Barely more than a month after the California Public Utilities Commission (CPUC) rejected a request by San Diego Gas & Electric to have ratepayers pick up $379 million in costs related to three deadly wildfires in 2007, the utility is not giving up.
Attorneys for SDG&E have filed an application with the CPUC, asking for a rehearing.
“The CPUC’s decision to deny recovery of expenses related to the 2007 wildfires is unsupported by the evidence, violates the CPUC’s own prudent manager standard and deprives the company of its due process,” SDG&E communications manager Allison Torres said in an email.
In an unanimous decision on Nov. 30, the CPUC’s five commissioners agreed with a recommendation made last year by a pair of CPUC administrative law judges that SDG&E did not reasonably manage and operate its facilities leading up to the Witch, Guejito and Rice fires that killed two people, injured 40 firefighters and forced tens of thousands to seek shelter at Qualcomm Stadium.
The three fires combined to destroy more than 1,300 homes.
The call for a rehearing does not come as a complete surprise. Moments after the CPUC rendered its decision, SDG&E officials said, “The CPUC got it wrong” and vowed to fight to overturn it.
But critics who battled the utility in the proceeding blasted SDG&E’s request to revisit the decision.
“Utility customers must remain vigilant,” said San Diego attorney Michael Aguirre, who represented a ratepayer advocate in the case. “California’s utility giants are pounding on the doors of the CPUC, demanding utility customers pay SDG&E $379 million for the 2007 San Diego fire SDG&E equipment caused. The CPUC should focus on improving fire safety at the utilities, not subsidies for careless behavior.”
For utilities, the case highlights questions about how to fairly distribute costs in rural and backcountry areas where more homes are being built in an environment where wildfire conditions seem to grow more deadly each year.
“Accountability is a critical element in any regulatory environment, but so is fairness,” Edison said in an email to the Union-Tribune. “California’s utilities should be held responsible when their serious misconduct causes damage in our communities. However, if California courts continue to hold utilities accountable for wildfire damage without any showing of misconduct, then utilities should not solely absorb the cost.”
But critics of utilities say the companies see the SDG&E case as a financial threat.
“They are very scared of the concept that their shareholders are actually expected to be held accountable for their poor business practices,” said April Maurath Sommer, executive director and lead counsel for the Protect Our Communities Foundation, an environmental group based in San Diego County. “This just has to do with fear of their bottom line, that they are not going to be able to take advantage of their ratepayers for everything.”
Last April, the CPUC fined PG&E $8.3 million for failing to maintain a power line that sparked the Butte Fire that killed two and destroyed 549 homes in September 2015. Investigations are underway into whether PG&E equipment ignited some of the catastrophic Wine County Fires in Northern California last fall.
In its application for a rehearing in the 2007 wildfires, SDG&E attorneys argued the weather and wind conditions surrounding the blazes were “extreme and unprecedented” and the utility operated responsibly.
“The Decision imposes an unreasonable and unattainable standard of perfection even when damages are caused by extreme factors beyond SDG&E’s control,” the filing said.
But the commissioners agreed with the report from the administrative law judges that said SDG&E is not expected to be perfect and sided with fire investigators and witnesses who said the utility did not properly manage its facility and equipment in the moments leading up to the fires.
In the Witch Fire, for example, a Cal Fire investigator determined arcing SDG&E power lines dispersed hot particles on a grassy field, igniting a fire that was spread due to windy conditions.
The report said SDG&E should have acted “more proactively” to de-energize the line. SDG&E has argued it actively monitored the faults on the line and sending an engineer to determine its location would not have prevented the fire.
Although the commission’s vote was 5-0, CPUC President Michael Picker and Commissioner Martha Guzman Aceves expressed qualms, calling their votes “close calls.”
Another of the utilities’ objection to the Nov. 30 ruling centers on a legal doctrine called “inverse condemnation”— a California constitutional claim that requires just compensation when property has been taken or damaged for the public use.
Along with SDG&E attorneys, PG&E and Edison said the CPUC decision was wrong to say inverse condemnation was not relevant to the 2007 case.
When making their ruling, some commissioners ruling acknowledged that inverse condemnation should be clarified by the courts or the state Legislature.
The decision on a potential rehearing rests with the five commissioners. CPUC observers say requesting a rehearing is not unusual but getting commissioners to reverse a ruling would be tough sledding. Commissioners, however, have been known to modify some of their decisions.
There is no set timetable for the CPUC to respond to the request, but SDG&E in its application said it hopes the commission “will act expeditiously” so that SDG&E “may pursue legal remedies through other means.”
A month before the CPUC’s decision, SDG&E’s parent, Sempra Energy, announced it was taking a $208 million after-tax write-down in case the decision went against utility.
Sempra CEO Debra Reed said at the time, “We vehemently disagree” with the administrative law judges’ report and said the Federal Energy Regulatory Commission “looked at the same set of facts and believed we were a reasonable utility operator.”
Maurath Sommer said it is time to move on.
“They just need to shut the door on this thing,” she said. “It’s been 11 years, come on.”
Torres said under the commission’s own procedures, “SDG&E has the right to challenge the decision and hopes the CPUC will correct its errors.”
SDG&E had $1.1 billion of liability insurance in place in 2007, which utility officials say was the maximum amount they could obtain.
SDG&E ended up paying more than $2 billion in settlements and other costs in the aftermath of the fires, leaving it with about $379 million in outstanding costs. The utility estimated the average customer would have had to pay $1.67 more per month, spread out over a six-year period.