Arizona recently enacted legislation that modifies the liability faced by utilities in the event of wildfires. This legislative change comes amidst debates over its implications for both utility companies and consumers.
The initial draft of the bill, which aimed to significantly reduce the liability of utilities facing lawsuits over wildfires, met resistance from both insurers and trial lawyers. Eventually, a revised version of HB2201 was signed by Democratic Governor Katie Hobbs. This updated law mandates that utilities submit biennial plans detailing their strategies for minimizing wildfire risks. The full text of the bill can be viewed here.
Marc Osborn, a lobbyist for insurers who opposed the original version, commented on the bill’s evolution: “The bill is in a much better state than it was when it was introduced, the key is whether or not the plans that are approved by the Department of Forestry are robust and are protective of Arizona.”
According to APS spokesperson Jill Hanks, the legislation introduces necessary oversight and clarifies expectations for utility companies in terms of wildfire risk mitigation. She remarked, “The law also clarifies what is expected of utilities in Arizona when it comes to wildfire risk mitigation. Additionally, HB2201 provides important clarity around how liability for wildfire-related losses will be imposed and helps protect customers from bearing the costs of business-halting liability arising from meritless lawsuits.”
Under the new law, a utility that adheres to an approved plan is considered to have met the expected standards, barring any clear evidence of wrongdoing. However, some, like Sierra Club Grand Canyon Chapter Director Sandy Bahr, remain critical. Bahr described the bill’s journey from a “terrible bill” to just a “bad bill,” expressing concerns about accountability for utilities.
In related legislative actions, Governor Hobbs also signed HB2679, which permits utilities to leverage a financial mechanism known as securitization. Critics, including environmental and renewable energy advocates, opposed this move, fearing it might burden ratepayers with the costs of poor investments. The Arizona Capitol Times noted that the bill’s language was crafted by APS before being presented to Rep. Gail Griffin (R-Hereford).
While APS argues that securitization offers financial relief to consumers, critics like Autumn Johnson from the Arizona Solar Energy Industries Association argue it could extend the life of inefficient power sources like the Four Corners coal plant. Johnson stated, “Doubling down on coal, when far cheaper options like solar are available, is a terrible deal for Arizona’s economy and our clean energy future.”
Concerns also arose regarding potential conflicts with the Arizona Constitution, as Attorney General Kris Mayes noted potential overreach into the Arizona Corporation Commission’s authority. Following these concerns, the bill was amended to ensure some level of oversight by the Commission.
Governor Hobbs defended her decision, saying, “HB2679 will lower costs for everyday Arizonans, improve grid resiliency by growing our energy economy, and ensure utilities are being held accountable to deliver cost savings to Arizonans.” Her spokesman, Christian Slater, highlighted the bipartisan support for the bill.
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