Wildfire: CEPP Releases New Research and Policy Proposals on Utility-Ignited Fires
As shown by California’s recent history of catastrophic wildfire, fires ignited by electric utility infrastructure like power lines tend to be particularly dangerous. One key reason for this phenomenon is that the conditions which make utility-ignited fires more likely also make fires more severe. Hot, dry, windy weather conditions increase the odds of electric infrastructure igniting a fire by making it more likely, for instance, for a power line to blow down into dry grass, or for a dead tree branch to fall onto a utility pole; these conditions also increase the odds that fires will spread more quickly and be harder to contain once they are ignited. In the last several years, wildfires in Oregon, Hawaii, and Texas demonstrate that utility-ignited fires pose an increasing risk, even in areas not previously considered prone to wildfires. Factors including the effects of climate change on weather conditions indicate that this risk is likely to continue to increase.
Because catastrophic fires cause serious, deadly harms and can destroy entire communities, the legal liability for a fire can reach into the billions of dollars, enough to bankrupt a utility. This occurred in California in 2019, when Pacific Gas & Electric declared bankruptcy following a series of catastrophic wildfires ignited by its infrastructure. Fires in states other than California have different legal consequences, because California has a unique liability regime for utility-ignited fires. However, even in states with less stringent laws, utilities have recently been found liable for negligence in connection with utility-ignited fires, and can be held legally responsible for wildfire damages comparable in size to those faced by California utilities, enough to put their businesses in jeopardy.
The scale of this potential liability means that wildfires pose an existential threat for electric utilities, as well as an obstacle to the broader transition away from fossil fuels and toward renewable sources of energy. Even utilities that have never ignited a catastrophic fire may be perceived as a riskier type of business due to growing potential exposure to wildfire risk, which makes it more difficult for them to secure investment to build infrastructure—including the new electric infrastructure needed for the transition to zero-carbon power. Higher costs may be passed on to utility customers in the form of higher rates, threatening the affordability of electricity. In order to reduce both the direct harm caused by wildfires and the indirect problems that wildfire creates for utilities, the energy transition, and utility customers, it’s essential that electric utilities take action to efficiently mitigate the risk of their infrastructure igniting a catastrophic fire.
CEPP recently released two papers on the subject of utility wildfire mitigation. The first, Wildfire: Assessing and quantifying risk exposure and mitigation across western utilities, is a white paper released by the Woods Institute for the Environment at the Stanford Doerr School of Sustainability, quantifying the current state of wildfire exposure and mitigation among investor-owned utilities in the Western United States. The second, Climate change and utility wildfire risk: A proposal for a federal backstop, is a policy proposal created in a collaboration between the Stanford Doerr School of Sustainability and The Hamilton Project at the Brookings Institution, laying the groundwork for a potential federal response to utility-ignited wildfire that would reduce risk by creating a new source of insurance and safety oversight for the utility industry.
Together, these papers seek to build a utility wildfire mitigation “playbook” based on the lessons learned from catastrophic fires and utility wildfire mitigation plan development in California. The first paper identifies the fundamental elements of utility wildfire response and assesses where utilities operating in the Western United States are implementing these key early steps. To encourage further adoption of mitigation efforts that have proven effective at reducing near-term wildfire risk, the second paper goes on to propose a potential federal wildfire response, informed by California’s efforts to promote wildfire mitigation among the state’s largest utilities. Under this proposal, the federal government would provide access to an insurance-like risk pooling mechanism for utilities that choose to take key early steps toward mitigation, while leaving the further development of state- and utility-specific wildfire mitigation plans to utilities and their regulators.
Our hope is that these papers will help to inform decision-makers and stakeholders nationwide about the challenges posed by wildfire risk in the utility context. The current wildfire crisis calls for a coordinated and cost-effective response that reduces wildfire danger, preserves the reliability and affordability of electric power, and supports the transition to renewable energy. To assist in this process, CEPP plans to continue our work on this subject, incorporating more advanced forms of risk modeling and mitigation analysis and applying these tools to a greater variety of electric utilities across a broader geographic scope.
Eric Macomber joined the Climate and Energy Policy Program and Stanford Law School as a Wildfire Legal Fellow in September 2022. His work focuses on law and policy issues relating to wildfire and the wildland-urban interface.