In an unusual and controversial move, Oregon’s second-largest electricity provider wants state regulators to protect it from paying huge sums of money for future lawsuits stemming from wildfire destruction.

PacifiCorp’s request comes just months after the utility lost a massive lawsuit in Multnomah County over its negligence in Oregon’s catastrophic wildfires of 2020, with more lawsuits pending and litigants seeking billions of dollars in damages.

PacifiCorp’s request, filed Oct. 24 but unpublicized until now, drew harsh criticism from wildfire victims, lawyers and ratepayer advocates, who questioned the company’s motives and the proposal’s legality.

The financial protections PacifiCorp is seeking would “only apply prospectively,” the company told state regulators. A spokesperson for the utility, Simon Gutierrez, said the request would have “no impact on ongoing litigation.”

PacifiCorp has asked the Oregon Public Utility Commission to limit future lawsuit awards against the company to “actual” damages for property and loss of life. As a condition of accepting electrical service with the utility, the rule would have customers waive their right to other types of damages such as non-economic and punitive awards by juries — the same kind of awards that a Multnomah County jury stung the utility with in June after finding its conduct before, during and after the Labor Day 2020 fires was grossly negligent, reckless and willful.

The utility, part of billionaire Warren Buffett’s Berkshire Hathaway conglomerate, has filed the same request in five of the six states where it provides electricity service, including Washington, California, Idaho and Wyoming. It comes as the utility faces major increases in its liability insurance rates and has seen its credit rating downgraded after large jury awards to victims of the 2020 fires.

PacifiCorp argues that limiting the type and financial scope of damages from wildfire lawsuits would protect customers from higher costs.

“Excessive wildfire damages pose a risk to all utilities in the West,” Gutierrez said in a written response to questions from The Oregonian/OregonLive. “We believe a reasonable limit on liability as allowed under Oregon law would be a net benefit to Oregon customers, as it would shield them from some of the costs associated with wildfire litigation. This proposal generally aligns with precedents from several western states.”

But the type of protections PacifiCorp is seeking appear far broader than examples cited by the company in its regulatory filing. And it’s not at all clear PacifiCorp’s customers — as opposed to the company’s shareholders — would ultimately be on the hook for its litigation losses.

The proposal also raises broader questions about whether other utilities could seek similar financial protections, if PacifiCorp’s request is ultimately approved by Oregon regulators, and what that could mean for future wildfire victims.

“This proposal is grossly beyond the pale,” said Sam Drevo, who was one of 17 named plaintiffs collectively awarded $90 million in economic, non-economic and punitive damages in June stemming from PacifiCorp’s role in four wildfires on Labor Day 2020.

“As a wildfire victim that lost everything in fires that were caused by PacifiCorp’s equipment, non-economic and punitive damages are the only punishment available in the legal system to stop negligent behavior from happening again,” Drevo said in an email. “I am shocked by this disgusting proposal and hope it falls flat with the PUC.”

Lee Beyer, a longtime Oregon legislator and former chair of the Oregon Public Utility Commission, said PacifiCorp’s assertion that the requested changes would benefit ratepayers is questionable. That’s because he believes it’s unlikely the commission would allow PacifiCorp to pass the legal costs on to customers.

“Any costs coming out of a court case are generally the responsibility of the utility and its shareholders,” Beyer said, though he said increased borrowing and insurance costs because of increased wildfire risks could fall to ratepayers.

Bob Jenks, executive director of the ratepayer advocacy group Oregon Citizens’ Utility Board, questioned whether the utility commission even has the legal authority to grant PacifiCorp’s request. Asking ratepayers to waive their legal remedies as a condition of accepting service from a local monopoly “is a pretty extreme thing,” he said. “It’s incredibly broad and raises a number of fundamental legal questions.”

Matt Preusch, an attorney for plaintiffs in the class action case against PacifiCorp, said the proposal was outrageous. Despite the company’s request that the new rules be applied prospectively, Preusch said he worried it appeared to be “an attempt by PacifiCorp and its owners at Berkshire Hathaway Energy to avoid responsibility for upending thousands of lives in September 2020.”

The jury award in June spotlights the type of damages PacifiCorp is looking to avoid.

Only $4.4 million of the $90 million in damages awarded was for actual economic losses while the balance — some 95% of the total — was for non-economic and punitive damages.

While PacifiCorp has vowed to appeal the verdict, the jury’s findings of fault and a punitive damages multiplier will apply to thousands of other members of the class, whose damages will be determined in future court proceedings.

Multnomah County Circuit Court Judge Steffan Alexander has scheduled three trials early next year that will determine damages for 20 additional plaintiffs and a group of timber companies in the class action suit, and he has ordered the company and remaining plaintiffs to enter a formal mediation process after those trials are complete. The company faces another lawsuit from victims of the Archie Creek fire in southern Oregon that is slated to go to trial in 2024 and 2025.

PacifiCorp said in its most recent financial filings that “certain government entities” have also informed the company that they are contemplating legal actions. Total damages sought in lawsuits filed in Oregon related to the 2020 fires is about $8 billion, it said, excluding any doubling or trebling of damages included in the complaints.

In its filing with Oregon regulators, PacifiCorp said its proposal aligned with precedent from several western states where limitations on utility liability have been approved.

Liability limitations are an inherent part of the ratemaking process and are necessary to ensure reasonable rates, the utility argued. Increased risks of wildfire have exposed western utilities to atypical damages from lawsuits, it added, and the recent wildfire verdict resulted in downgrades of its credit rating, impacting its ability to access low-cost financing.

“This provision strikes a reasonable balance between enabling actual damages when appropriate, and unreasonable treble damages,” the company told regulators.

None of the precedents PacifiCorp cited in Washington, California and Wyoming, however, appeared as sweeping as the one the company has proposed. The examples generally dealt with liability waivers for loss of service, “acts of god” or damage that occurred because of faults on the customer side of the electric meter. And at least one specifically excluded any waiver of liability in cases of negligence.

Kandi Young, a spokesperson for the Oregon Public Utility Commission, said it had never previously addressed a waiver of liability in exchange for service as PacifiCorp has proposed.

Likewise in Washington. “It doesn’t look like the commission has done this before for any utility nor does it appear that a waiver exists for the utilities we regulate,” Tiffany Young, a spokesperson for the Washington Utilities and Transportation Commission, said in an email. She said the commission planned to meet with PacifiCorp on Thursday to discuss the filing.

The California, Idaho and Wyoming public utility commissions could not be reached or did not respond to a request for comment.

Tariff filings such as the one PacifiCorp submitted in Oregon generally become effective 30 days from the date they were filed, unless the utility commission suspends the effective date and orders an investigation, Young said. PacifiCorp initially asked the utility commission to adopt the new rules by Nov. 29, but that’s unlikely to happen. In this case, state regulators are planning to recommend the commission suspend the filing for an investigation.

That process can take up to nine months and would provide an opportunity for ratepayer advocates and others to weigh in. Young said it would resolve all issues related to the filing, including whether the utility commission even has the legal authority to support the request.

David Sugerman, a Portland lawyer who specializes in consumer protection work, said PacifiCorp’s request is legally problematic as a matter of both contract and consumer protection law.

The utility would be presenting its customers, who have no bargaining power with a monopoly electricity provider, with an “unconscionable contract provision,” Sugerman said. And the company is asking the commission to insulate the utility from the consequences of any future misconduct.

Sugerman said that because the utility is a state regulated monopoly, the waiver could also violate the “remedies clause” of the Oregon Constitution, which guarantees that the remedies that exist in law remain available to every person.

“Somewhere in the corporate boardroom or the C-Suite, the boys in finance are being a little too cute by half in telling the legal department they need to gin something up,” he said of PacifiCorp’s request. “It’s a very jaundiced move and a jaundiced argument.”

— Ted Sickinger; tsickinger@oregonian.com; 503-221-8505; @tedsickinger