PG&E filed for bankruptcy in 2019 after its equipment ignited fires that killed 84 people and destroyed 18,000 structures. The company faced $30 billion in liabilities. That was the warning shot.
Since then, California utilities have deployed a defensive strategy: Public Safety Power Shutoffs (PSPS) — intentionally de-energizing transmission and distribution lines when fire weather conditions are extreme. No power flowing through the lines means no sparks. No sparks means no utility-caused ignition. No ignition means no liability.
The problem: PSPS events cause their own devastation. Businesses lose millions per day. Medical equipment fails. Traffic signals go dark. Communities lose trust in the utility that's supposed to serve them. And the liability exposure isn't actually eliminated — it's just shifted from fire damage to economic damage and public safety failures.
There is another path: invest in the landscape to reduce ignition risk at the source.
the liability math utilities face
California's inverse condemnation doctrine holds utilities liable for fire damage caused by their equipment — regardless of negligence. If your line starts a fire, you pay. Period.
This creates an impossible calculation:
| Factor | Scale |
|---|---|
| Total transmission/distribution miles | 100,000+ miles for major IOUs |
| Miles in high-fire-threat districts | 25,000+ miles |
| Average liability per catastrophic fire | $1-30 billion |
| Annual vegetation management spend | $1-3 billion |
| PSPS economic impact per event | $65-100 million per day |
The current approach — more inspections, more PSPS, more liability reserves — is defensive. It manages exposure without reducing it.
why PSPS is not a long-term solution
PSPS events are increasingly unpopular with regulators, communities, and customers:
Economic impact — A single large PSPS event costs the California economy $65-100 million per day in lost productivity, spoiled inventory, and business disruption.
Health and safety — Medically vulnerable customers lose power. Traffic signals fail. Crime increases. The "safety" shutoff creates its own casualties.
Regulatory pressure — The CPUC is pushing utilities to reduce PSPS scope and duration. The easy defensive play is getting harder.
Reputational damage — Communities don't distinguish between "fire caused by utility" and "blackout caused by utility." Both erode trust.
Incomplete protection — PSPS reduces but doesn't eliminate ignition risk. Equipment can fail during re-energization. And PSPS doesn't address fires started by other sources that then damage utility infrastructure.
the alternative: landscape-scale fuel reduction
What if the vegetation around transmission corridors couldn't carry fire?
Fuel reduction — thinning, prescribed fire, vegetation management — changes the fire behavior in the landscape. A fire that encounters a treated corridor:
- Drops from crown fire to surface fire
- Slows spread rate
- Reduces flame length
- Becomes defensible by suppression crews
This doesn't eliminate all risk. But it fundamentally changes the probability and severity of fire reaching your infrastructure — and the liability exposure that comes with it.
what the treatment looks like
Effective utility corridor treatment goes beyond traditional vegetation management:
| Traditional VM | Landscape-Scale Treatment |
|---|---|
| Clear vegetation within right-of-way | Treat fuel loads 300-1,000 ft from lines |
| Tree-by-tree hazard removal | Continuous fuel breaks along corridors |
| Annual inspection cycle | Ongoing MRV with remote sensing |
| Compliance-driven | Risk-reduction-driven |
| Utility-only scope | Cross-boundary coordination with neighbors |
The difference: traditional vegetation management is about keeping trees off lines. Landscape-scale treatment is about changing fire behavior across the terrain your infrastructure crosses.
the fire-water nexus: why this matters beyond liability
Fuel reduction isn't just about fire prevention — it's about the water cycle.
As we detail in the fire-water nexus: why utilities should invest together, the forests you're treating for fire risk are the same forests that:
- Filter water for downstream water utilities
- Drive local precipitation through evapotranspiration
- Store snowpack that becomes regional water supply
- Regulate flood peaks for stormwater systems
When fire destroys a headwater forest, the 2002 Hayman Fire showed what happens: Denver Water faced $30+ million in emergency sediment response. Treatment costs spike for years. Reservoir capacity is lost to sedimentation.
The electric utility's fire becomes the water utility's sediment becomes the stormwater utility's flood becomes the region's drought.
This creates an opportunity: utilities that share the same watersheds can share the investment. An electric utility funding fuel reduction is also protecting water supply, reducing flood peaks, and maintaining the small water cycle that creates local precipitation.
Ensurance syndicates enable this coordination — pooling capital from multiple utilities around shared landscape outcomes. Each utility justifies through their own rate case, but the landscape gets treated as one system.
quantifying liability reduction
The key question for regulators and rate cases: how much does treatment reduce expected losses?
This requires fire behavior modeling that links:
- Fuel conditions — Pre- and post-treatment fuel loads
- Fire weather scenarios — Wind, humidity, temperature distributions
- Ignition probability — Given equipment failure rates
- Spread modeling — How fire moves through treated vs untreated landscape
- Damage estimation — Structures, resources, lives at risk
The output: a quantified reduction in expected annual loss that can be weighed against treatment costs.
Example framework:
| Metric | Before Treatment | After Treatment |
|---|---|---|
| Probability of catastrophic fire (per year) | 2% | 0.5% |
| Expected loss given catastrophic fire | $5 billion | $1 billion |
| Expected annual loss | $100 million | $5 million |
| Treatment cost (amortized) | — | $20 million/year |
| Net benefit | — | $75 million/year |
These numbers are illustrative — actual modeling requires site-specific analysis. But the framework shows how treatment investment can be justified on pure liability math, before considering PSPS reduction, community benefits, or ecosystem value.
funding mechanisms
How do utilities fund landscape-scale treatment?
Rate case recovery — Treatment costs can be recovered through rates if they demonstrably reduce risk and benefit ratepayers. The liability reduction math is the justification.
Wildfire funds — California's AB 1054 created a $21 billion wildfire fund that utilities can access. Similar mechanisms exist or are emerging in other states.
Partnership structures — Utilities can partner with land managers (USFS, BLM, private landowners) to share costs for treatments that benefit multiple parties.
Ensurance syndicates — Pool capital from multiple utilities facing similar corridor risks to fund regional treatment programs with shared benefits.
documentation for regulators
Rate recovery and liability protection require documentation that regulators accept:
| Documentation | Purpose |
|---|---|
| Pre-treatment fire behavior modeling | Baseline risk quantification |
| Treatment specifications | What was done, to what standard |
| Post-treatment verification | Confirming treatment effectiveness |
| Ongoing MRV | Continuous monitoring of fuel conditions |
| Liability reduction analysis | Quantified expected loss reduction |
This is where MRV (measurement, reporting, verification) becomes critical. Remote sensing, field verification, and continuous monitoring create the evidentiary basis for regulatory approval and liability defense.
what we do
BASIN helps utilities navigate landscape-scale fuel reduction through coordination, structuring, and advisory services:
Assessment coordination
- Connect utilities with specialists for fire behavior modeling and risk quantification
- Facilitate corridor-level prioritization based on liability exposure
- Coordinate PSPS reduction scenario analysis with technical partners
Treatment planning and coordination
- Cross-boundary treatment design across multiple landowners and agencies
- Coordinate between utilities, land managers, and contractors
- Facilitate landowner engagement and partnership structures
MRV and documentation
- Structure ongoing monitoring programs using remote sensing and field verification
- Coordinate third-party verification for regulatory-grade documentation
- Develop documentation packages that support rate case recovery
Funding structures
- Advisory support for rate case justification
- Syndicate formation for multi-utility coordination
- Ensurance certificate structures for ongoing treatment funding
See our full services catalog for details.
the window is now
Fire seasons are getting longer and more severe. Regulatory patience with PSPS is thinning. The liability exposure isn't going away.
The utilities that invest in landscape-scale fuel reduction now will have:
- Quantified liability reduction for rate cases
- Reduced PSPS scope and duration
- Improved community and regulatory relationships
- Actual risk reduction, not just risk transfer
The question isn't whether to invest in the landscape. It's whether to do it before the next catastrophic season — or after.
next steps
- Assess your highest-risk corridors — Where does fire behavior modeling show the greatest expected loss?
- Model treatment scenarios — What would landscape-scale treatment cost? What's the liability reduction?
- Identify funding pathways — Rate recovery, wildfire funds, partnerships?
- Talk to BASIN — Contact us about assessment coordination and syndicate formation
related reading
- the fire-water nexus: why utilities should invest together — How electric and water utilities can coordinate on shared watersheds
- want snow? invest in the water cycle — How healthy landscapes create precipitation
- why utilities are investing in watersheds instead of treatment plants — Natural infrastructure economics for water utilities