushing that responsibility onto people who can at least afford it.”
Several states are also considering wildfire funds similar to California, which was established in 2019. These measures will allow utility services to be funded with a mix of interest rate increases and shareholder contributions, which can be used later to cover damages from wildfires.
Oregon Rep. Marsh said her proposal would allow wildfire victims to quickly access funds and rebuild their lives. Residents will have the option to refrain from paying from the fund and sue the utility for full damages. The bill died on the committee amid opposition from wildfire casualties that characterized it as a utility relief.
Stateline Reporter Alex Brown can be accessed at abrown@stateline.org.
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Original issue: May 1, 2025, 12:29pm EDT
