Fires, Flood, Storms and Earthquakes – Who Pays?

It has become rather dramatically politicized. When S.C. Republican Senator proposed to limit disaster relief after the 2012 Super Storm Sandy (then the second worst hurricane in the United States in recent history), which inflicted damage primarily in blue states, it took a New Jersey Republican Governor, Chris Christie, to champion an appropriate Congressional relief effort. A threat from GOP donors on Wall Street made the difference.

Even though the recent deadly California fires had very little to do with forests (mostly urban fires), that didn’t stop Donald Trump from blaming California for the fires by reason of inept forest management, perhaps a precursor to a denial of sufficient federal relief  aid. After all, California is the bluest state in the union (the GOP won no statewide offices, and the Dems have a supermajority in their legislature).

Trump tends to punish opponents and reward only loyalists. He definitely is not a president for all. But after visiting Paradise, California on November 17^th, when over 70 people had been reported to have died and over a thousand people missing across the state at the time of this visit to a dramatically destroyed town, even Donald Trump was moved to pledge aid. A rare reaction to blue state damage from the President.

You can look at the massive failure to restore a Latino territory to normalcy, Trump’s denying the vetted fatalities of thousands from 2017’s Hurricane Maria and insisting that his administration did a good job and that there were really fewer than two dozen related deaths. To this day, Puerto Rico is still lumbering under water and power shortages, and lots of infrastructure and housing inadequacies.

Finding those responsible for a lack of preparedness, like power companies unprepared for the increase in storms, high heat, and powerful winds, is part of a search for money to pay for the fourfold increase (since 1970) in major natural disasters, many of which are directly linked to global climate change. Where such fault can be established, the consequence suggest that attaching liability to private sector players is unlikely to generate the required financial resources to pay for the damage.

Matt Stiles, writing for the November 17^th Los Angeles Times, looks at how California power companies might fare by reason of their potential liability for the deadliest and most damaging fires in this nation’s recorded history: “The worst fires in recorded California history promise to reshape the state’s utilities as Pacific Gas & Electric and Southern California Edison face billions of dollars in potential liabilities and growing calls to overhaul their systems to better prevent wildfires.

“Power suppliers in California have faced increasing financial pressure over the last decade as a series of deadly fires has been linked to system malfunctions, usually caused by powerful winds.

“But the November fires — which have killed scores of people in Northern California and several in Southern California — have raised larger questions about the utilities’ operations and how much of the costs for fire damage and system improvements will be shouldered by ratepayers.

“State regulators say they are investigating not just the fires, but in the case of PG&E, also ‘the corporate governance, structure, and operation to determine the best path forward.’ This has fueled new demands from critics who want the state to break up the utility.

“PG&E itself has offered a dire outlook if it is found responsible for the Camp fire in Butte County, saying it would exceed its insurance coverage.

“Investigations into the cause of the Camp and Woolsey fires are continuing, but both utilities have hinted that their distribution system could be a factor in the potential causes.

“That prospect sent their stocks tumbling and sparked questions about their exposure because of a gap in a new wildfire mitigation law that the Legislature approved this year to help PG&E deal with massive liabilities emga dis from the 2017 wine country fires. PG&E’s stocks recovered a bit Friday [11/16] as regulators question whether bankruptcy was a certainty.

“A broader question also lingered on the minds of energy experts and analysts this week: In the state’s volatile wildfire environment, how can these large utilities still run their businesses amid a continued and perhaps existential threat of financial exposure?”

There really isn’t enough insurance money to keep paying for these disasters. And while examining the viability of rebuilding in particularly hazardous regions is becoming a necessity, it is equally clear that so much of our country is at risk for some extreme natural disaster that we need a different approach. I’ve examined the analytical relief redesigned by One Concept, making relief more efficient and effective, but our proclivity to kick the can down the road suggests little in the way of preparation.

What is clear is that our current approach to mega-natural disasters simply does not work. We throw billions to fix much of what could have been prevented or minimized after the fact, or blame others for the catastrophe and walk away. That’s not what government should be all about. Some ubiquitous providers of basics – power, water, infrastructure, healthcare, primary and secondary education, disaster prevention and relief – do not seem well-suited to remain in the private sector… where massive coordination and deployment is necessary.  

I’m Peter Dekom, and part of a ground-up rethink of the role of government to protect the people may well be a pullback from many private sector entities unable to cope with the challenge.