When California SB 901 was passed last September instituting a variety of wildfire-related measures, it was met with mixed reactions. The bill’s detractors saw it as a bailout for large utilities such as Pacific Gas & Electric (PG&E), who are able to pass off some their liability in starting wildfires to ratepayers in the form of higher monthly bills. Proponents, however, highlighted new requirements that utility companies submit annual wildfire mitigation plans to the California Public Utility Commission, in which they outline a wide-range of wildfire prevention measures to be taken in the upcoming year. The mitigation plans include efforts such as extensive tree-trimming over power lines, scheduled blackouts on days of heightened fire risk, and improved maintenance and inspection of key infrastructure. PG&E and Southern California Edison have promised up to $2.3 billion and $582 million respectively towards the implementation of their 2019 mitigation plans, though these figures are not set in stone.
California’s annual wildfire mitigation plans seem to be a positive step towards curbing the outbreak of increasingly destructive wildfires across the state, but how much of an effect will these plans actually have? They could have a larger impact than many people realize, as both the size and the scope of the investments are huge improvements over the current status quo.
The upwards of $2.5 billion in funding called for in the various wildfire mitigation plans dwarfs the current amount of funding going towards wildfire prevention. On the state level, California’s 2019-2020 budget proposal appropriates $654 million towards wildfire-related issues, of which $420 million goes towards relief and response funding and only $235 million goes towards state-wide prevention measures. On the federal level, $4.1 billion was appropriated in 2017 to the Forestry Service and the Department of the Interior for wildfire preparedness and suppression. Of that $4.1 billion, just under half was appropriated for preparedness measures, which include training programs, hazardous fuel removal, and the requisition of new fire-fighting infrastructure. It is important to note that while California is a major recipient of these appropriations, especially suppression appropriations, the funds are split across all fifty states.
The wildfire mitigation plans could also have a major impact insofar as they invest in prevention, which provides a much better ROI than investing in suppression. In fact, a 2005 study suggests that each dollar spent on wildfire prevention reduces expenditures on wildfire suppression by $3.76, meaning taxpayers stand to benefit from increased investment in preventative measures. Given such a high rate of return, it would seem that prevention is underfunded. This underfunding of prevention efforts is exacerbated by the recent practice of “fire borrowing,” which is the reallocation of prevention funds towards suppression and relief efforts when the latter accounts are depleted. The practice of fire borrowing has increased in recent years; in four of the past six years hundreds of millions of federal funds have been diverted from prevention accounts to suppression accounts, which accounts for between 15% to 35% of the federal prevention budget depending on the year.
SB 901, which requires that utilities submit a mitigation plan every year (though we can only speculate on whether the quantity of investment will be similar in future years), doesn’t come without a price. More precisely, the cost of implementing these annual mitigation plans will be borne by ratepayers, who will most definitely see their gas and electricity bills increase in the coming years. With a lack of political volition to increase taxes for wildfire prevention measures, both on a state and federal level, it will be ratepayers who essentially fund wildfire prevention programs. But by passing the costs onto ratepayers rather than all California taxpayers, the tax incidence could be quite different. Gas and electricity usage tend not to be nearly as progressive as California’s overall tax structure meaning that those with a lower ability to pay may end up footing a greater proportion of the bill.
As the frequency and destructiveness of California wildfires continues to increase, so too does the necessity of finding a sustainable solution to fighting them. Current state and federal policy has emphasized providing funding and resources for fighting fires once they break out, while fire prevention measures, which limit future damage with a high return on investment, have taken a back seat. New requirements for California’s utilities to submit annual wildfire mitigation plans isn’t a cure-all, but it is a big step in the right direction and can hopefully illustrate the importance of oft-neglected efforts to prevent wildfires before they start.