SDG&E WANTS RATEPAYERS TO PAY FOR ITS WILDFIRE COSTS

By Miriam Raftery

Updated August 8, 2015 with comments from SDG&E, clarifications/corrections.

August 7, 2015 (San Diego’s East County ) – SDG&E is asking the California Public Utilities Commission to pass on costs to ratepayers for the uninsured costs of legal settlements for the utility's role in causing three major fires in the 2007 firestorms.  The utility has announced plans to file an application this fall seeking to recover those costs, which could be as high as $367 million.

Collectively, the 2007 firestorms ranked as the second worst wildfire in California history at the time, triggering a mass evacuation of a half million people.  The fires destroyed over 1,300 homes and killed two people.  Cal Fire's investigation found SDG&E equipment responsible for the Witch, Guejito and Rice fires.  Cox Communications was also found responsible for one of the 2007 wildfires. Extreme weather conditions and high winds also contributed to the fires' rapid spread.

In 2012, SDG&E filed a proposal with the CPUC to create a wildfire expense balancing account (WEBA) to track wildfire-related costs, but after hearing evidence from tearful survivors of the fire, many of whom still had court cases pending against the utility, the CPUC turned down the utility’s request. While the CPUC rejected the separate balancing account, it did agree to allow SDG&E to track its costs related to lawsuits over the 2007 wildfires in a previously established wildfire expense memorandum account.

Also in 2012, the utility reached a settlement agreement with the state, approved by the CPUC, that resolved all issues in the CPUC's Consumer Public Safety Division regarding to its investigation of the Rice, Witch and Guejito fires, said SDG&E spokesperson Stephanie Donovan.  Under the agreement, SDG&E did not admit to any safety violations nor has the utility been found to be negligent or out of compliance, she added. Under that settlement, the company's shareholders paid $14.75 million, of which $14 million went to the state's general fund.

SDG&E has now settled nearly all of those cases, the 2007 wildfire-related cases, paying out a total of over $2 billion on settlements and legal costs, the majority of which have been covered by $1.1 billion in liability insurance and $824 million in recoveries from third parties, including Cox Communications.

"It’s understandable that some of those who suffered losses in the 2007 fires are angry and don’t understand why settlement costs could be recovered through rates. But there is established precedent and the law in California is clear that utilities are “strictly liable” for any damage caused by power lines, and, as a result, a utility must pay damages to those who were harmed no matter whether negligence or some other factor was involved," Donovan told East County Magazine.

She adds, "As a regulated utility, SDG&E must serve all customers without exception, including those who live in fire-prone areas. The remaining costs of the settlements – that is, what is over and above what we’ve paid out from SDG&E’s liability insurance and recoveries from third parties – are costs of providing service, and as such, they’re costs SDG&E is allowed to recover in rates. We have done everything possible not only to achieve reasonable settlements, but also to offset the amount of costs we would seek to recover. We all also need to recall that the Santa Ana weather conditions in October 2007 were extreme and that those strong winds fueled the fires that caused such massive damage – the extent of which was beyond SDG&E’s control." 

However some ratepayer advocates have argued that shareholders in the privately-owned and profitable utilty company hould shoulder the uninsured losses from the fires, not ratepayers.

That utility's proposal has drawn outrage from some local leaders.

Supervisor Dianne Jacob issued this statement: “SDG&E’s on-going effort to stick ratepayers with the cost of wildfires it caused is outrageous. It’s especially offensive to those who lost their homes and even loved ones in the 2007 firestorms and are now being asked to help pay for the utility company’s mistakes. My hope is that state regulators stand up for San Diego County residents and reject SDG&E’s proposal.”

Lou Russo, an Alpine planning group member, sent an e-mail out stating, “I'm writing the PUC to tell them "Hell NO!”  He urged other concerned citizens locally to do the same.

An earlier version of this story incorrectly listed the Paradise Fire as caused by SDG&E; in fact the Rice Fire was the third of the 2007 blazes in which SDG&E equipment was found to be a cause.  We have added  details of the state settlement and clarification on the WEBA proposal in this updated version, along with comments/clarifications from SDG&E spokesperson Stephanie Donovan.