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HB 2275 - Wildfire prevention ¶

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Section 1 ¶

The legislature finds that the increased cost of catastrophic wildfires poses an immediate and growing threat to communities, infrastructure, and property in all regions of Washington state. Changing climate conditions and development patterns in the wildland urban interface increases both the likelihood and severity of wildfires capable of consuming entire communities in a single event.
The legislature further finds that the state must enact policies that both mitigate wildfire risk and prepare Washington to respond effectively when catastrophic wildfires occur. The scale and speed of modern wildfire events require proactive planning, financial readiness, and coordinated oversight to protect lives, property, and essential public systems.
The legislature recognizes that a wildfire prevention and protection fund can support both objectives. Such a fund can provide justice for wildfire victims by creating a reliable and timely pathway to compensation when catastrophic losses occur. The legislature finds that victims of catastrophic wildfires are diverse and include tribal governments, local governments, timberland owners, homeowners, renters, and small businesses; many of whom lose not only property but housing, livelihoods, and community stability. All stand to benefit from the existence of a predictable, well-structured fund.
The legislature further finds that the fund should also support wildfire mitigation, prevention, and resilience efforts. Investment revenue generated by the fund may be used to restore forest health, reduce hazardous fuels, and help vulnerable communities harden through measures such as forest health practices and vegetation management, defensible space, and removal of burnable material around homes and critical infrastructure. These investments reduce future wildfire risk and lessen the severity of catastrophic events.
The legislature acknowledges that electric utilities are not the sole cause of wildfires, but utility-related ignitions can result in some of the most destructive and costly wildfire events. The magnitude of potential liability from such events threatens utility solvency, destabilizes insurance markets, increases costs for consumers, and jeopardizes the reliability of essential energy infrastructure. The legislature therefore intends that the fund also supports utility financial stability, protects ratepayers from extreme cost shocks, and helps maintain affordable and reliable service for Washington consumers.
The legislature further finds that Washington cannot rely solely on the federal government to respond to catastrophic wildfires that destroy entire communities. Federal assistance may be delayed or insufficient to address the full scope of losses experienced by victims and local governments. The state must establish its own capacity to respond decisively to catastrophic events.
The legislature therefore intends to establish a wildfire prevention and protection fund as part of a comprehensive wildfire resilience strategy that:
1. Provides timely and equitable compensation to victims of catastrophic wildfires;
2. Supports mitigation, prevention, and infrastructure hardening to reduce future wildfire risk;
3. Preserves the financial stability of essential utilities and protects consumers from excessive rate and insurance impacts; and
4. Creates a flexible framework capable of evolving as wildfire risk, climate conditions, and best practices change over time.
The legislature further intends to establish a wildfire protection and prevention council to oversee the fund, guide investment and mitigation priorities, and take other necessary actions to protect the state from wildfire risk. The council shall promote accountability, transparency, and coordination across agencies, utilities, local governments, tribes, and affected communities. By establishing this framework, the legislature takes a measured and forward-looking step to address the reality of catastrophic wildfire risk while advancing justice for victims, strengthening prevention and mitigation efforts, protecting consumers, and safeguarding Washington's long-term economic and environmental health.

Section 2 ¶

The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

"Administrator" means the fund administrator selected by the commission.
"Consumer-owned utility" has the same meaning as in RCW 19.29A.010.
"Council" means the Washington wildfire prevention and protection council.
"Covered wildfire" means any wildfire that is caused by an electric utility's negligence.
"Department" means the department of natural resources, or its authorized representatives, as defined in chapter 43.30 RCW.
"Electric utility" means an electrical company or a consumer-owned utility.
"Electrical company" has the same meaning as in RCW 80.04.010.
"Fund" means the wildfire prevention and protection fund.
"Fund contribution" means a one-time payment to be made by each electrical company to the fund.
"High risk customer" means an electric utility customer in a service territory that has been designated by the department under RCW 43.30.580 or by the United States forest service as having a high wildfire hazard potential.
"Participating electric utility" means an electric utility that has satisfied the eligibility requirements of the fund.
"Wildfire fund annual contribution" means the annual contribution that participating electric utilities must pay to the administrator for deposit in the fund.

Section 3 ¶

The Washington wildfire prevention and protection council is established to implement and administer the fund. The council's primary responsibilities consist of:
1. Oversight and guidance of the fund;
2. Selecting and directing an administrator for the fund to oversee operations;
3. Setting and collecting a fund contribution that would establish a balance sufficient to implement and administer the fund through the first full fiscal year of operation;
4. Setting and collecting the wildfire surcharge for participating electric utilities under section 4(3) of this act;
5. Providing recommendations to the legislature on the structure of the fund and any potential improvements, as appropriate.
The council shall consist of 15 members and be comprised of the following members:
1. One representative from each of the following:
  1. The department, appointed by the commissioner of public lands;
  2. The utilities and transportation commission, appointed by the chair of the utilities and transportation commission;
  3. The office of the insurance commissioner, appointed by the insurance commissioner;
  4. The office of the state treasurer, appointed by the state treasurer;
2. The office of the governor, appointed by the governor;
1. Tribal governments, appointed by the board of natural resources;
2. The energy resilience and emergency management office of the department of commerce, appointed by the director of the department of commerce;
3. Investor-owned utilities, appointed by the board of natural resources;
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 ix. Rural electric cooperatives, appointed by the board of natural resources;
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1. Public utility districts, appointed by the board of natural resources; and
1. The public, appointed by the board of natural resources;
1. Two members from the senate, with one member appointed from each of the two largest caucuses in the senate by the president of the senate; and
2. Two members from the house of representatives, with one member appointed from each of the two largest caucuses in the house of representatives by the speaker of the house.
The members of the council shall select a chair and vice chair from the members representing a state agency or tribal government.
The members of the council may receive reimbursement for travel expenses in accordance with RCW 43.03.050 and 43.03.060, and are eligible for compensation under RCW 43.03.250.
The council shall meet as often as necessary at the call of the chair or by vote of the council, but not less than quarterly. A majority vote of the members of the council is required for any vote or official action by the council.
The council shall direct the administrator to prepare and present for approval a plan of operations related to the operations, management, and administration of the fund on an annual basis. At least annually, the council shall direct the administrator to present the plan of operations to the appropriate policy committees of the legislature. The plan shall include, but not be limited to, reporting on the fund assets, projections for the durability of the fund, the success of the fund, and whether or not the fund is serving its purpose.
The department shall provide secretarial and administrative services for the council and shall serve as custodian of the records.

Section 4 ¶

There is established a fund for the purposes of reimbursing eligible claims paid by electrical companies and consumer-owned utilities for damages that resulted from a covered wildfire. Electrical companies must participate in the fund and pay the fund contribution set by the council under section 3(1)(c) of this act. Consumer-owned utilities may elect to participate in the fund. All electric utilities participating in the fund must comply with the requirements of this section to maintain eligibility for disbursements from the fund.
To maintain eligibility for the fund, a participating electric utility must:
1. Remit to the administrator of the wildfire fund an annual contribution set by the council. A participating electric utility may collect a surcharge from its customers to cover the cost of the wildfire fund annual contribution in the form of a cost recovery rider, provided that it provides a discounted rate to low-income customers consistent with RCW 80.28.068;
2. Comply with the utility's submitted and approved wildfire mitigation plan. Submission and approval of an electrical company's wildfire mitigation plan shall be consistent with RCW 80.28.445. For consumer-owned utilities, wildfire mitigation plans created consistent with RCW 19.29A.170 must be submitted to the council for approval; and
3. Maintain commercially reasonable wildfire insurance coverage.
The council shall annually review and set the:
1. Wildfire surcharge for each participating electric utility. The council may set the surcharge for participating consumer-owned utilities at a lower rate than electrical companies. In setting the surcharge, the council must consider the:
  1. Balance of the fund and a fund reserve level sufficient to support:

(A) The expected liabilities of the fund over the current and next fiscal biennium; and

(B) The administration of the fund;

    ii. Market share of each participating electric utility; and

    iii. Number of customers and high risk customers of each participating utility;

b. Damages threshold for fund eligibility for each participating electric utility, based on the number of high risk customers the utility serves and the miles of transmission lines the utility owns and operates. The damages threshold shall be the amount of damages from a covered wildfire for which each participating electric utility is responsible before it can seek reimbursement from the fund. Once the damages for a covered wildfire surpass this amount, the participating electric utility can seek reimbursement from the administrator for excess liabilities that surpass the threshold.

To be eligible for payment under this section, a claim must:
1. Be made by an electric utility meeting the eligibility requirements of this section;
2. Be for third-party damages against the electric utility;
3. Result from a covered wildfire that occurred after July 1, 2021; and
4. Exceed the electric utility's damages threshold.
The payment of a claim under this section is conditional on the availability of specific funding for this purpose, and nothing in this section shall be construed to create an entitlement to reimbursement or payment of any claim. The total amount paid for claims may not exceed the amounts available in the account established in subsection (6) of this section.
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1. The wildfire prevention and protection account is created in the state treasury. All moneys received by the administrator from participating electric utilities must be deposited into the account. Expenditures from the account may be used only for payments of claims to electric utilities pursuant to and for the administration of the fund, including expenses incurred under sections 3, 5, and 13 of this act. Only the administrator or the administrator's designee may authorize expenditures from the account. The account is subject to allotment procedures under chapter 43.88 RCW. An appropriation is required for administrative expenses, but not for payments of claims.
2. Investment earnings received by the wildfire prevention and protection account shall be transferred to the wildfire response, forest restoration, and community resilience account in RCW 76.04.511 at least annually.
3. On the last business day of June of each year, the state treasurer, based upon information provided by the department, must transfer from the wildfire prevention and protection account to the wildfire response, forest restoration, and community resilience account in RCW 76.04.511 a sum equal to the investment earnings received by the wildfire prevention and protection account posted during the current fiscal year.
The council may adopt rules to implement this section. Any rules adopted under this section must be made publicly available on the website of the department.

Section 5 ¶

The administrator shall carry out the duties of the council in administering the fund and may, subject to the approval of the council:
1. Retain, employ, or contract with officers, experts, employees, accountants, actuaries, financial professionals, and other executives, advisers, consultants, attorneys, and professionals as may be necessary in the administrator's judgment for the efficient operation and administration of the fund;
2. Receive and deposit in the fund any remitted fund contributions and wildfire fund annual contributions;
3. Enter into contracts and other obligations relating to the operation, management, and administration of the fund;
4. Review and approve claims and provide funds to the participating electric utilities for the purposes of paying eligible claims, in accordance with section 4 of this act;
5. Buy insurance or take other actions to maximize the claims paying resources of the fund;
6. Pay costs, expenses, and other obligations of the fund;
7. Take any actions necessary to collect any amounts owing to the fund from participating electric utilities;
8. Require repayment of any funds disbursed to an electric utility for claims related to a covered wildfire for which the utility acted with gross negligence, willfulness, or intentionality as determined in a finding by a court of law after a final disposition of the case has been reached;
  1. Undertake such other activities as are related to the operation, management, and administration of the fund, as approved by the council.
The salary of the administrator shall be set by the council in accordance with RCW 43.03.040. The administrator is a state employee for purposes of chapter 42.52 RCW.