Reason Foundation analyst says can mitigate damages by changing infrastructure

By Carrie Bradon | Mar 7, 2019

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LOS ANGELES – California law has long held utilities companies responsible for fires found to be caused by their utilities, even in instances when the companies themselves have not been negligent. According to an opinion piece recently published in the Los Angeles Times, this system has created a difficult climate for utilities companies and is generating interest in liability reform from experts.

Carolyn Kousky, executive director of Wharton Risk Management and Decision Processes Center at University of Pennsylvania, recently voiced her opinion, which is that California requires liability law reform if utilities companies are going to survive.

Marc Joffe, senior policy analyst at the Reason Foundation, commented on Kousky’s suggestion for more reform and believes it will bring much-needed changes to these companies’ operations.

“I am pleased to see that Carolyn Kousky and her co-authors are proposing liability financing strategies that promise to allow utilities to continue servicing California homes and businesses at affordable rates,” Joffe told the Northern California Record.


Senior Policy Analst Marc Joffe of the Reason Foundation   Reason Foundation

Kousky compared the California situation to the electric infrastructure in Florida and Louisiana, where electrical companies are not held responsible for damages to people’s homes.

Joffe said that one way to mitigate damages would be to change the infrastructure of the power lines completely.

“Within this framework, I hope the state can create incentives for utilities to move more of their power lines underground. ‘Undergrounding’ is a very effective, but very expensive, risk mitigation approach that should be used selectively,” Joffe said. “Also, it is good to see alternative liability financing mechanisms being added to a policy discussion that has placed too much emphasis on government takeovers.”

Joffe said that government-operated utility companies should not be equated with an assumption that that a utility will protect individuals from wildfires. 

“As we saw in Hercules, California and more recently in Puerto Rico, public power operations are highly vulnerable to managerial incompetence and corruption,” Joffe said.

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