California Enacts Solution to Fund Utility Wildfire Liabilities
Allan Marks is a Global Project, Energy & Infrastructure Finance partner in Milbank’s Los Angeles office. Allan advises clients on the development, financing, and acquisition of energy, transportation, water, and other infrastructure projects globally. He is also a lecturer at UC Berkeley’s law and business schools.
Marking a significant commitment by the state to shore up the financial position of its major investor-owned utilities, California Governor Gavin Newsom signed Assembly Bill 10541 (AB 1054) into law on July 12, 2019. Because the law passed as an "urgency bill" with a more than two-thirds majority in each chamber, AB 1054 took immediate effect. Enacted on a bipartisan basis, the law creates a pool of liquidity to cover future wildfire claims, creates incentives to increase the safety of electric utility infrastructure, and indirectly backstops utility credit. The law thus should have a significant impact: funding for recovery from future wildfires, reduced wildfire risks, and lower utility borrowing costs.
Bridging the Gap with a New Wildfire Fund