PG&E DISCLOSES EX-PARTE COMMUNICATIONS IN EFFORT TO INFLUENCE SDG&E WILDFIRE COSTS CASE; RATEPAYER FILES SUIT SEEKING TO PREVENT RATEPAYERS FROM BEING CHARGED FOR 2007 FIRES

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By Miriam Raftery

October 31, 2017 (San Diego) – An ex-parte meeting between representatives of Pacific Gas & Electric Company (PG&E), Southern California Edison and a California Public Utilities Commissioner’s advisor was held October 4th regarding the application by San Diego Gas & Electric (SDG&E) for authorization to recover costs related to the 2007 wildfires.  SDG&E has sought to charge ratepayers for its uninsured losses pursuant to a Wildfire Expense Management Account (WEMA).

Edison provided disclosure of the meeting, held at the request of PG&E.  The meeting at the CPUC office in San Francisco  included Rachel Peterson, advisor to Commissioner Liane Randolph,  attorney Eric Lisken and other officials of Edison, as well as multiple representatives of PG&E. (See the notice of Ex Parte disclosure for full information and scroll down for details.)

Isken, who led the discussion, argued that  recent appellate cases including Pac Bell v. Sol Cal Edison (2012) assume all costs incurred by a utility resulting from inverse condemnation claims will be collected from customers in rate hikes, and that no portion of such costs will be paid by shareholders.   He argued that the CPUC ‘s authority regarding inverse condemnation costs is limited to determining if  costs are reasonable, and if amounts paid to settle inverse condemnation claims and defense costs incurred by a utility are reasonable.  He contends that the CPUC has other tools to address prudence by a utility in its operation and management of electrical systems, including enforcement proceedings and penalties of up to $50,000 a day.

An enforcement proceeding related to the 2007 San Diego wildfires rasied virtually identical arguments about SDG&E’s imprudence as were raised in the Monterey Peninsula Water Management District v. PUC case, in which  the California Supreme ruled that the CPUC lacked jurisdiction to review a water district’s fee assessed by an agency, which he contends is similar to inverse condemnation costs imposed on utilities by judicial rulings which the CPUC “lacks power to review.”  In the case of the 2007 wildfires, PG&E notes, the proceeding was resolved by a settlement involving a substantial payment and acknowledgements of violations and other substantial commitments.

“That settlement resolved all issues and it is inappropriate and unlawful o conduct another prudence review here,” Isken argued regarding the WEMA-related application by SDG&E.

In a related matter, a consumer filed suit last week seeking to force approval of a CPUC ruling barring SDG&E from passing on $379 million in its wildfire costs to consumers.  Taxpayer Ruth Henricks, represented by Michael Aguirre with Aguirre & Severson, accuses the CPUC in a federal complaint of twice refusing to confirm an August 2017 decision that denied SDG&E’s application to pass along those costs to ratepayers.  The decision was made by two CPUC administrative law judges who found that SDG&E “did not reasonably manage and operate its facilities prior to the 2007 Southern California wildfires.”

She accuses the CPUC of delaying “so as to provide an opportunity for SDG&E and its utilities monopoly kin—PG&E and SCE, neither who had been a party in the proceedings evidentiary hearings—to meet privately with the commissioners and lobby against the ALJ’s proposed decision denying SDG&E its request to lay the burden of its $379 fire cots on ratepayers, instead of on the management found to have acted imprudently and unreasonably,” the complaint states. 

It further accuses the CPUC regulatory agency of being under control of utilities it is mandated to regulate, thus violating Henricks' due process.  Henricks, who participated in evidentiary hearings and cross examined witnesses on fire costs, contends that defendant Michael Picker, CPUC president, improperly allowed SDG&E to make arguments in ex-parte private communications with commission advisors outside the evidentiary hearing record – similar to the ex-parte private meetings that PG&E and Edison representatives have now had with the CPUC. 

Both PG&E and SCE have been added as parties to the proceedings, according to Courthouse News.  Power lines in northern California have been blamed for some of the recent fires there, just as three of the 2007 fires were found by Cal-Fire to have been caused by SDG&E lines as well as  in one fire, Cox Cable equipment. 

SDG&E has repeatedly contended that its equipment was properly maintained and denied that its lines were at fault for the fires.  The company has also noted that it has made significant investment in fire-hardening its infrastructure  and other safety improvements since the 2007 firestorms.

Now PG&E and Edison seek to raise an inverse condemnation defense in order to pass along costs of  uninsured wildfire losses to ratepayers. Henricks seeks an injunction to prohibit the CPUC from authorizing such charges.

A proposed bill in Sacramento could prevent utilties from charging ratepayers for costs of wildfires caused by negligence, the San Francisco Chronicle reports.  State Senator Jerry Hill, author of the measure, calls such charging an "outrage," adding in a press release, "“Victims of devastating fires and other customers should not be forced to pay for the mistakes made by utilities. It’s time to stop allowing utilities to push the burden of their negligence onto the backs of customers.”