Assembly Utilities And Energy Committee

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Good afternoon and welcome. I am calling to order this hearing of the Assembly Committee on Utilities and Energy. We are here to discuss the California Earthquake Authority's SB 254 report and options for reforming the current utility wildfire recovery system to benefit survivors, ratepayers, and other stakeholders. Before we begin, I have a couple of brief housekeeping announcements. A first public comment is welcome in person. Otherwise, it can be submitted online via the committee website. And second, as is customary, we will not accept disruptive behavior and will apply assembly rules to maintain order and run a fair hearing. With that, on January 7th, 2025, the Palisades and Eaton fires together burned over 37,000 acres, destroyed more than 16,000 structures, and killed 31 people in Los Angeles County. Those fires are still shaping this committee's work, and they may reshape California's entire wildfire recovery system. Wildfire-related costs now account for roughly 27% of PG&E's total revenue requirement and 17% for SCE and SDG&E. The average California residential utility customer pays between $250 and $490 a year in wildfire-related costs on their electric bill. Over $40 billion in wildfire costs have been authorized for recovery in just the past five years. Yet, despite all of those investments, despite what is appearing on everyone's utility bills, survivors are waiting for compensation, utilities are managing catastrophic legal exposure, and no one has a clear answer for what Next, SB 254 created an emergency $18 million continuation account last September. This was designed as a bridge, not a destination. On April 7th, the California Earthquake Authority submitted to the legislature and the governor the report required by SB 254. This is the most comprehensive state-commissioned analysis of the problem that has ever been assembled. The CEA report is unambiguous on one point. there is no pathway that includes the option to simply fail to act. The responses to that report reflect genuine disagreements across every stakeholder group, including survivors, rate payers, utilities, insurers, and consumer attorneys, each with legitimate stakes and different bottom lines. In today's hearing, panel one features wildfire survivors who will speak to what the current system has meant in practice, what has worked, what hasn't, and what real recovery requires. Panel two will begin to examine the options for reform, what each achieves, who bears the cost, and where the realistic paths forward may lie. Let's be clear that the trade-offs are real. There is no option that insulates every stakeholder. But this hearing is about understanding those trade-offs clearly enough to help us make informed choices. With that, I will call up the first set of panelists representing two wildfire survivor groups. We will go ahead and welcome, we're joined by William Abrams, who is with UWSC Organizing Advocate and Public Policy Consultant and Wildfire Survivor, and Joy Chen, who is the Executive Director of Every Fire Survivor's Network. And thank you both so much for joining us.

We really wanted to begin with this panel so that we ensure that we center the committee's work on the recovery of victims. So we're pleased to welcome you.

Thank you very much, Chair and members of the committee. As mentioned, my name is Will Abrams. and I am a wildfire survivor from the 2017 PG&E Tubbs Fire. I am among many fire victims from 2015 through 2018, still waiting to be compensated by PG&E for our losses. And I'm also one of many advocates with the Utility Wildfire Survivor Coalition, representing thousands of wildfire survivors from across our state. I'd like to start with a bit of a personal reflection, if I can, as you'll see on this initial slide, that I think is a central issue contemplated by the SB254 report. This is my son, Leo, and he was 10 years old at the time of the PG&E fires. And then the days after the harrowing experience escaping from the flames, He asked, Dad, are we going to build our house out of brick? I asked him what prompted this question, and he told me all about the book he had read about the Great Chicago Fire of 1871 and how after the second Chicago Fire three years later in 1874, the city of Chicago passed all sorts of laws and collaboratively worked together to ensure a fire city They outlawed tar roofs increased the size of their water mains mandated brick and stone buildings and worked collaboratively with corporations to mitigate wildfire risk because they wanted insurance to back in that time. Let's compare this with where we are here today in California in the year 2026 with thousands of fires ignited by our utilities just over the past five years. Let's take a closer look at the system and wildfire mitigation processes that we have created. As you'll see here on slide number two, I hope this slide is confusing to you because that is really the point. Now, here is the utility wildfire landscape as described within the SB254 report with a finer point put on some of the particulars based upon my lived experiences and the lived experiences of other fire victims that it has been my honor and privilege to work with over too many years, advocating across all of the spaces that you see here in this convoluted circle. Now, this circle representation is pretty analogous to how we have been dealing with the wildfires since 2017. Mind you, much of this mess is very well-meaning, but we have some problems here that I want to highlight. So down here at the bottom of the slide, you have organizations that often get viewed as the voice of the people, which are these strange types of organizations, which are sometimes called out in legal agreements as consortiums, often formed as LSCs or subsidiaries, but then advertised as civically minded nonprofits. You have organizations like wildfire victims first, recruiting fire victims to their cause, which is really as best as I can tell from their formation documents, just utilities and their investors working against the victim's interests. Just shameless. Other flavors of these types of organizations are like fairness for fire victims, which apparently is managed by organized labor, owned and operated by certain injury attorneys, and yet advertising themselves as a nonprofit grassroots organization. To add insult to injury, their listed coalition members are a who's who of leaders across California who apparently also did not understand who they were signing up with. I could go on down this list of similar organizations that are mucking around in the wildfire litigation space, But needless to say, fire victims' interests are not served by these deceptions. The other point I would like to emphasize regarding this process diagram is that it drives a diffusion of responsibility and a competition for scarce resources. Who wins this competition? It's those shadowy hedge funds that are the primary drivers of this vicious cycle. Firms like Baupost, BlackRock, Vanguard, these institutional investors see these utility-caused disasters as a profit center. They made bad bets on corporations that cause fires due to their negligence and a string of violations, but because of their power and influence, they make money in times of public distress. Some of these investor and utility-driven shenanigans drive what is euphemistically called litigation financing and lines of credit which are among a whole host of financial tools that must be exposed if any of the rest of this is going to get better Intermediary finances are the go between these institutional investors and many prominent claimant attorneys as reported in Bloomberg, the Wall Street Journal, and NPR. These stories exposed how organizations like Centerbridge and Oppenheimer set up funds central to how victims are represented or not represented by key attorneys during these disasters. Now, if you think there are not provisions attached to those financial agreements that aren't favorable for victims or the public interests, then as a New York transplant here in California, I'd like to gauge your interest in a piece of the bridge that goes over the East River. Now, I certainly can highlight more of this or asks for the committee if there are questions. But let me move on to some solutions. So if you can turn to slide three. First, what I really want to highlight, as while the SB254 study does a good job describing a number of pathways, there are really only two legislative paths I would ask the committee to consider. The first is really reinforcement of the current path marked by deliberately opaque processes, a diffusion of responsibility, and misaligned incentive structures. This path drives higher RWE for investors when utilities start fires. Importantly for this discussion, the same path drives utilities and their preferred investors to deliberately drive a long, drawn-out, and dramatically incomplete restitution process for victims so investors can hedge their financial positions and seek protections on the backs of victims struggling to put food on the table. Now, you may sense a bit of bitterness in my voice when I describe this, because every day I have fire survivors, some of which are here today, reaching out to me and sharing how they are suffering because of these financial gains. What is the alternative? I urge the committee to drive to three categories of legislative packages this session. First, we must strive transparency. Any organization or individual that operates in these spaces and that touches any public program associated with how we recover after wildfires must provide complete declarations and financial disclosures, which by the way is in line with the Bar Association rules, which aren't enforced. Second, we must ensure that there are clear roles and responsibilities. As an example, right now we have the Office of Energy Infrastructure Safety tasked with certain safety regulation and oversight. And due to AB 1054, the CPUC shall approve the wildfire mitigation plans, but we still expect the CPUC to regulate things like a corporate safety culture. We cannot micromanage the utilities and have overlapping regulatory bodies and audits, and then throw in some independent audits on top and expect brighter days. This regulatory pathway reminds me of the prophetic Doxter Seuss and his book about the hot hot your bee watcher, where the bee watchers watcher watches the bee watchers to ensure security. And arguably our state budget, insurance scarcity, and other issues that plague our otherwise wonderful and beloved Golden State stem from these types of well-meaning, hauch regulatory structures All of this regulatory mess needs to be cleaned up and the fact that the utilities were successful at driving intervener compensation out of the Office of Energy Infrastructure Safety is really a disservice to the public interests, as many safety-focused interveners now are no longer engaged as a counterbalance to the utility interest. Third and most importantly, we must align our incentive structures. As an example, return on equity must be aligned with driving affordable energy rates. Bottom line, wildfire safety performance, such as fewer wires down rates, wires down, and fewer ignitions, full victim restitution. There are straight line ways to do this by tying utility approved ROE to where they stand nationally in terms of these measures, or we could be a bit more prescriptive and tie this to other metrics such as CPI. Our utilities operating as regional monopolies and under their Certificate of Public Convenience and Necessity must have their incentives aligned with our public goals as proxies for competitive pressures. If we continue to promote financial structures and direct contradiction with our public interest outcomes, we will not be able to see our way out of these disasters. I encourage the committee members to engage with us around these types of solutions. So I will end by just telling you that my son, Liu, who I mentioned at the beginning of this presentation, is now 18 years old and just last month decided to enroll in my alma mater, sorry, Indian University, and he's focused on public policy. While I am, of course, hugely proud of my son, that he has turned his fire trauma into positive action and education, I am here today because I don't want him and all of our kids chasing our tails and working on these same issues fire after fire. I encourage the committee to learn from how we responded to past fires and from how we responded to historical events like the Great Chicago Fire so we can all work collaboratively this session towards our common goals and hopefully with aligned incentive structures. Thank you for your time and consideration.

Thank you.

My name is Joy Chen. I'm an Eaton Fire Survivor and Executive Director of the Every Fire Survivors Network, the nation's largest survivor recovery hub with 10,000 plus Eaton and Palisades survivors and allies. For survivors, here's the reality on the ground now, as our great Assembly members, Harabedian and Erwin know all too well, according to the Department of Angels. Two in three survivors now are still displaced. Forty percent of us can only afford temporary housing for a few more months, if that. Credit cards are maxed. Retirement savings are drained. Mental health providers report rising suicidal ideation driven by extreme financial and housing insecurity as displacement is turning into homelessness. And the for-profit company that caused all of this, record progress. Last September, we were very disappointed to read that in the final hours of the ledge session, SB 254 was gutted and amended from protecting survivors to protecting corporations. The LA Times called it effectively a bailout. We were told these backroom deals were necessary to protect utilities from bankruptcy and to protect their financial stability. That same logic is now driving the SB254 study. In October, the CPUC approved a massive Edison rate hike and nearly $1 billion in back pay. Two months later, Edison increased shareholder dividends to pay out $1.3 billion in 2025 alone. Its three largest shareholders are all out of state. Vanguard in Pennsylvania, BlackRock, New York, State Street, Boston. So let's be honest about what happened here. Instead of protecting Californians from bankruptcy, these backroom deals created a massive transfer of wealth from California families to Wall Street shareholders. And the shareholder enrichment didn't stop there. In 2025, Edison's profits tripled from $1.3 billion to $4.5 billion in a single year. What company do you know whose profits triple in one year? And did Edison achieve these spectacular results from innovation? No. From operational excellence? Definitely not. On Edison's earnings calls, CEO Pedro Pizarro is explicit. These profits came from regulatory decisions, from the backroom deals that state leaders handed to Edison last fall. Pizarro's own compensation rose 20% to $17 million for the same year his company killed 19 of my neighbors and destroyed the lives of tens of thousands more. So who's paying for all this corporate excess? The same families now fighting to stay housed. AB 1054 explicitly tied wildfire fund access to executive compensation being linked to safety records. So what happened? What happened to that accountability? These three private companies are granted monopoly status because the public is supposed to get something in return. Safe, reliable, affordable service. service. But I'm a former deputy mayor of Los Angeles, and we oversaw the LADWP. And I want to know this. Why do publicly owned utilities deliver lower rates, better service, and don't cause catastrophic fires, while California's three for-profit electric monopolies charge rates double the national average, provide much worse service, and keep burning down communities across California? because we let them. People often ask how the Every Fire Survivors Network grew to more than 10,000 survivors and allies so quickly, because we are built on principles that every Californian agrees with regardless of party Every fire every survivor after a disaster should have a real shot at getting home Insurance companies should fulfill their contracts And corporations that repeatedly cause catastrophic harm should be held accountable. With Senator Sasha Renee Perez and more than 250 nonprofits, we asked Edison to advance urgent housing relief to the families whose homes they burned down and poisoned. Edison would be fully reimbursed through the wildfire fund. We did not ask them to pay survivors $1 more than they already owe. We simply asked them to pay sooner. But Edison said no. Instead, they launched what they call a fair and timely compensation program that requires survivors to sign away lifelong legal rights in exchange for payments that would make recovery impossible. Renters get a flat $25,000 when the median renter losses are $250,000. Smoke damage survivors get $10,000. My smoke remediation costs $200,000. The SB 254 study was supposed to evaluate how to equitably allocate catastrophe burdens. Instead, it's a bailout for these three for-profit electric monopolies, dressed up as policy language. Every burden that it shifts away from utility shareholders lands on someone else, on survivors, on policyholders, on taxpayers. It's a zero-sum game. If companies that start fires pay less, everyone else is forced to pay more. Californians are furious at these backroom deals. The system meant to regulate these companies only protects and enriches them. Many of your constituents are reaching the point where they just want to throw the bums out. Now, I'm glad to discuss any aspect of the SB 254 study with you, but here are three things that you can do right now. First, demand that Edison advance urgent housing relief. Survivors should not be going homeless while funding Edison's record profits and shareholder dividends. You can learn more about that proposal and the coalition of 250 nonprofits behind it at EdisonRelief.org. Second, pass AB 1774 from Assemblymember Werner requiring independent audits of utility wildfire mitigation spending. The last CPUC audit, the first and last CPUC audit, was done in 2021, and it found that utilities got $6 billion in wildfire mitigation spending and could not account for $2.5 billion of it. We need to not just enable and hold utilities accountable for charging customers for wildfire mitigation spending. We actually need to make sure they're doing it as well with the money they've already collected from us. In the four years before the Eaton Fire, the Los Angeles Times reported that Edison failed to spend $500 million in wildfire mitigation funds they already collected from us. including for removing the ghost lines which ended up causing the Eaton Fire. It haunts me to know that had AB 1774 been law the Eaton fire may have never happened Third reject any proposal that strips protections from survivors The SB 254 report proposes eliminating punitive damages and capping non-economic damages. That means compensation for death, pain and suffering, and losing everything. Does Boeing compensate families after crashes? Yes, it does. Did big tobacco pay billions after spending decades hiding the public harm its products cause while lobbying government to block accountability? Yes, big tobacco did. Well, we are at a big tobacco moment for California's three for-profit electric monopolies. If the financial rewards for repeated catastrophic failure are record profits, record executive compensation, and record shareholder dividends, then catastrophic failure is exactly what this system will keep producing. Consumer Watchdog found that these three companies spent $12 million lobbying you and the state legislature over the last two years. But we cannot allow special interests to run our government. We, the people of California, our leaders, we must work together to create corporate accountability in this state. Corporate accountability is a necessary condition of a functioning society. Families across our state are depending on you. Thank you so much for having me.

Thank you, Madam Chair. Thank you for doing this. Thank you to Mr. Abrams, Ms. Chen for being here, for the testimony, and obviously everything that you guys are going through. We continue to be with you and obviously trying to support you in every way that we can I guess my main question it really I guess I just throw it to Ms Chen but Mr Abrams you can jump in as well The 254 report as the chair said it very comprehensive There's a lot in there. Would you say from a survivor standpoint there are certain needs or gaps for survivors that weren't addressed by the report? And if so, what would those be? You each laid out a few legislative items that you would like to see pursued. But Ms. Chen, maybe to just start with you, what gaps, I guess, from the survivor's standpoint, did 254 not either delve into enough or not address that you think should be addressed?

you got a name check we're opening we're passing it to you I know there we go

Will, why don't you go?

Agreed. Thank you.

Thank you so much, Madam Chair. One of the things that I'm sure we'll talk a lot more about is one of the paths, as you called it, that's in the report. The direct quote was socializing the risk of damage from natural catastrophes. And I think when I talk with survivors, when I talk with folks from local jurisdictions, I think in many ways it feels to them like we already have done that at a time where we are seeing those record profits from the utilities. And in fact, there were previous settlements that some of the utilities had been under where until certain conditions were met, they weren't able to pay out dividends. And yet we don't talk about that same type of accountability structure for wildfire survivors or victims from these wildfires to make sure that before dividends are paid out, before shareholders are increased, that we're making sure that the folks are taken care of. And, Will, I know my colleagues have heard me talk about this quite a bit, but as a reminder and from a different voice, can you explain to them how wildfire survivors from camp and from tubs were compensated and how it's different now?

Thank you. Thank you. And I think picking up on the point about getting folks rapidly rehoused, we don't have a representative on the panel right now from local jurisdiction, local government, who is navigating not just the rebuild of their own city, but the rebuild of each individual home. But one thing that I do want to mention is these wildfires create their own economic climate in each of these communities where the cost of goods, the cost of materials go up pretty substantially. I think we saw in Santa Rosa about a 40 percent increase in the cost of labor as well as the cost of materials for folks. You had a lot of folks who ended up being underinsured as a result of that, even folks who had an extended policy. And then you also had some folks who had clauses in their insurance contracts that said that they had to rebuild like for like, which meant that they couldn't even rebuild a smaller house to try to get back faster. And from a city perspective, when you have a major natural disaster like this, property values are held to the cost of the land because there's no longer a home on it. So you have cities and counties that are trying to front load money to be able to rebuild while also recognizing that the dollars are not going to come in at the same rate that they were. And anything like development fees or fees that they might need for the amenities that folks have lost, typically they're being asked to defer those as well to try to keep the costs below. We have socialized the costs. As a council member and as a mayor, it was heartbreaking to talk to folks from unimpacted parts of my city about when are we going to move forward with a park project or a transportation project. And the answer was, we can't help you right now. We have to help these other folks. And people believed that that was the right thing to do. They thought that bringing our fire survivors home was the right thing to do. but that didn't mean that there wasn't a socialized cost to the rest of the community for having to go through that rebuild. I think Santa Rosa, I think we spent about $100 million in the first two years, played hopscotch with our budget, literally draining our reserves three different times and having to rebuild them three different times to advance money to get projects back faster. And what we knew what the data shows is that the longer it takes to get your residents home the longer it takes for recovery to occur for all of those reasons And you can do things like buy local and other things to try to bolster your local economies But the reality was the longer it took to get people stable in your community, the longer it would take not just for that individual to recover, but your entire community to recover. And I think we need to talk about the socialized cost of that as well. And when I look at this report, and we'll dive into it a little bit more, there is very little retrospective on negligence. There is very little retrospective on the accountability question about how do you adequately capture that you have communities that have been undercompensated? How do you capture that you have had work that has not been done that was promised to communities while investors and shareholders were paid out, and we instead socialized the impact of those fires? And so I know we'll get into the next panel. I want to thank both of you for being that voice that can help to talk about it because I do think it matters and it breaks through up here. But also, to your point, it needs to be included in all of these discussions, and we can't just look forward and say we're going to change things without actually looking at what a lack of accountability has created to get us here in this moment. So thank you.

That's a really exciting future to imagine, Madam Chair. What we have done with the Edison Urgent Housing Relief Program is it's not as big and visionary as what you just laid out, which is you just get the money that you need to recover, compensate for your losses fast so that you can rebuild your home, so that you can get on with your life as you were before the fire took away your home. All we have done, I guess we haven't been – we've been too scared to think that big. all we've been really hoping is for Altadena families to be able to keep a roof overhead because people are literally running out of housing now. And that's been a huge barrier for people who are in process of going homeless. Right now, two out of three of us are still not home. And most of us are running out of insurance housing, ALE payments within the next six months, if we haven't already run out. So people are really scrambling like, oh my God, how do I keep a roof over my kid's head tomorrow? So if you're just in survival mode, you're not thinking about rebuilding your house. You're just trying to survive. And in this kind of scenario, we've been saying to Edison, hey, we just juiced your profits by three times and all this executive comp and this and that and shareholder dividends. Would you just take a tiny, a fraction of the profits we just gave you and advance it to us Don give it to us Just advance it to us from what you give us in the future And you be fully reimbursed from the Wildfire Fund But it's just this cash flow gap of when you'll be reimbursed and you want to pay us in the future. And now that could be years. So who should cover that cash flow? It should be Edison because they got all the money from the they're getting all the money from the state, not us. Right. Because who are going homeless. So that's all that was. This idea, and we hope that they will come through on that. On this question, then, a fast pay facility, I don't know right now what that would look like. But I would love to be a part of envisioning what that would be. Because that would be really exciting. I mean, you know, these are people who were doing okay before the fire. They had homes and now they're totally not OK. So, you know, our whole goal, our whole mission is to create a future where everyone has a real shot at getting home. And the one barrier to that is money. Right. And so unless we can create some way to fast pay people, then the only people who will get back home are people with money. And recovery in California will be reserved for the wealthy, and that's what we're trying to avoid. So, yeah. Thanks.

Yeah, so as part of the determinations that we received as part of the PG&E fires, we had an evaluation for what are your losses. And I have a piece of paper at home that says this is how much your house is worth and this is how much your property was worth and the pain and suffering of your kids. And I have a piece of paper and it has a bottom line number on it. and PG&E has said, well, sorry, can't do that. I know we talked about full before, and Bill Johnson went in front of the CPUC and said we're committed to paying victims full. Well, sorry, can't do that, but it's fair, and I cross-examined Bill Johnson at the CPUC for hours and trying to get him on And what is fair? Fair is in the eye of the beholder and all of this type of thing. So full is really, really, really important as we move forward.

And I think that is a good – that's actually, I think, a good transition to our next panel where our first presenter is going to be Tom Welsh, who is the chief executive officer of the California Earthquake Authority and the administrator of the Wildfire Fund. So I will just say that the way the wildfire fund is structured today is that it's a reimbursement fund. So the money does not it doesn't go to the utilities. So when they if they pay you one hundred dollars, then they are able to submit a reimbursement request to the wildfire fund at that point. But I think the question of what would an effective fast pay process look like is something that I think is really important for us to dig into both with our next set of panelists and hopefully in continued conversations with both of you.

Thank you very much.

Madam Chair and members, thank you very much for the invitation to come and speak and lead off an aptly named panel, which is examining trade-offs. Because when I thought about and looked back at the scope of work that you gave to us when you authored SB 254 and it was passed and signed into law on September 19th. It is laden with tradeoffs, as we will discuss. What I will do since the report has been out for a while it has been digested and it will take some additional time to really digest it I focus principally on the process that we undertook to attack the topics that are in the study. Ultimately the report speaks for itself and was the product of a very robust process that I'll start. That scope, we decided that it was important to include the scope in its entirety on page 15 of the report because many of the questions that have arisen throughout the hearings that we've done so far and the commentary that we've received so far find answers inside the depth and thoroughness of the scope of topics that you asked us to undertake. When we looked at the scope, one of the first things we did was recognize that you had called upon us to produce a report that was really based on very deep, thorough engagement with a broad array of stakeholders. Within a couple of business days after the bill was signed into law, we started the process by issuing a broad call for stakeholder engagement. And we asked and we spread that far and wide and we tried to get everyone who we thought might be interested in participating in this process to give us early written submissions to help us continue to build on a process in an evolutionary way that heard people's voices early so that we could be responsive to those voices. We got a fantastic outpouring of contributions from a wide array of stakeholders, 80 different unique submissions from nearly 70 individuals and organizations that wanted to participate and contribute. All of those materials are posted side by side with the report. We wanted to make sure that those materials, that first-person input was available to the legislature alongside the report, and those are there on our website. That feedback also helped us inform how we were going to organize the topics into work streams, and we created four work streams to focus on risk reduction and how you pay for it, the mitigation piece of bending the risk curve down. We had a work stream focused on the utility sector and also how the utilities finance and pay for their own system risk reduction. We had an insurance industry work stream, and we had a catastrophe financing work stream. One of the first things we had to do was hire subject matter experts to make sure that we had the right people guiding that process, asking the right questions in a really informed way. I gave every Workstream leader a directive to engage with stakeholders, not just stakeholders, but survivors in particular. The systems that we use to equitably and fairly allocate losses from catastrophes are embedded in the insurance industry. They're embedded in the utility sector. And survivors have a voice across every piece of what we're doing. So I told the Workstream leaders that it was really important to the process that they engage with stakeholders I sorry survivors and survivor representative networks like the ones that you just heard from because that was necessary to really help inform our thinking as we distilled and brought forward strategic options for your consideration. The Workstream leaders went out and spent hundreds of hours engaged in personal conversations with a wide variety of stakeholders, not just the ones that were identified in SB254 and that we were directed to connect with, But everyone who would talk to us and had meaningful input was contacted, and those hundreds of hours of conversations and interactions and interviews helped inform a robust convergence process. The pathways and strategies that we'll talk about and you may have questions about were the product of bringing those separate work streams together through a convergence process and getting together on multiple days on multiple occasions within the CEA office to share notes and to make sure that voices were heard across those work stream organizations. When we then converged and got together and started building the report, the next part of the process was to charge the work streams with helping deeply analyze the cost of inaction. And as the chair mentioned, the outcome of that interaction really demonstrated to us, to everyone involved in the project, that the status quo is not working for anyone. Survivors, as you just heard, foremost among them. But survivors, communities, ratepayers, insurance policyholders, the utility sector, the insurance markets, they all are challenged in one way or another by the level of natural catastrophe resiliency that we have here in the state. And that, in turn, really identifies that the report needed to bring forward and examine tradeoffs. And that's why the framing of this particular panel, I think, is so apt, because the status quo doesn't work well for anyone. When we talk about the pathways and strategies and options, we did struggle to try to come up with a good way to synthesize the 10 topics and bring together in an organized way the ultimate options that are available for you to consider. what we came up with was breaking them into these three pathways. Earlier in the process, I have to confess that I spent some time thinking about a systems-based approach to presenting options so that we would present options that were related to the insurance industry as a system that we use to allocate losses from natural catastrophes and the utilities as a system that we use to allocate losses from utility-caused wildfires. But that was an incomplete organizational structure that tended to lose some important voices like survivors. Instead we came up with a set of pathways starting first with an area that we all agree on which is the need to find ways to invest in reducing the size of the problem through mitigation And that first pathway focuses on the community level personal responsibility of landowners and communities to address the needs of their community when it comes to resiliency. The second pathway is where most of the tradeoff and most of the friction that you will hear over the course of hearings and subsequent hearings on any bills that are introduced in response to the study and in response to the challenges that the state faces. those tradeoffs are really deeply nested in the second pathway when we come to the topic of how we equitably allocate losses across the state when natural catastrophes strike. And then the third pathway is essentially the larger, more transformational opportunities for the state to step in if it chooses to, to approach natural catastrophe resiliency more holistically and more fully by creating new funds and new mechanisms. mechanisms, protection gap enterprises is generally in my business how they're referred to, where there is a gap in the systems that provide protection from natural catastrophe. What are the different structural options that are available to the state to fill that gap? An important aspect of the report is that although we have three pathways, nine strategies, dozens of different options for you to consider. I really want this not to be taken as a singular exclusive list of things that you can do to address the problems that we face. It's designed to bring forward options that felt fully baked or baked enough to be actionable, to be picked up, but the creativity, the life experience that this body, the Assembly, along with the Senate bring to the discussion is a vital aspect of your efforts moving forward. So you could call this a choose-your-own-adventure or kind of build-a-bear approach, and it's It's more serious than that. I don't mean to undermine the seriousness of it, but I don't want the report and the list of options to be viewed as exclusive. I think that the legislature, the individual members, the experience of your staffs will add value and see opportunities that the study didn't have the timeline to fully develop. So there may be other additional or combinations of things and packages that can be put together to help address the challenges that you face. I can go into greater detail, but I wanted to just, in the short time allotted, given the fact that there's seven of us up here, to just give you that overview, the process of how we got to where we got to. We were pleased. Pleased may be the wrong word. We were honored to be given the opportunity to deliver the report, to undertake the work. It was a lot of work, and we hope that we've delivered something that is ultimately useful to to the legislature and to the governor as you do the hard work that lays ahead. Thank you.

The one-minute version is that the key information characteristic of the wildfire fund is that it does not sit between utility caused wildfire survivors and the utility companies. The utility companies, whether the fund exists or not, is liable for utility caused wildfires. And so it's sometimes characterized as a bailout. It actually is just an insurance fund. It's a nonprofit way of providing insurance for the utility companies for when their infrastructure causes wildfire that produces damage to property lives and produces other types of damage. The way the process works is the wildfire fund is activated by a utility-caused wildfire by what's called in the statute AB 1054 a covered wildfire, which can be triggered either by Cal Fire or a governmental entity determining that the ignition came from wildfire infrastructure. Or alternatively, if that process is taking long, a utility company can decide to settle pending litigation on terms that result in the dismissal of that litigation with prejudice. And that in turn is another independent trigger of the ability to seek coverage from the wildfire fund. Whether or not a fund is covered or a wildfire is a covered wildfire or not is not a determination that's based on negligence. It's just a binary. Either it's a utility-caused wildfire or it's not. And once it becomes a covered wildfire, they pay the first billion dollars out of their own claim-paying capacity, and then we pay the remainder of the eligible claims that emerge from that wildfire. After that is done, then there is a subsequent proceeding in front of the CPUC, a catastrophic wildfire proceeding, in which there is a determination of whether the utility acted prudently and met the prudent manager standard with respect to that particular wildfire and the particular infrastructure that was the source of the ignition. If they were prudent say they had perfectly maintained infrastructure but the ignition source was say metallic balloons or a wildlife a bird flying in and causing the ignition that prudency would allow them to keep all the money from the wildfire fund if that proceeding results in a finding that they were imprudent in some fashion which is akin to but not exactly the same as negligence then they have to reimburse the wildfire fund for a portion of the money that they drew out of the wildfire on account of that particular covered wildfire. So there is, in the instance of the Eaton fire, for example, there's a cap on how much they have to reimburse, which is 20 percent of a regulatory number. Their their transition, transmission and distribution equity rate base. It's a common number. All three of the utility companies have available and provides a formula for how much they should have to reimburse if they're found to be imprudent. So, for example, in the Eaton Fire, that number would be just under $4 billion that they would end up reimbursing back to the Wildfire Fund. From shareholders?

But whatever money they got from the wildfire fund, they would have to reimburse to us and from whatever money that they have available to themselves, which. All right. You may have some questions on that as we go into the hearing.

Welcome. Yeah. Pleasure to be here. Madam Chair and members of the committee. So my name is Lloyd Dixon. I'm a senior economist at RAND and director of RAND's Feinberg Center for Catastrophic Risk Management and Compensation. And my job here today is to provide some background on where the money comes from and where it goes under the current compensation system. So I'll bring up and pose and address three questions. So the first is, how much have utilities paid to compensate survivors of utility-caused wildfires? I think I have a slide that you can put up there that I'll go into. But first, let me note that the first insurance payments are the first source of compensation after wildfires. They pay out whether a wildfire is utility-caused or not, and they cover property, typically replacement costs, up to the policy limit, as well as additional living expenses, again, up to the policy limit. So when the wildfires utility cause, injured parties can seek compensation from the utility for their uninsured or their underinsured damages. And as seen in this figure, between 2017 and 24, utilities paid approximately $38 billion of compensation to the groups I'll go through in a minute. And just to put that number in perspective, Southern California Edison's and PG&E's annual revenue from electricity revenue is about $18 billion a year. So this is $38 billion, a large sum of money. About 55% of the payments, as you can see in the figure, are to injured parties for uninsured and underinsured losses. So these are payments for property damage, additional living expenses, wrongful death and bodily injury, non-economic damages. And so examples of those are for emotional distress during evacuation, loss of irreplaceable personal items or difficulty adjusting to a new living situation And the utilities also cover part of the attorney fees of the claimants About 40 are the next area there the orange area are payments to insurers Okay, insurers bring claims against utilities on behalf of their policyholders to recover the insurance claim payments they've made to parties who've suffered damages. And these These are called subrogation claims, but insurers don't recover all their claim payments. They typically recover on the order of 50 to 70 percent of their claim payments, and we'll come back to that later. And the last part there are payments to public entities, and those account for a much smaller share and therefore uninsured property damage, response costs, staffing evacuation centers, other things like that. Okay, so now let's, that was the first question. Now let's turn to the second question, is I wanted to talk about how much is spent on litigation costs in our current compensation system. So legal costs in our current system are considerable and compounded by the approximately four years it takes on average to resolve claims. That's on average, so some take far longer, some are shorter, to resolve claims between a survivor, a claimant, and the utility. So I'm talking about utility claims there. attorneys, the plaintiff's attorney's fees are typically between 25% and 35% are not unusual. Some occur outside that range, but that's kind of a typical range. And applying this percentage to the approximately $21 billion in the blue area there to the injured parties means that injured parties paid roughly $5 to $8 billion in legal fees over this period in attorney's fees. The utility and electricity rate payers cover part of these fees, but survivors cover the rest. And these legal fees take dollars away from the money survivors have to rebuild. Okay, so litigation costs are also incurred by insurers pursuing the subrogation claims I talked about. 20% of the recovery is not uncommon, and this would amount to roughly another $3 billion in this period. Fees for attorneys that defend utilities, the defense costs, also add to the totals, and these can add billions more. So that's, again, an overview of the litigation costs in the current system. And now I just want to finish with looking at a third question. It's about how are the costs of the wildfire spread over the different stakeholder groups? So first, let's talk about the split between utility payments for the utility payments between shareholders and rate payers. So Mr. Welsh went through, you know, covered part of that. But let me just sort of kind of emphasize that for fires after AB 1054 was passed, the wildfire fund reimburses utilities for the compensation payments they made. And those funds are half from rate hares and half from utility shareholders, sort of half-half split, subject to the caveats that Mr. Welch went through, in order meaning subject to the CPUC prudency review, which I won't go into again. But if the fund, so that's for while the fund has money. You know, if the fund runs out of money, the utilities are still liable. They still need to make the payments regardless if there was a fund or not. And the CPUC has the authority to determine what portion of those payments are passed on to rate payers And there some guidelines from that that we can go into as needed But you know bottom line there an allocation process that goes on there Now, I just wanted to point out that if the result of the allocation of funds between ratepayers and shareholders, shareholders causes utilities to be more financially fragile, you know, more causes of credit ratings to drop, for example, That will add to the costs that utilities incur in raising debt and in their equity, their capital equity, their equity costs. And ultimately, you know, those costs are passed on to rate payers. So one of the key things here is that, you know, you deal with this, there's a market for investing and shareholders or investors can invest in California utilities, other utilities. And the return they demand is based in part on the volatility and the uncertainty of their investments. So once you make it to the extent that this allocation of cost between utilities and shareholders makes utilities more fragile, that adds to these costs of debt and equity, which end up in the long run moving on to ratepayers. Okay, so that's what I wanted to say about the division of utility outlays between shareholders and rate payers. So I also want to point out that a smaller share of the overcasts of utility-caused wildfires are borne by insurers and their policyholders. So that's because, as you recall, that insurers recover about 50% to 70% of their claims payments from the utilities, and utilities caused wildfires. And so that means that some of the costs of utility-caused wildfires are sort of, in effect, transferred from the rate payers to insurers and their policyholders. And over the long run, this shift means that insurance policyholders are paying more for their coverage than they would be otherwise. Now, the amount paid by insurers and their policyholders is far less than the amount paid by utilities and their ratepayers, but there's still a – that group is contributing. Finally, I wanted to point out that, you know, as I think has become apparent from the conversation today, a lot of costs – there are costs that are borne by survivors. And it's hard to quantify those, and we can talk about, you know, more about what fair and full means and that kind of thing. But the bottom line is the amount that is borne by survivors is determined by, you know, how much their settlement, their settlement from the utility net of litigation costs, once you take out the attorney's fees and others, fall short of their losses. So, you know, under our current system, you know, the survivors are also bearing. So you have the utilities and the rate payers. You have the insurers and the policyholders. And you have the survivors kind of currently in the current system spreading these costs. Also, I'll just conclude by the similar argument can be made for the cost for public, a cost that are paid for by public utilities, public, sorry, the public parties up on that figure that the public entities that bring claims that are then passed on to their taxpayers. So thank you.

Welcome. Here we go. Thank you. Good afternoon. My name is Tyson Smith. I'm from Pacific Gas and Electric. I'm appearing today on behalf of the state's three large investor-owned utilities. Thank you for the opportunity to speak here today. At the outset, I wanted to thank the CEA for its work in preparing the resiliency study. They led a transparent and inclusive stakeholder process that took a deep look at wildfire related issues. The input from the state agencies to that process was also especially well done including from the CPUC and it provided valuable insights into the issues that we face as a state. The resulting study is comprehensive and it's really remarkable in its clarity around the problem that we face in California due to wildfire risk. I think the report makes one point crystal clear and that is inaction is the worst possible outcome for Californians. If we do nothing. We face rising energy bills, declining grid reliability, and a shrinking safety net when disasters strike. These cascading costs ultimately hit all of us, ratepayers, homeowners, taxpayers, and the economy at large if we fail to act. The stakes really couldn't be higher. We agree with the report on the impacts to utility customers from the current system. Wildfire costs, as we've heard, make up approximately 20% of utility bills. This reflects the billions of dollars that we've poured into wildfire safety, into hardening the grid, implementing new technologies, and stepping up maintenance and vegetation management. Yet climate change continues to outpace some of these efforts. The CEA report also makes a fundamental point that wildfire risk harms utility finances. A financially distressed utility can't invest the way we need in the state in safety, in clean energy, or in resilience. And those higher borrowing costs, as Mr. Lloyd pointed out, flow directly to ratepayers. Put another way, inaction combined with utility financial distress means higher customer bills, and all of those costs fall hardest on those that can least afford them, as lower-income households devote more of share of their income to energy-related costs. Another theme that you see in the report is that effectively mitigating wildfire risk is really a whole-of-society problem. Utilities alone can't reverse decades of development in fire-prone areas or the buildup of fuels. I think one of the important points from the report is that utility investments and risk mitigation have delivered real results. We've reduced ignitions and reduced risk. But as we make additional investments, we face declining returns without broader efforts beyond the utility system. Simply put, wildfire spread results from factors that are outside any one entity's control. And we need to approach solutions with that in mind. And finally, the key point again at the end is, as the report makes clear, if nothing changes, the pressures we face as a state continue to mount, even absent another catastrophic wildfire. We really need an all-of-government, all-of-society approach to tackle these interconnected and interdependent issues head on. And to that end, the report identifies three pathways which make a lot of sense for addressing this risk. First, we've got to commit to community wildfire risk reduction, whether that's through home hardening, better land use planning, streamlining mitigation work. Second, we've got to equitably allocate catastrophe burden among all involved stakeholders rather than have them fall on any single sector of our economy. And third, we need to look at developing state-led strategies for resilience by creating new tools for funding wildfire losses and mitigation. At bottom, the report offers really a clear-eyed warning. The cost of inaction is greater than the cost of reform. So by acting on the report's pathways, we can improve the safety net for survivors while ensuring that communities become safer, utilities remain financially stable and accountable, and insurance is available and affordable to homeowners. We urge the legislature to seize this opportunity to fortify our state's catastrophe resilience and to safeguard California's future for us all. Thank you.

Thank you Chair and thank you members of the committee Here on behalf of DWP and we a member of the California Municipal Utilities Association First, let me say that we applaud the SB254 study and finding that catastrophic wildfire risk is a society-wide problem for which a status quo approach is unsustainable. We also emphasize that the current liability framework results in a compounded vulnerability for communities served by municipal utilities. Because legal risk, credit risk, and the fiscal health of both municipal utilities and the cities that own them are interdependent, the financial stress that wildfire liability places on public utilities carries over and creates financial stress for the cities they serve. After severe wildfires, when support is most needed, Californians residing in such cities are exposed to the risk of both rising utility rates and more costly or more limited essential city services to rebuild and recover. In an extreme scenario, wildfire liability placed on a municipal utility could bankrupt the city itself. For the roughly 10 million Californians served by municipal utilities, this risk must be explicitly addressed. To do so, reform should focus on non-regressive strategies that most directly improve liability certainty, cost containment for utility customers, and just, effective, and timely victim recovery. Reforming inverse condemnation is the most direct and durable solution because it removes the core legal doctrine that plaintiff's lawyers are using to seek uncapped liability, regardless of fault. Exposure to inverse condemnation is difficult to ensure, difficult to model, and difficult for capital markets to price. For both municipal utilities and the cities that own them, it can increase borrowing costs, impair access to capital, and direct investment away from productive uses. For reform to be effective, this pathway should also define fault, establish a reasonable standard of care, and reduce litigation incentives. If inverse condemnation reform cannot be achieved, we believe that an integrated three-pillar solution is required. First, the solution must establish a liability cap via a state-sponsored insurance framework. We recommend option 3.1.1 as identified in the CAA study, which is a state-administered wildfire liability insurance program for utilities because it provides the most flexibility to participants with varied risk and financial conditions.

Thank you. All right, next up, we are hearing from John Fisk with the Consumer Attorneys of California. Welcome.

Thank you. All right, let's see. Last but not least, Dr. Skinner joining us from the Public Advocates Office. Thank you.

is all of our panelists and as I mentioned we also have an additional witness available to answer questions so thank you so much for being here with that questions from committee

Thank you, Assemblymember. Part of this is it will take a while to actually understand, is the mitigation effective? We're looking at utility tools and models. We're assessing them. The Office of Energy Infrastructure Safety has a public process that looks at that. and just looking at how the utility wildfire models are changing can inform those risk reduction measures to help understand which should be done where. One item I want to highlight is when we're discussing a financial assessment of where's the money going, that just tells us was the money spent. It doesn't tell us if it was spent on the right things. So it needs to be more than that. The commission does have a process that's starting to relook at and more thoroughly dive into when the utility is given money, are they spending it? And not only are they spending the money, but are they getting the units of work done that corresponded with that forecast authorization from the commission? So it's looking at both sides of that is what is the cost of the work getting done and is the work itself getting done or are we paying two times as much or half as much?

Currently it's coming through different areas. So CAL FIRE, for example, upstates their maps frequently. The commission has its high-threat fire maps that include overlaying where utility infrastructure is. As we look with greater understanding at the impacts of the wildland-urban interface, again, that's more of a CAL FIRE or local fire agency-driven assessment. It's a blend of looking at the probability of an ignition, and some of that data we're getting for the utilities. We can also see historically where there's been undergrounding, where there's been covered conductor, where there's been fast trip or EPSS, where those measures are coming in. Are we seeing the same incidents of lines down, outages? Under what conditions are those ignitions still happening or not happening? It's definitely a lagging indicator, so we don't necessarily see all that till we've been through five, ten years of weather and storms in conditions to see how well it holds up. But we do know where undergrounding has been done, covered conductor has been done, and we can see that those activities do lead to a very significant reduction in the ignition. And then the second part of the equation comes in really with entities with fire modeling experience of what are the consequences if there is a spark that doesn't get extinguished fairly quickly, and then does it lead to a major wildfire? And that's where some of the other measures talked about in the SB 254 report come in of when we look at how do we have community, household resilience, other things along those lines.

Yeah, I think eliminating inverse sounds like a simple thing to do, but it's actually obviously very, very challenging. And it nevertheless still would result in litigation, right, in some manner. So I think what we're suggesting is perhaps you start with eliminating inverse, and then over time you could implement pathway two.

Let's say if you were unable to achieve pathway one, then we think at minimum pathway two needs to be implemented. And we feel like those three pillars have to come about together. They mutually support one another. So that's what we're proposing.

Thank you. Assemblymember Calderon.

at the CPC. First, all costs that we are reviewed, audited, and scrutinized by regulators through public and stakeholder processes that conduct regular and thorough audits, including by the state auditor. To the extent there's allegations that there was reprioritization of wildfire-related funds. There's actually a statute that prohibits us from diverting wildfire spending. So I think there's – our activities are audited both before we spend money, and we're agreed on what are the right things to spend money on, and then afterwards they're audited not only to determine whether we spent the money we said we did, but that it went to the right places and was on the right activities and that we achieved – we acted prudently and incurring those costs. So there's very extensive oversight of our activities, including audits that have not indicated that we've failed to spend wildfire funds.

There are audits periodically done annually by Office of Energy Infrastructure Safety around our performance of our wildfire mitigation plans. They do both field audits of our work to the adequacy of the work we're doing, as well as on our spend of these activities. And those occur on an ongoing basis.

Assemblymember Rogers.

That's not an accurate characterization of it at all. So what the audit looked at was where we spent money on wildfire mitigation over a given time period. We spent money above and beyond what was authorized in our general rate case, as here mentioned, Dr. Skinner mentioned. General rate case is where we define our regular spend. But in the late 1910s, we were 2010s, we were dealing with extreme wildfire conditions, and we were going out and doing a lot more work and rapidly hardening, doing vegetation management and the like. That meant that we spent more money than we were authorized to spend in our GRC. That included us taking some money that we were spending on non-wildfire-related activities and dedicating those to wildfire risk mitigation. So what we actually did was spend more than we were authorized to spend on wildfire mitigation. That audit report simply looked at what work did you not do that was not related to wildfires over that time, and those are activities that are not spelled out that we're required to do. They're groups of funds and activities that were planned in our general rate case, but that we ultimately needed to spend more money on wildfire risk mitigation. So that's not an accurate characterization to say that it can't be accounted for. The money was spent, and it was spent on wildfire risk mitigation.

That's actually – it's not through the general rate case. It's through – those costs are recorded in a memorandum account, which then the utilities have to go and apply for cost recovery at the CPC for those. That goes through a public stakeholder process with intervener intervention and CPC administrative law. Judge looks at those issues and decides whether and how much of those costs should be passed on to customers. And so we go through that process on an annual basis or as necessary to ensure that those costs are accounted for and were spent prudently.

That is correct. But again, there's oversight of that spend to ensure that it's being spent to reduce risk and it's spent on activities and on costs that are prudently occurred. So there is oversight, active oversight of those activities, again, before any of those costs are passed on to ratepayers.

There's a lot embedded in that question. When you look at all of the options and the structure of the pathways, I'm going to start actually with pathway one, which is risk reduction. The third strategy there is focused on utility investment in infrastructure safety. AB 1054 in 2019 that created the Wildfire Fund, created the Office of Energy Infrastructure Safety, focused attention on the need to make more targeted risk-reducing investments, knowing that those are at the expense of rate payers. So when you first start thinking about the balance between the interests of rate payers and the accountability of the utilities, you have to acknowledge that rate payers, all of us as rate payers, bear the cost of the risk reduction investments that are made in those systems. So we wanted to include in the first part of the first pathway a focus on ensuring that as we ask rate payers or as the state and the CPUC asks rate payers to invest policyholder money in risk reduction, that we do it in a way that is sensitive to a threshold analysis. you know we could we could in theory spend all of our ratepayer money all of my money as a ratepayer on trying to zero out the risk And the utility companies may embrace that and say, if you want us to spend the money, we will. But one of our recommendations is to establish a standard that allows for balancing between the ratepayers' funding of risk reduction and just how much risk is being reduced. the conclusion, so the feedback that we got from stakeholders is that, you know, affordability from a ratepayer standpoint is actually potentially harmed if you overspend on risk reduction. Now, that's sort of the first part of accountability, but it's only the first part. But there is not just a limitless amount of ratepayer money that can be spent to chase down that last bit of residual risk. So there may be some reasonable residual risk that can be tolerated by the state that is too expensive from a ratepayer standpoint to eliminate. Accountability doesn't stop there. So the tradeoff elements between ratepayer interests and survivor interests is really embedded in pathway in a number of the options in pathway two, some of which are not necessarily – well, may bump into each other. inherently we're engaged in a set of tradeoffs and balances that need to be looked at by the legislature. An example, perhaps, is the fast pay option. And at the risk of oversimplifying the fast pay, then the genesis of that was to think about other kind of systems that we have in California, like the workers' comp system. Every employer has to have workers' comp insurance, and the way you control costs is you set up a fixed schedule of what are reasonable and adequate recoveries for someone who gets injured and what kind of additional benefits they should draw if they are injured in an industrial accident. That type of a system creates predictability, in theory, lower cost, reduces the litigation friction, and speeds recovery and is based on getting people back to work. That analog became part of that tradeoff. But we acknowledge that that alone as a solution doesn't necessarily address the need for aligning incentives and having that system produce the best corporate behavior on behalf – well, not just corporate behavior, but the best behavior on behalf of a utility company that's operating inherently dangerous equipment. There's no sort of short glib answer to how you balance against ratepayer interests, both on the side of the investments that we all fund for safety, whether it's a POU or an IOU, ratepayers ultimately are paying for the creation of safe infrastructure And then on the liability side there is an acknowledgement and focus in the report and in each of the options that touch on the utilities on those trade And so we don't, in the report, come to any definitive conclusion about how you strike that balance. But we do identify and try to identify clearly that each option does involve its own different balancing equation between accountability, recovery, and affordability and achieving other goals. There is there's no really short, simple response to that other than the fact that we in the report tried to grapple with all of those issues and identify the tradeoffs that necessarily come from employing any of those options. Did you want to add something?

Yeah, I get that. I guess a retort that I hear frequently talking to my constituents is if the CPUC's policymaking is geared at preventing bankruptcy from an IOU, then how much can we actually expect them to hold people accountable for wrongdoing? And I think both of you are actually the two that one of the questions that I have should be geared towards, which is this report talks about really difficult tradeoffs. And I appreciate starting conversations in different areas about things that have been third rails to touch. But at its core around this question of accountability is that you have a monopoly that has been created with the tradeoff for the public being a duty to serve. They get a protected monopoly status. Yes, they have regulations, and the public gets a duty to serve. At what point in this discussion do we actually have a chance to discuss if the duty to serve is not existent? And what I mean by that is not just that you don't have lines that are going, but that the tradeoff for the public is I might have my house burned down and I have no choice, no – from a capitalism perspective, no competition to try to drive better behavior. And any enforcement tools that we are told that we have may put them into bankruptcy, which is heads I win, tails I lose, right? for the constituent, it's the same thing, that they are the ones that are impacted, not shareholders ultimately So did you in your report contemplate trade around the very existence of the structure of the monopoly and how you could introduce competition as a form of driving at additional accountability and protections for ratepayers and for constituents

threshold analysis of I guess what you would call the the utility compact which is you get the monopoly but you have to serve every person no matter where they are and what the cost is of getting electricity and services to them.

Yeah, please.

I appreciate that. I've got two more quick ones, Madam Chair. Go for it. So the first, and I don't, Mr. Neal, I know you're non-presentation only, but you're technical. When I view this problem, I see kind of four distinct paths, and there's probably more. You've got the wildfire survivors, the general public, the IOUs, and insurance obviously plays a role in that. And we heard from some of the previous testimony about how difficult it is to start the recovery process for folks when they don't have money. And I know part of the discussion here, part of the tradeoff, would be some of these choices shifting the liability burden off of the IOUs and onto the insurance companies and onto the rate payers and the taxpayers. specifically, I wanted to ask you about the content issue where you have folks who are paying every single month for covering the contents of their home. They go through a disaster and suddenly they have to prove every single expenditure, every single thing that they had in their home that they didn't have to prove before they were paying for a certain level of coverage. So when we talk about recommendations in the report on how to move money faster, I know Ben Allen had a bill last year that was signed into law that allows people to be paid out for the contents of their home without having to itemize it, but at 60 percent of what their policy actually said. So they have to give up 40 percent of what they've been paying for month over month to be able to move faster. So you avoid some – the insurance industry avoids some scrutiny in the report over this. But for me, that's absolutely linked to how do we get money in the pockets of survivors to allow them to start the process of rebuilding and to start to resettle in a community post a disaster. So I wanted to make sure while you're at the panel, I know not a presentation only, if you have a response to that at all.

Yeah, I'm asking specifically about if I say I'm covering $200,000 worth of content in my home, you say, okay, you're going to pay $50 a month for that. I say, okay, I'm paying $50 a month. You didn't make me prove I had $200,000 that I needed to cover. Instead, when I need that payout, you say, now prove to me that you weren't paying too much the whole time.

My apologies. I asked the wrong person then.

I have to confess I may have lost the thread of your question but you started by talking about some of the options in the report that contemplate trading or a modification of subrogation as an example where

I did the catastrophic modeling. But I will say there's two things that I'll respond to that is that I don't think that this is an either-or necessarily to have a fast-paced system and how it integrates with insurance. I will say that insurance is not uncommon to have a proof of loss. insurance is an indemnity product that is there to make sure that you don't recover more than you originally had. And you are very right that when you go to buy insurance, you don't go and catalog every single thing in your home to say, do I have this much contents? And even if you did, six months later, you might change the amount of contents that you have. You might make significant upgrades and put a lot more money into the contents of your home. And so it's not something that is feasible to track at all times the exact value of contents. I'm an insurance professional. I don't know the exact value of my own contents of my home. And so I would say that from a fast pay perspective, it does make sense that you do want to be able to accelerate payments. insurance is frequently a faster way that people recover than those that do not have insurance, particularly if they're waiting for the determination of whether or not it was a utility-caused wildfire before you can even begin to try to recover money from the utilities or from the wildfire fund. And so I do believe that a fast-paced system could be enabled for a faster payment, and then you can still have insurance require proof of loss. You don't necessarily have to have an either or, or a waiving of your rights under your insurance to be fully indemnified if there's a fast-paced system in the wildfire context. I appreciate that, and I think that that's the

Well, that certainly is not what was intended by any of the recommendations. And in fact, survivor interests were very much centered. The fast pay, one way to look at the fast pay option, first, the report itself does not articulate exactly how you should build a compensation system, a fast pay system to make it adequate. The utility companies, when they have done this, have looked to people like Ken Feinberg, people who have administered large fund allocations and reimbursements.

No, I appreciate that. And I think part of what I was trying to highlight in the first panel is that you do already have that tradeoff for survivors. that oftentimes you have people, as you said, call it purgatory, where they don't know how expensive it's going to be to rebuild their home given the change in the economic climate for the area as they're doing the assessment, which then prevents them from being able to settle with their insurance company that then they have to jump through a bunch of hoops with to get a number and then to be able to figure out what their shortfall is going to be to be able to seek additional legal options for compensation. And that's something that's very difficult for a community to move forward from. You're caught in a chicken and the egg there. Yeah, I couldn't agree more, which is one of the reasons why the report also went into detail about the chronic underinsurance phenomenon that happens with catastrophes. because what we refer to in the business as surge demand is real. And the incidence or the frequency of insurance not being adequate to help you recover your home is extraordinarily common. The cost of rebuilding goes up in a catastrophe, and many, many insureds find themselves underinsured to an extent that they were not expecting. And so we included discussions of underinsurance and recommendations about how to create more informed consumers so that they can understand some of the tradeoffs between how much premium they pay and how much exposure they're taking on to themselves, given the limits of their insurance, the cover a limit, because it's after catastrophes, cover a limits are frequently inadequate. to cover reconstruction costs. I agree, which is why, to bring it back to where I started, the tradeoff between faster but less is an anti-consumer, anti-fire victim tradeoff. Especially when I was talking about the content coverage, the tradeoff that you get 60% and you don't have to go through this long process means that you're giving up 40% when you're likely already underinsured just to get the process working for you. And that's not a trade-off that I think I'm willing to support.

Then my last question, I swear, Chair, is around the first pathway that was mentioned here around inverse condemnation. And did you contemplate the difference that an impact in changing inverse condemnation would have on a municipal utility versus an IOU? Yeah. How could you see that playing out from a liability standpoint? What remedies would a local city, for instance, have without inverse condemnation to get compensation? How would you walk through that with some of our local government stakeholders?

I think the question – and I appreciate the answer. I think the question is if you have to do a constitutional amendment to go down that pathway anyway, you could craft it in a way that you wanted to with distinctions. But it sounds like you have not had those conversations about possible differences that could occur.

And last one from my colleague. Did you consider any equity caps, CEO compensation caps for the IOUs? And then kind of bringing it back to a question that I had in the first panel specifically tied to things or dividend payouts, any of those types of market mechanisms when an IOU has not either settled or has adequately compensated folks, whatever that metric ends up being measurable, whatever we define measurable as.

I appreciate that. Thank you. Okay. Thank you. All right. Thank you. I've got a number of questions. I want to ask a couple, and then I'm happy to turn it back to Assemblymember Papen, and I'll continue. But actually, before I dive in, I kind of want to share, I guess, my context, both for this conversation and as we continue to dig into this report and potential legislative action. And I guess I'll start by saying, I think similar to Mr. Fisk, the point that you made. I think we need to remind ourselves that we're talking about it's all the same people, whether we're talking about survivors or we're talking about California rate payers, California insurance policyholders, California taxpayers. Ultimately, it's all of us. And so this conversation, in my mind, is not going to be about what's good for the IOUs, what's good for the attorneys, what's good for the insurance companies. It's about what is good for Californians. And so I think the two questions that I have as we enter that conversation is, number one, is there a way for us to ensure that victims are compensated, but in a way that we are able to lower system costs? And I'm going to refer back to Mr. Abrams' graphic here that he shared with us that shows that there's potentially some opportunity to rationalize some of this and create system savings so that we ensure we've got the money to make victims whole. So that's kind of my first big question. The second question is, is there an opportunity for us to shift how we socialize some of these costs, not just to rearrange the deck chairs on the Titanic, but because it ends up being more fair or it ends up incentivizing behavior in ways that the current construct does not? And so, like, those are my two big questions. And I guess I just want to ask one thing before I pass it to Ms. Patman and bring it back. So Mr. Dixon, kind of with the, again, the victims, the survivors front and center, of every dollar in wildfire settlement, how much actually reaches the survivor? Do you have an estimate for that?

Okay, so your estimate, and I know you'll get back to us with your thorough analysis, but the estimate is of every dollar that's getting put into the system, say 60 to 65 cents is actually making it to survivors. So, Mr. Fisk, when you were offering your opening comments, You spoke about the work that you have done in prosecuting some of these cases. And I guess what I'm trying to understand is that this is a very unique system. So the existence of inverse condemnation means that if a utility piece of equipment is involved, they are liable. So I guess I don't understand why is – why do we need a system where then 35 to 40 cents of every dollar is going to legal support when in the Constitution there's nothing to prove they're liable?

But what I hear you say, and maybe I misunderstood this, what I hear you say is actually given inverse, we shouldn't need to have 35 to 40 percent of the funds getting paid to someone other than survivors. The reason in your view that's happening is because of the litigiousness of the defense attorneys.

Got it. All right. And then I know Assemblymember Pepin had a question. Thank you, Madam Chair.

That may be. But what I'm suggesting is perhaps that's something we tweak along the way. So if prejudgment interest is allowed, maybe that element goes up depending upon whether or not, as you say, an IOU doesn't want to settle with you. The longer it takes, the higher the interest rate goes up. I'm just, while we're talking about trying to change the equation and look for incentives, that might be one thing. That's why I was coming out of my seat when you were talking. Thank you, Madam Chair. Thank you. Assemblymember Calra. Thank you. And first of all, that's a

to even further delay and further litigation than we already have. Can I ask a somewhat follow-up question? And several of you, both of our witnesses in the prior panel, talked about the importance of aligning incentives. And that's a theme that has come out in this committee on numerous topics. So I'm interested in anyone's perspective. What does that mean in practice? What are some practical things that you think we could do to better align incentives in order to achieve the right outcomes, whether that means a more wildfire resilient system or a quicker recovery for the community. Anyone? Anyone? Go for it. Sure. Thank you. I think that's one of the

the destruction that's causing them if they do occur. Any other perspectives? How do we indeed actually align incentives? I just want to mention one more thing maybe I have before. I don't think

All right, Mr. Valero, I want to ask you a couple of questions. So I'm looking at your thank you for providing us with this kind of frame for the way that LADWP is thinking about a path forward. And I think it is super important to note that, as some folks in testimony noted, POUs have not had the same experience as IOUs. I think as we are seeing the climate become drier, hotter, the hotness become hotter, the winds become windier. I think you and other POUs across the state understand that you two are going to be grappling with these disasters. So I appreciate you being here and being part of this conversation. Can you just – I want to ask a couple of questions about kind of your proposal or how you're thinking about this. So say more about – I think you said it's the equivalent of 3.1.1, but under the liability cap backstop pillar, when you say state-administered utility liability program, what does that mean? Is that like a fast do you mean fast pay program What is that So in terms of kind of that liability cap backstop and what we associate with 3

Got it. All right. And then the second pillar is targeted damages reform and modifications to subrogation. When you were talking about that, you talked about a need in your view to set limits on non-economic damages. Can you talk a little bit more about that?

And Mr. Jackson, how much of, again, that $38, I think you said billion dollars, how much is non-economic damages? And can you tell us a little bit, give us a flavor for what non-economic damages include?

That's helpful. Thank you. All right. And I interrupted you. Mr. Valero, I keep wanting to just call you Fernando, not very professional. Mr. Valero, talk us through column three,

Thank you. And it's super helpful. Thank you. I appreciate that. Let me see. Let me ask another question. I don't remember who mentioned this. Someone asked about the role of or mentioned the role of hedge funds and private equity. I think maybe it was you, Mr. Fisk, but you were talking about it, I think, in the context of the IOUs. When we were digging into some of these issues in the aftermath of the Palisades and Eaton fires, there was a lot of concern that we were seeing lots of hedge funds and private equity firms actually buying up claims. Is that happening? And because I think back to sort of the pie, like we got to make sure the pie is going I is going to make victims whole. We can't have a bunch of random folks kind of taking slices of the pie. So I think a lot of us were very concerned with reports that we were seeing this kind of turned into an industry that was being backed by hedge funds and private equity.

Great. Everyone was nodding. So this is one area of agreement. Good, good. All right. Any additional questions? We're making progress. Thank you, Mr. Kalra, Ms. Poppin. All right, any additional questions? Well, actually, with that in mind, lightning round, because I think you also said that IOUs should only be able to socialize costs if they've demonstrated that they've met the highest safety standards. Does everyone agree with that?

I mean, it is a complicated question. There are tradeoffs, right? I mean, because, you know, you don't want them to do everything that's incredibly expensive because there's other places you could spend those dollars better. So it's what defines having met the highest safety standards. Yes. It's like doing an appropriate social cost benefit analysis. Is that where you should spend that dollar versus in a community or a home place? All right. I have one last question. I know it's been a long hearing, and I think you all have – many of you have appeared at multiple hearings in the last 24 hours. So thank you. A question, I don't know that you contemplated it in the report, but perhaps you did. Should we be treating things differently if we're talking about a utility-caused wildfire where the utility was indeed negligent versus a utility-caused wildfire where they did everything right and there was that Mylar balloon or the squirrel that just ate a wire? Should we have a different approach and a different framework for those two different situations? Perhaps, Tom, you start.

and those that are arising from more challenging circumstances that do involve inappropriate substandard behavior by the utilities. May I comment on that?

I'm not familiar with the legal theory where the balloon flies into the utility and inverse applies. So I think there's a lot of misunderstanding around inverse. So inverse condemnation comes from the notion. Inverse applies if any piece of utility equipment was involved in ignition of any wildfire under any circumstances. I think that's the misunderstanding. I do not think so. I know I'm not a lawyer, but that much I know. And Tom is right next to you and also going, huh?

I am a lawyer, and I litigate this in case, and I've read all the case law. It's the intended use and design. The intended use and design of the infrastructure has to cause the fire. The intended use and design. So let's say, for example, let's be even more ridiculous than a mylar balloon. Let's say a rocket ship careens out of control and lands into the tower. If it's not the intended use and design that causes the fire, then inverse does not apply. So you first have to have the intended use and design. And we went through this in 2018 and we went through this in 2019. I was here for almost every week during the legislative sessions of those two years, and we did a lot of education around inverse condemnation. And so first, I just want to lay that down. I don't think it's as when we go to prove inverse condemnation, we are still proving causation. The lawyers still have to hire the experts that say this is how it happened. This is exactly what happened. It's the lack of the grounding. It's the fact that they did not – they knew that there was a tree – they have eminent domain powers.

That's where this all comes from. The state has given investor-owned utilities eminent domain powers.

Yes, eminent domain powers allow the investor-owned utilities to place these poles, place these lines, place these towers wherever basically they want to, and then they have to pay compensation on the eminent domain side. If the intended use and design of the structure causes the wildfire, then they're liable under inverse condemnation. They could, in addition to that, in the operation of the intended use and design, be additionally negligent or, in some cases, criminally liable. So there's three different layers, but we still have to prove causation, which takes an enormous amount of work from the expert's perspective. I'll give you a for example. Mr. Abrams, I'm always impressed when I hear him speak, as well as Ms. Chen. He had a very unique experience in the PG&E bankruptcy, and in fact, that fire that he was in was the Tubbs fire. And in that fire, there was actually a finding by the Cal Fire Report that said it's inconclusive. So the lawyers, ironically, in that fire had to prove that there was PG&E liability due to the intended use and design. So the notion that there no limit whatsoever on the liability I don necessarily agree with So that one Two I was commenting to some others before I joined this panel that the largest thing that I think was missed because I met with a lot of legislators in 2018 and a lot in 2019 when AB 1054 was being crafted, and the sentiment was that there was always going to be a balancing for the reimbursement of the reimbursement. That AB 1054 was intended to allow the CPUC to review the conduct and require the utilities to repay when they've been negligent. So to answer your question, what I would do is I would lift the cap of SCE having to pay back the $4 billion. dollars. Because if all they have to pay back the $4 billion, then the presupposition in the CEA report that the Eden Fire is going to exhaust the AB 1054 fund is much more true than it is if it wasn't capped, because then SCE would have to use its profits to pay back the 1054 fund and it could last longer. There was a discussion among the legislatures that this fund was going to last longer because the IOUs were going to be required to pay back the fund when they got reimbursed from the fund if they've been negligent or non-prudent, imprudent. So that history has been lost somewhere in this that the original design of the fund needs to go back and forth.

I'd be happy to answer your question.

No, the answer is yes, they should be treated the same. There should be a uniform response no matter the cause of a fire. The survivors should experience an improved outcome in any of those cases. There are ways to hold utilities accountable outside of the immediate response in the aftermath of a fire, and those are available. But I think the response from a community to all Californians, they should know that there's a response available for them to get communities back quickly following a fire, regardless of cause or regardless of negligence. So, yes, we should treat them differently.

The same.

Yes.

I would just buoy off of what he said. I would agree. We should treat them differently.

Hi, good evening. Yes, I guess it is good evening. It was good afternoon, but here we are. Chris Rose on behalf of NRDC Action Fund. Madam Chair, thank you to you and your staff for this robust discussion. It's very helpful and needed. As Dr. Skinner stated in his testimony, approximately 20% of California's electricity bills goes to wildfire-related costs. Those costs discourage electrification and regressively fall on low-income households. We ask for a wildfire funding solution that prevents future utility bankruptcy and stabilizes insurance markets, not through the electric bills, but through a more durable and equitable funding source. Thank you very much.

Good evening, Madam Chair and remaining members of the committee. Amanda Walsh with the Orange County Business Council. OCBC agrees with the CEA report and asks that the legislature take action. California's wildfire crisis is no longer just an environmental issue. In fact, it's an economic and affordability crisis impacting families, workers, small businesses and entire communities across the state. And right now, wildfire victims can wait years for compensation with legal fees and outside speculators taking a significant share of their recovery dollars. And at the same time, insurance instability is making it harder for Californians and businesses to recover, yet alone invest. The Wildfire Victims First Fund is about restoring stability through prevention, affordable, and comprehensive insurance coverage and faster fare compensation for its victims. And for the business community, that means faster building, reopening businesses, restore jobs, restoring local economies. Prevention, insurance, stability, and recovery forms all of the essentials to protecting California's long-term economic future and ensuring wildfire victims come first. Thank you. Thank you.

Thank you.

Thank you.

Thank you.

Thank you.

Hi, thank you for having us.

Hi If I seem flustered it because I just found out my grandma in the ICU and so she not expected to make it through the night And we lost my grandpa three days after the Tubbs fire. So my name is Melissa Geisinger. I'm a survivor of the Tubbs fire. I live in Santa Rosa and Coffee Park, and I'm an author, among other things. And I'm also a fifth generation Californian, and I'm proud to be. I love being a Californian because we set the bar for the rest of the country in so many ways. And we are in a very unique position to set a precedent and set an example for everyone else because it's not going to get better with these fires. In 1906, my great-grandmother was six years old when her home in south of Market in San Francisco was destroyed by the great earthquake and then burned. I was in the process of writing a book about the 1906 earthquake and fires when the Tubbs fire happened. So I was in a unique position to see and learn from and experience it from a different angle, from a different perspective. I believe that what's passed down is not just the stories that we hear from our ancestors, but infrastructure, improvements, and policy. All of those are equal. So what stories are we going to be telling our kids that are going to be passed down? And what world are we going to have 100 years from now where we can look back and say, this is the moment where it became better. This is what we learned, and this is how we improved. My son was in my tummy. I was seven months pregnant during that fire. We lost our home. I lost my business. He was born with a severe heart defect, and so we had a whole lot of trauma that happened all at once. and he's fine now. We moved about eight times during three years before we wound up back home. I also lost my marriage. That's a whole other thing. But my son now is eight and he knows about the fire and he's scared to be alone in the house because he worries about it. And he's on the autistic spectrum and he asks me, why? How did the fire start? And I told him about the utilities being responsible. Did they say they were sorry? Well, yes, but did they make it right? Not so much. I want my son to grow up thinking that the world is fair and there's equal compensation and accountability for utilities as they offer companies and people. So that's what I have to say about that. Thank you.

Thank you for your time and for staying late. I appreciate it. My name is Doreen Zimmerman. I am a PG&E Campfire Survivor, Utility Wildfire Survivor Coalition Advocate, and I am a property valuation expert who specializes in devastated markets nationwide. However, today I'm here on behalf of my late husband, Todd, who passed away in 2024 through California medical aid in dying During his final hours with me he repeatedly apologized that the life we had built together over 47 years was gone because of the fire and that he had to die before we were ever made whole. Not one more person should ever have to die, apologizing for their devastated finances resulting from a utility-caused wildfire on their deathbed. Not one more person. I ask this committee to support any and all avenues from AB 2700, AB 1774, and to amending the Wildfire Fund to allow fast, fair, and full restitution to all utility-caused wildfire victims and to reject any portion of AB 2054 study that is not aligned with making past, current, and future victims whole, fast, fairly, and fully. Not one more person should have to perish apologizing. I ask for that consideration. Thank you.

Good evening. Again, thank you all for staying here so late. My name is Andrea. I'm a campfire survivor. My family lived in Paradise for almost 20 years before the death of a state of fire that destroyed our community and nearly everything we possessed. My husband, Dave, and I raised our youngest child there, who was a student at Butte College at the time. Dave worked at local granite businesses both in Chico and Paradise until a few years prior to that, and I had just passed the one-year mark of working at JCPenney's in Chico. We still feel a deep connection to the area despite or because of how we've managed to continue to thrive. As renters, unlike most of the people you hear are homeowners, so we realize we will most likely never be able to go back home. But not being fully compensated in a timely manner has kept my family members in limbo for over seven years. After two months of staying in hotels and with the over demand for housing in Butte County, we ended up renting a house here in Sacramento that cost over $400 a month at the time. It is now $1,000 more than what we paid in Paradise. How are we supposed to stay saved to buy a home of our own if everything costs more, especially the utility rates from the felonious company that caused the destruction in the first place? The trauma has affected us all in various ways. Since we were essentially homeless in a hotel, Dave only took the day after the fire off because he felt like he needed to keep working to keep us off the streets. The stress from the fire and the work eventually caused him to have seizures right after we moved down here, and he was unable to work for over two years. Our child was unable to get into Sac City College because of overcrowding, so moved to Tahoe to work and never finished schooling as planned. I, myself, was the one who was home the morning of the fire, along with my brother-in-law, so I saw firsthand the damage in real time as we escaped with a little more than a couple totes of important papers. and my mom's and dog's remains. I struggle with the breathing issues, survivor's guilt, and random PTSD moments. All of the survivors are utility-caused fires like us deserve fully compensated, not at the expense of the customers. PD&E has posted record-breaking profits every year since 2018 and given themselves raises while claiming banks were upseat to get out of paying nuts. Do not let these companies continue to avoid consequences through deadly actions. Support the survivors, the ratepayers, and your constituents by improving the recovery system. Thank you for your time.

Chair members, Nate Sullivan on behalf of Liberty Utilities, sorry, serving 50,000 customers in the Lake Tahoe area. As a worldwide travel destination, we're visited by over 15 million tourists each year. Nearly our entire service area is in a high-fire zone. We invest heavily in wildfire prevention and mitigation, enhanced vegetation management, system hardening, inspection regimes, weather monitoring, and operation protocols that often exceed baseline requirements. Yet despite this preventative work, Liberty remains exposed to a catastrophic risk that we cannot reasonably manage under current law. If a major wildfire were to occur even absent negligence Liberty faces potentially existential liability due to California strict liability and inverse condemnation framework Unlike the state three largest investor utilities Liberty does not have access to the Wildfire Fund as a meaningful safety net We're hopeful that reforms can be implemented this year to address these issues that are unique to small multi-jurisdictional utilities like ours. And just on an anecdotal note, our wildfire liability costs were around $1 million in 2019. They're now over $30 million. So in addition to the utility having to shoulder those costs, also the individual homeowners and residents in our service area are facing increased insurance rates as well. So we're hopeful that this discussion can lead to meaningful reform. Thank you so much.

Hello. Short. My name is Tanya Quilla. I'm a Tubbs Fire Survivor from 2017. I don't have a speech planned. I didn't really plan on speaking, but decided I'm going to take this opportunity. I'm actually here today because my daughter is a light sleeper. All eight of my neighbors, all eight homes left. We are alive today because of our daughter and because of my husband's driving skills. I am thankful to be alive. Within three weeks of staying at my mother home after we lost everything I came up with a crazy idea let live in a fifth wheel Because we could not afford the rent because the rent increased so much So we lived in about 300 square feet, our family four, two dogs and a cat for one year. On a family's residence where we got a tremendous amount of harassment. We paid off our debt and we bought a home. Since the fires, there's a lot of issues to deal with knowing that all of these people left me and my children and left without saying anything. Family members that evacuated, many family members, and never not a word to us. We live with that. We're hoping for this compensation to at least have some type of closure with this. We have waited nine long years. Thank you for letting me speak. We are a success story because we lived in that trailer. If we would have rented, we'd still be struggling now. Thank you for letting me speak.