PUSH IS ON FOR OTHER CALIFORNIANS TO SUBSIDIZE MANSION OWNERS

 

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, MARCH 7, 2025, OR THEREAFTER

BY THOMAS D. ELIAS
“PUSH IS ON FOR OTHER CALIFORNIANS TO SUBSIDIZE MANSION OWNERS”

 

It took only about three weeks for insurance companies to start their push for all California property owners and renters to subsidize the payouts going to burned-out mansion owners in the wake of the January firestorms in Los Angeles County.

 

State Farm General, California’s leading seller of homeowner insurance, applied as February began for a 22 percent rate increase on all its California customers to help cover payouts on at least 8,700 claims it received after the fires in Altadena and the Pacific Palisades district of Los Angeles. That would amount to a $740 million per year premium hike.

 

State Insurance Commissioner Ricardo Lara initially refused that application, but set an informal hearing later this month where he might reconsider.

 

How do we know this would be a subsidy from residents in areas that have never seen a wildfire and likely never will to mansion owners in places that are historically far more risk prone? Here’s an example: one burned-out beachfront Malibu residence sold three years ago for $85 million. That’s on the high end of the homes lost in January, but the affluent Palisades had hundreds of homes valued at $4 million or more.

 

Prior to its latest request, State Farm General last June asked for a 30 percent rate increase, or more than $1.3 billion. Essentially, the company wants premiums more than 50 percent above what it has charged under rate increases totaling about 27 percent in 2023. It has not provided sufficient financial data to justify either rate hike request. 

 

The entire idea of forcing all other California homeowners to subsidize payouts to those who lost property in January also departs from longtime national industry practices. One such practice: when state subsidiaries of national companies need extra money, they usually draw on the reserves of the parent company.

 

Parent State Farm Mutual Automobile Co., headquartered in Bloomington, IL, now has reserves of more than $134 billion, far more than enough to cover any and all losses from the January fires. It has sometimes used those reserves to aid state subsidiaries after hurricanes.

 

This did not stop Lara from demanding that all Californians pay added premiums to cover half the $2 billion or so that insurance companies must put out to cover losses of the state’s last-resort FAIR plan. The authors of the 1988 Proposition 103 insurance initiative estimate this would come to $60 from every policyholder in California. They say it’s illegal to charge consumers for any of this bailout. 

 

As it stands, State Farm and other companies having their way with Lara would almost double the insurance bills of Californians, even those living nowhere near wildfire zones.

             

State Farm is not alone. Allstate, which often doubles down on State Farm actions, estimates its January fire expenses at $1.1 billion. The national company has reserves of almost $21 billion, but will likely demand huge property insurance price hikes if State Farm gets them.

 

This may all seem grossly unfair. Not only are the big companies hitting Californians harder than residents of other states, but they seek to hang onto their huge reserves, supposedly gathered to cover the costs of crises just like this one.

 

The companies like to say they’ve suffered giant losses in California over the last nine years, State Farm claiming it’s more than $2.8 billion in the red in California in the nine years ending Dec. 31. That’s not necessarily so.

 

For one thing, it leaves out the large profits of other State Farm companies that sell auto and life insurance.

 

Not including those profits in their financial statement is plain dishonest. It’s also disingenuous to claim losses from previous fires blamed on power lines and towers. Why? Once electric utilities were forced to pay up for those liabilities, insurance companies recouped many of their fire expenses.

 

But State Farm, in its newest price increase request, piously said that “We must appropriately match price to risk. That is foundational to how insurance works.”

 

Also foundational is that when a subsidiary in one state has a shortfall, the parent company steps up, which State Farm Mutual plainly wants to avoid. Lara has evinced no inclination to force it to, either.

 

All of which means there’s something seriously wrong with the way California’s insurance regulator operates in this era of repeated crises.

 

 

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Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough, The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net

 

Suggested pullout quote: “If all this seems grossly unfair, that’s because it is.”

MAJOR QUESTIONS FOR STATE’S GAS COMPANIES

 

CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, MARCH 7, 2023, OR THEREAFTER

 

BY THOMAS D. ELIAS

     “MAJOR QUESTIONS FOR STATE’S GAS COMPANIES”

 

        Anytime one of California’s big privately owned utility companies doubles, triples and even quadruples the bills of its customers (compared with year-ago levels), it’s sensible to ask why. And to wonder whether that company is making windfall profits.

 

        So it is today, when the nation’s biggest natural gas utility, Southern California Gas Co., over the last two months more than tripled charges to most of its 21.8 million customers. Similar increases were inflicted upon gas customers of SoCalGas’ sister company, San Diego Gas & Electric, which serves 3.7 million gas meters. Both are subsidiaries of San Diego-based Sempra Energy.

 

        For gas, these companies even serve customers in many cities with municipally-owned electric utilities, like Los Angeles.

 

      To all appearances, the gas price hikes have been far more severe in Southern California than north state areas served by Pacific Gas & Electric. Here’s a key question: what part does the corporate positioning of SoCalGas and SDG&E play in this?

 

        For PG&E, SoCalGas and SDG&E all get their gas from essentially the same sources: Drilling and fracking operations in the Mountain West, Texas, Oklahoma and western Canada. But where the price per therm topped out at about $2.30 in Northern California this winter, it has reached well over $3.40 in areas served by the Sempra-owned utilities.

 

        A therm is a unit of energy equal to 100,000 BTUs. One BTU, or British thermal unit, is the quantity of heat required to raise the temperature of one pound of water by one degree.

 

        SoCalGas has firmly maintained through the winter that its price hikes are purely the result of higher than usual wholesale gas prices, that the company has simply passed those charges along to customers. That may be literally correct.

 

But the claim raised eyebrows at California’s most effective consumer advocacy group, the Los Angeles-based Consumer Watchdog. The group put out a brief video contending Sempra’s utilities bought much of their recent supplies from the company’s own trading arm, which reaped large profits. The video is here:  https://www.youtube.com/watch?v=8SUxoP7LrpQ.

 

At the same time, Consumer Watchdog claims SoCalGas and SDG&E were derelict in other areas and that the state Public Utilities Commission (PUC) must investigate its actions. Similar calls for a thorough probe of the price hikes came from California’s Democratic U.S. senators, Dianne Feinstein and Alex Padilla, who called on the Federal Energy Regulatory Commission to step in.

 

Said Feinstein, “These sky-high and unpredictable rates have had grave effects on my constituents…Many faced the difficult circumstance of having to pay higher heat and electricity prices at the expense of other necessities such as food or housing costs, or choosing to forego heating and the use of home appliances.”

 

Consumer Watchdog President Jamie Court maintains that whoever investigates must ask at least a few questions: Why did Sempra’s utilities fail to hedge contracts or have long term contracts necessary to deliver gas at cheaper off-season rates rather than having to buy at the height of the spot market in mid-winter?

 

He also asks why SoCalGas, for one, depleted its usually heavy inventories of gas in November and early December, when its per-therm prices were significantly lower and wholesale prices also far lower, rather than setting itself up to have need at the height of the market?

 

And he wondered how much parent company Sempra made from spot market transactions with its own companies in Southern California.

 

All are reasonable questions for which consumers need well-documented answers.

 

One other question also should be raised, given the way that California utilities like PG&E and Southern California Edison long have made up for penalties assessed against them for wrongdoing by raising rates after a bit of time has passed.

 

This is it: Are the winter’s huge price increases actually a way for SoCalGas to recoup all or most of the $1.8 billion it had to pay in damages for the 2015-16 leaks from its Aliso Canyon storage facility in the hills above the Porter Ranch section of Los Angeles?

 

And here’s a mandate for the PUC: Get solid answers to all these questions before ever granting another rate increase to either SoCalGas or SDG&E.

 

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    Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough, The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It" is now available in a soft cover fourth edition. For more Elias columns, visit www.californiafocus.net

IGNORED OROVILLE WARNING RAISES BIG QUAKE, LEVEE QUESTIONS

CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, MARCH 7, 2017, OR THEREAFTER

BY THOMAS D. ELIAS
          “IGNORED OROVILLE WARNING RAISES BIG QUAKE, LEVEE QUESTIONS”

          Just because nature allows a delay of many years while officials dither over a catastrophe in the making doesn’t make that disaster any easier to handle when it finally strikes.

          This is one major lesson of the Oroville Dam spillway crisis that saw the sudden evacuation of almost 200,000 persons from their homes when the dam’s emergency spillway crumbled under the force of millions of gallons of fast-moving water.

          Warnings of precisely this sort of crisis at Lake Oroville were submitted to the Federal Energy Regulation Commission during a 2005 relicensing process, almost 12 years before those predictions came true.

          “A loss of crest control (which has now occurred) could not only cause additional damage to…lands and facilities, but also cause damages and threaten lives…downstream,” environmental groups (Friends of the River, the South Yuba River Citizens League and the Sierra Club) cautioned, recommending relicensing of the dam only if repairs were made.

          Their claim drew scorn from officials of the state Water Project, which runs the vintage-1968 Oroville Dam. “Our facilities, including the spillway, are safe during any conceivable flood event,” said Raphael Torres, then acting deputy director of the Water Project. Plus, some of California’s most powerful water districts, including the Metropolitan Water District of Southern California, didn’t want to fund a fix. They’ll have to pay now, as much as $600 million, by some estimates.

          FERC, loaded with power industry advocates by then-President George W. Bush, disdained the environmental groups, as it usually does.

          So the background of today’s crisis bears warnings, both about preparation for likely future natural disasters and about what can happen when industry advocates control powerful federal agencies, now the case for several cabinet-level departments in the Trump administration.

          For California, alarm should be strongest about earthquakes, and the related issue of levees in the Delta of the Sacramento and San Joaquin rivers. After the 1971 Sylmar Earthquake hit on a previously unknown fault and destroyed a veterans hospital, among other buildings, mapping of earthquake faults became a high state priority.

          Over the next 20 years, 534 maps of faults and their possible damage were published. But in the following 20 years, no new maps appeared because of budget cuts, leaving the project about 300 maps shy of where it needs to be for all residents of known potential damage areas to be properly warned.

          Some areas have used the maps drawn between 1971 and 1991 to pinpoint buildings that need retrofitting, with many projects completed.

          But most of the other 300-odd known faults have yet to be mapped.

          At the same time, California still lacks a signficant quake warning system, and probably can’t complete one without the remaining maps even if it suddenly became a priority. It’s tough to warn people at risk in a major quake if you don’t know what buildings they’re in.

          This issue was no priority at all for Gov. Jerry Brown through most of his current go’round in office. Yes, Brown long supported an early warning system that might give a minute’s notice before shaking from a Big One hits urban areas. But through most of his current tenure, he proposed no state funding for this, saying the money should come from private or federal sources. It did not.

          Brown shifted in last year’s state budget, providing $10 million to create such a system, now in the works from the U.S. Geological Survey and academic researchers, who hope to begin putting their system to limited use next year.

          The dithering put California behind other quake-prone places like Japan and Taiwan.

          Why is this important? The original legislative sponsor of the warning system, Democrat Alex Padilla, now California secretary of state, said in 2013 people need a system giving them “critical seconds to take cover, assist loved ones or pull safely to the side of the road.”

          Even when that system comes online, much more mapping will be needed. For the biggest quakes of the last 40 years came in unexpected places.

          The upshot: California’s water system is not the only area needing better preparation for coming disasters. The problem, though, is the same as it was at Oroville before this year’s massive storms created a crisis: Until an urgent problem occurs, few believe it ever will. Once it happens, it may be too late to act.

         

         
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Elias is author of the current book “The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government's Campaign to Squelch It,” now available in an updated third edition. His email address is tdelias@aol.com 

NEW VACCINATION FORM EASES WAY FOR FALSE MYTHS

CALIFORNIA FOCUS
FOR RELEASE: FRIDAY, MARCH 7, 2014, OR THEREAFTER

BY THOMAS D. ELIAS

          “NEW VACCINATION FORM EASES WAY FOR FALSE MYTHS”

          For almost two months, parents of California public school pupils have been able to claim with no proof that their religion precludes getting their children vaccinated against once dreaded and disabling diseases like polio, rubella, mumps, pertussis and smallpox.

          This enables parents who believe in false myths to exempt their children easily, even if they really have no religious beliefs at all.

          It comes thanks to a relatively unpublicized signing message Gov. Jerry Brown in 2012 attached to his approval of a bill originally designed to make it slightly more difficult for parents to evade the vaccinations almost all children must get before they can attend public schools.

          No one yet knows just how many parents are availing themselves of their Brown-ordered new ability to merely check off a box on a form rather than having a doctor, school nurse or nurse practitioner sign a form attesting that they have been informed of the benefits of vaccinations. Figures won’t be known until late spring at the earliest.

          But supporters of the vaccinations that have caused the near disappearances of many serious diseases warn that a proliferation of anti-vaccination myths might accelerate a trend away from vaccinations that actually began prior to Brown’s order.

          In short, parents who believe those shibboleths can claim a religious belief even when they have none, and they can’t be questioned.

          As it stands, no organized religion now forbids adherents to vaccinate their children. This may be because almost all of today’s religious doctrines originated before vaccinations began in the first half of the last century. “Even Christian Scientists say it’s in the parents’ hands to do what’s best for their children,” says Catherine Flores Martin, executive director of the California Immunization Coalition. But many Christian Scientist adherents have claimed the tougher-to-get exemptions offered before this year.

          Altogether, 97 percent of all California schoolchildren are vaccinated, with various inoculations required prior to enrollment at assorted grade levels.

          “If a recent trend we noticed away from vaccinations accelerates, we’ll revisit the subject with both the Legislature and the governor,” Martin said. In California, the trend has been most pronounced in Marin, Santa Cruz and Santa Barbara counties, Martin reported.

          An increase in exemptions seems likely under Brown’s order, which made it easier for parents to lie about their religious beliefs either to avoid the hassle of getting children vaccinated or because they actually believe some of the myths.

          One of those falsehoods ties the measles, mumps and rubella vaccine to increased autism rates. This myth, originally published in a British medical journal, was debunked years ago and was long ago renounced even by the authors of the flawed British study. But it persists, even getting a full airing last fall on the syndicated TV talk show of former CBS News anchorwoman Katie Couric.

          “Like many flawed and false stories that circulate on the Internet, a lot of people who heard the original story didn’t see the retraction and backpedaling from this one,” said Martin. Kouric later tried to correct what she had aired, but Martin says “It’s too early to tell if that effort had any effect.”

          More myths are associated with other vaccines. Example: There’s a wide, but false, belief that pertussis (whooping cough) vaccines are tied to seizures, despite a lack of evidence for the claim.

          Brown has thus far appeared oblivious to the potential harm of his gratuitous signing order, his spokesman saying that he “believes that vaccinations are profoundly important and a major public health benefit.” He has said nothing beyond that his order aimed only to “take into account First Amendment religious freedoms through an extremely narrow exemption.”

          But the exemption turns out to be quite wide, not narrow at all, a loophole in existing health laws. Parents who don’t want to bother now need only check off that box on a form.

          Which means that the moment there’s firm evidence the loophole created is being used by liars and not believers, Brown must reverse it even if that means admitting he made a big mistake.

    -30-
     Email Thomas Elias at tdelias@aol.com. His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, go to www.californiafocus.net.