Utility Liability and Grid Modernization: A Path to Reducing Wildfire Risk and Protecting Consumers

October 12, 2023 by Julie Tolmie

Electricity transmission and distribution lines ignited more than 32,000 wildfires in the U.S. from 1992 to 2020, according to a report published by the U.S. Forest Service.

To prevent more devastating wildfires and take advantage of a recent surge in federal funding, utilities should invest in improving electrical infrastructure.

Early on the morning of August 8th, a power line operated by the utility company Hawaiian Electric ignited one of several wildfires that swept across the island of Maui.[1] The Maui wildfires eventually became one of the United States’ deadliest natural disasters[2] and the latest in a series of wildfires started by electric utility infrastructure; electricity transmission and distribution lines ignited more than 32,000 wildfires in the U.S. from 1992 to 2020 alone.[3]


The process of holding utilities liable for the damage wildfires inflict varies between jurisdictions. In most states, plaintiffs suing a utility for wildfire damage must show that the utility acted with recklessness or negligence.[4] In California, however, “inverse condemnation” imposes strict liability; a utility can be held liable for a wildfire so long as some piece of its infrastructure helped spark the fire.[5]


Regardless of the legal standard applied, a utility’s liability can reach millions, or even billions, of dollars. Following the 2018 Camp Fire in California, which was ignited by a faulty transmission line, Pacific Gas and Electric (PG&E) faced 750 wildfire-related lawsuits.[6] It ultimately reached a $13.5 billion settlement for several 2015-2018 wildfires, including the Camp Fire.[7] In January of 2019, PG&E declared bankruptcy.[8] More recently, Xcel Energy reported that its liability for the 2021 Marshall Fire in Colorado could exceed $500 million.[9] And this summer, an Oregon court ordered PacifiCorp to pay $90 million in damages for starting four of the 2020 Labor Day wildfires.[10] PacifiCorp has estimated that another wildfire-related lawsuit, an ongoing class action suit, could impose additional costs that reach into the billions of dollars.[11] It’s not yet clear what Hawaiian Electric will have to pay in damages for August’s wildfires, but the amount could be large; Maui County’s lawsuit against the utility seeks damages for a suite of injuries, including losses to public infrastructure, revenues, and historical and cultural landmarks, along with the cost of fire response and environmental damage.[12] Law firms have also brought claims against Hawaiian Electric on behalf of the wildfire’s victims.[13]


When a court finds a utility liable for starting a wildfire, electricity customers may end up bearing the cost. A few days after PacifiCorp was ordered to pay $90 million in damages, for example, the utility asked the Oregon Public Utility Commission to allow it to defer costs related to wildfire liability until June of 2024.[14] Doing so would allow PacifiCorp to add those costs to customer rates.[15] PacifiCorp made this request after it had already raised customer rates once that year for expenses related to wildfire mitigation.[16]


To reduce the risk of wildfire and prevent customers from incurring the high costs associated with it, utilities should update equipment and plan for extreme weather events.[17] Utilities can create a plan to preemptively shut off power to electric lines during dangerous weather conditions, such as high wind events.[18] To assist with safe power shutoff, they can invest in weather stations that will improve their understanding of fire conditions.[19] Utilities can also move power lines underground to protect them from storms and high winds, and they can focus these efforts on regions with high fire risk.[20] There are also cheaper options that could help reduce the risk of wildfire: installing cover conductors to protect lines from accidental contact with trees and brush,[21] and strengthening aboveground infrastructure by making utility poles out of stronger and more fire-resistant materials such as steel instead of wood, then securing the poles to the ground using guy wires.[22]


Although electricity consumers may pay part of the cost of these infrastructure improvements through higher rates,[23] a recent surge in federal funding can help reduce the price tag. The Infrastructure Investment and Jobs Act, for example, will provide states, Territories, Tribes, and the District of Columbia with $2.3 billion to increase grid resilience across the country over the next five years.[24] Hawaii will receive $95 million to strengthen its power grids[25] and California will receive $67.4 million, with the option to apply for additional funding in the future.[26] $3.9 million in funding from the Act will also be awarded to several research teams to test, scale up, and transfer knowledge about building national resilience to wildfires and floods.[27]


As wildfires become increasingly common in the American West, utilities must act quickly to prevent future fires. Ultimately, the cost of wildfires—billions of dollars in liability and loss of human life—is higher than the cost of improving electrical infrastructure.


[1] Adeel Hassan & Anna Betts, Maui Wildfires Latest: Lahaina Reopens to Residents, N.Y. Times (Sep. 29, 2023), https://www.nytimes.com/article/maui-wildfires-hawaii.html.  

[2] Id.

[3] See Spencer Kimball & Gabriel Cortes, Electric Utilities Face Billions in Wildfire Liability with Aging Power Lines Risking Another Catastrophe, CNBC (updated Aug. 28, 2023, 4:12 PM EDT), https://www.cnbc.com/2023/08/28/wildfire-risk-electric-utilities-face-billions-in-liability-with-aging-lines.html.

[4] See Jake Bittle, Utilities Are Getting Sued Over Wildfires. Who’s Bearing the Cost?, Grist (Aug. 18, 2023), https://grist.org/wildfires/utilities-lawsuits-wildfire-pg-e-pacificorp/.

[5] See id.

[6] Simmone Shah, Hawaiian Electric Lawsuit is More Evidence that Electric Grids Across the U.S. Need Updating, Time (Aug. 18, 2023, 7:00 AM EDT), https://time.com/6306121/maui-fire-hawaiian-electric-grids/.  

[7] Richard Gonzales, PG&E Announces $13.5 Billion Settlement of Claims Linked to California Wildfires, NPR (Dec. 7, 2019, 12:05 AM ET), https://www.npr.org/2019/12/07/785775074/pg-e-announces-13-5-billion-settlement-of-claims-linked-to-california-wildfires.

[8] Shah, supra note 6.

[9] Kimball & Cortes, supra note 3.

[10] Id.

[11] Ryan Haas, Pacific Power Potentially Wants its Customers to Pay $90M in Wildfire Liability, Oregon Public Broadcasting (Jun. 16, 2023, 5:29PM), https://www.opb.org/article/2023/06/16/pacific-power-pacificorp-lawsuit-wildfire-2020-public-utility-damages/.

[12] 8-24 County of Maui Files Lawsuit Against HECO for Civil Damages Caused by Recent Maui Fires, County of Maui (Aug. 24, 2023), https://www.mauicounty.gov/CivicAlerts.aspx?AID=12759.

[13] Hassan & Betts, supra note 1.

[14] Haas, supra note 11.

[15] Id.

[16] Id.

[17] Shah, supra note 6.

[18] Id.

[19] Id.

[20] Id.

[21] Id.

[22] See Matt Simon, Burying Power Lines Prevents Wildfires. But There’s a Cost, Wired (Sep. 1, 2023, 11:04 AM), https://www.wired.com/story/the-high-stakes-calculus-of-preventing-wildfires-by-burying-power-lines/.

[23] Id.

[24] Biden-Harris Administration Makes Historic Investments to Build Community Resilience, The White House (Jun. 19, 2023), https://www.whitehouse.gov/briefing-room/statements-releases/2023/06/19/fact-sheet-biden-harris-administration-makes-historic-investments-to-build-community-climate-resilience/.

[25] Urvi Dugar & Deep Vakil, US Approves $95 Million for Hawaii’s Electric Grid After Wildfires, Reuters (Aug. 31, 2023, 2:00 AM EDT), https://www.reuters.com/world/us/biden-administration-pledges-95-million-hawaiis-electric-grid-post-maui-fire-2023-08-30/.

[26] Biden-Harris Administration Makes Historic Investments to Build Community Resilience, supra note 24.

[27] Biden-Harris Administration Invests $3.9 Million for Flood and Wildfire Resilience Through Investing in America Agenda, National Oceanic and Atmospheric Administration (Sep. 28, 2023), https://www.noaa.gov/news-release/biden-harris-administration-invests-3-point-9-million-for-flood-and-wildfire-resilience.