Verdict in Oregon wildfires case highlights risks utilities face amid climate change

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Rachelle McMaster wipes the tears from her eye as her attorney greets her. A jury in Portland (Ore.), on Monday, 12 June 2023, awarded $4.5 million non-economic damages to her and approximately $150,000 economic damages, after finding that electric utility PacifiCorp was liable for wildfires of 2020. McMaster lost her Oregon home. Her spouse and daughter are watching.

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FILE – A trike stands next to the burned remains of a destroyed building near the Lake Detroit Market, Detroit, Ore. on Sept. 11, 202020. The jury's verdict in 2020 that held power company PacifiCorp responsible for the devastating wildfires of Oregon highlights the financial and legal risks utilities face when they do not take appropriate precautions to combat climate change. (Mark Ylen/Albany Democrat Herald via AP, file)

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FILE – Plaintiff Rachelle McMaster wipes the tears from her eye as her attorney greets her. A jury in Portland, Ore. awarded her $4.5M in non-economic damage and $150,000 in economic damage after finding that electric utility PacifiCorp was liable for wildfires occurring in 2020. A jury's verdict in Oregon that held power company PacifiCorp responsible for wildfires that ravaged the state in 2020 highlights the financial and legal risks utilities face when they do not take appropriate precautions to combat climate change.

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FILE – A burned statue is seen among the devastation at Coleman Creek Estates Mobile Home Park in Phoenix, Ore. on Thursday, September 10, 2020. The jury verdict which found the power company PacifiCorp responsible for the devastating wildfires that occurred in Oregon in 2020 highlights both legal and financial risks utilities are exposed to if they do not take appropriate precautions against climate change.

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PORTLAND, Ore., (AP) - A jury verdict found that an Oregon power company was liable for wildfires, and could have caused billions of damages. This highlights the financial and legal risks utilities face if they do not take appropriate precautions when faced with a hotter, drier environment.

Experts say that utilities, particularly in the U.S. West are increasingly in financial trouble, which is partly their fault. Although updating, replacing, and even burying powerlines can be a costly and time-consuming undertaking, utilities have been unable to begin this work years ago, and wildfires are becoming more destructive and lawsuits over electrical gear causing fires have exploded.

How can they pay for this and also do grid hardening in a way that prevents the constant shutdown of power? Josh Hacker, Chief Science Officer at Jupiter Intelligence - a company which provides advice on managing risks associated with climate change - spoke about lawsuit damages. This is a huge challenge. It's now biting them. It will eventually bite us all, as they need to recover the cost.

A jury in Oregon last week found PacifiCorp responsible for damages after it negligently failed to cut off power to 600,000 of its customers during a storm over Labor Day Weekend despite warnings by top fire officials. It also found that its powerlines were responsible for multiple fires.

PacifiCorp expressed disappointment with the jury decision and said that it intends to appeal.

These fires are among the worst in Oregon history. Nine people were killed, more than 4,856 square kilometers (4,875 square miles) of land was burned, and upwards of 5,000 houses and other structures were destroyed. The total damage is still unknown, but it's expected to be in the billions.

Utility companies often increase rates to raise money for infrastructure improvements because they make money off their customers. According to a factsheet from California's Public Utility Commission, Pacific Gas and Electric, for instance, has asked to raise its residential rates this year by 18%. This is partly because they want to bury over 3,000 miles (4 828 km) of overhead powerlines under the ground. The commission that regulates utility rate said it would make a decision between July and Septembre.

PG&E has been under increased scrutiny since it began upgrading its infrastructure. The utility serves 16 million customers over an area of 70,000 square miles (180,300 square kilometers) throughout central and northern California. In 2019, it filed for bankruptcy after facing billions of damages from multiple fires. This was shortly after its neglected equipment nearly destroyed the town of Paradise, located in the Sierra Nevada foothills. The Camp Fire is the deadliest, most destructive fire that California has ever seen.

PG&E settled its bankruptcy with wildfire victims for an astonishing $13.5 billion. The settlement was $13.5 billion, with only half the money paid in cash and the other half in PG&E shares, which have since fallen in value.

PacifiCorp says that since the Labor Day 2020 Oregon fires, it has spent hundreds of millions in upgrading equipment, expanding weather stations, and improving weather modeling. Customers are also contributing to the funding of these investments. Oregon's public utilities commission approved PacifiCorp's rate increase in 2023, in part to cover the utility's 'non energy costs' such as wildfire mitigation and plant management.

The revenue model for utilities and how some companies have settled wildfire claims in the past have raised concerns about whether such companies are being held truly accountable for their role.

Where are public safety and durability of the system in the priority list of companies that are primarily profit-making? This is the main question being asked,' said Scott McNutt. He is a part-time bankruptcy law lecturer at the University of California Davis and also served as the counsel for the fee examiner involved in the PG&E case.

Utilities say that the increasing risk of wildfires affecting public safety is driven by factors beyond their control. These include climate change and population increases in the wildland/urban interface, the area where development has encroached on natural areas.

PacifiCorp stated in a press release earlier this week that 'these systemic issues are bigger than any one utility'. This was after a jury had delivered a verdict.

Experts agree that the electrical grid must be hardened to protect homes and people from wildfires.

Michael Gollner is an associate professor of engineering from the University of California at Berkeley. He said that power companies should always work to reduce potential ignition risks. But you also want it to be so that, if there were to be fires, they wouldn't cause death and devastation.

Gollner says that communities can safeguard themselves against wildfires by changing the materials used to build homes. Fire-retardant roofing made from asphalt or tile, vents covered with fine mesh, and nonflammable siding are all ways to prevent homes burning down. It's also important to create a "defensible area" around your home. This is a buffer zone with less vegetation that helps slow the spread of a fire. He said prescribed burns are also important, as is thinning fuels out in forests.

He said: 'We haven’t taken a holistic step to harden up our communities, so that they don’t invite fires in.' "We haven't done other, hard work."