At the recent Phase III Hearing on DAO Docket Issues in Utah, a critical discussion emerged regarding the rising costs and challenges of excess liability insurance for utilities, particularly in the context of increasing wildfire risks. Utility representatives highlighted that maintaining excess liability insurance is essential for protecting customers from the financial impacts of claims, especially as wildfires become more frequent and destructive due to climate change.

Since 2010, the company has recovered over $450 million through its excess liability insurance policy, significantly exceeding the premiums paid. This underscores the importance of such coverage, as no amount of wildfire mitigation can entirely prevent wildfires. Utilities, unlike other businesses, cannot control service pricing and must provide continuous service, making them particularly vulnerable to changes in insurance coverage and costs.

The discussion pointed out that utilities in the Western United States are facing unprecedented increases in insurance premiums and reductions in coverage due to heightened wildfire risks. Factors such as prolonged drought, urban development near wildlands, and increasing jury awards for damages are driving these changes. While some parties have attempted to differentiate Pacific Corp's insurance cost increases from those of other utilities, it was emphasized that Pacific Corp operates across six high-risk states, which inherently increases its exposure and costs.

The testimony also addressed concerns about whether Utah customers could benefit from separate insurance policies. However, it was argued that such an approach would likely be more expensive and unfair, as it would allow Utah customers to benefit from shared system assets without contributing to their insurance costs. The overall conclusion reinforced that the current aggregated insurance model provides better risk diversification and cost efficiency for all customers across the states served by Pacific Corp.