San Diego Union Tribune
November 14, 2018
By: Rob Nikolewsk
The long-running effort by San Diego Gas & Electric to pass onto ratepayers $379 million in costs related to deadly wildfires in 2007 that ripped through parts of the county has suffered another setback.
California’s 4th District Court of Appeal in San Diego late Tuesday afternoon denied a petition from SDG&E asking the court to review a decision made by the California Public Utilities Commission last year that rejected the utility’s request to recover the $379 million through rates.
The record “contains substantial evidence showing both that SDG&E’s facilities caused all three of the wildfires at issue,” Benke wrote, “and that SDG&E did not meet its burden to show that it reasonably and prudently operated and maintained those facilities … In sum, SDG&E has failed to demonstrate that the (CPUC) erred on the claims it asserts.”
April Maurath Sommer, executive director and lead counsel for the Protect Our Communities Foundation, an environmental group based in San Diego County, agreed with the appeals court’s three-page decision.
“It’s not very long but it’s clear and direct and to the point,” Maurath Sommer said. “They did not take SDG&E’s assertions seriously at all. This is a total shutdown, which is good.”
San Diego attorney Michael Aguirre represented ratepayer advocate Ruth Henricks on behalf of utility customers in a lawsuit dealing with the 2007 fire but Aguirre, normally a sharp critic of SDG&E, held his fire.
SDG&E “fought hard and in this particular case, the utility customers won,” Aguirre said. “But we’re not gloating. We respect the fact (SDG&E) made such an effort and we’re just happy the utility customers won out.”
SDG&E spokeswoman Colleen Windsor said the utility is “considering next steps, including whether to further appeal.”
In a statement to the Union-Tribune, the utility alluded to a legal doctrine that has quickly moved to the center of discussions about California wildfires and investor-owned utilities.
“The Court’s decision to deny the appeal is disappointing because it missed an opportunity to provide clarity on important statewide issues regarding the relationship between the legal doctrine of inverse condemnation and cost recovery at the CPUC,” SDG&E said.
As interpreted by courts in California, inverse condemnation holds that utilities can be held liable for damages related to a wildfire ignited by a power company’s equipment — such as a downed power line — even if the utility followed accepted safety procedures.
Virtually no other state applies inverse condemnation the way California does and utilities say such an interpretation, combined with the requirement that power companies provide electricity in areas at risk to wildfires, may lead them to bankruptcy.
Defenders of inverse condemnation say the way it’s applied in California gives power companies extra incentive to reduce wildfire risks in their respective service territories and take extra precautions their equipment and procedures don’t spark conflagrations.
“While SDG&E has shown that the costs incurred was a result of inverse condemnation and that the fires occurred due to factors beyond its control, the CPUC nevertheless denied its application for cost recovery,” the utility said in its statement. “The Court did not address the substance of SDG&E’s arguments on appeal as to why the CPUC erred in its decision.”
Aguirre said one option for SDG&E is to appeal to the California Supreme Court but he advised against it. The utility not only lost last November before the CPUC, it also lost an an appeal before the commission for a rehearing before losing at the appeals court in San Diego on Tuesday.
“I think they’re at the law of diminishing returns at this point,” Aguirre said.
SDG&E spent $2.4 billion to resolve more than 2,000 lawsuits related to the Witch, Guejito and Rice wildfires but the utility insists the blazes were ignited by factors beyond its control — including extreme Santa Ana winds, a lashing wire owned by Cox Communications that hit an SDG&E power line and a tree limb that fell onto an SDG&E line due to high winds.
SDG&E officials have pointed out the Federal Energy Regulatory Commission, which regulates interstate transmission rates, granted SDG&E settlement payments through rates that eventually came to $80 million and found “the record indicates SDG&E behaved as a reasonable, prudent utility in the maintenance of its lines prior to the wildfires.”
During the most recent legislative session in Sacramento, Gov. Jerry Brown supported making changes to inverse condemnation but those efforts were rebuffed. Instead, a scaled-back bill passed that allows companies to borrow money for 2017 wildfire costs while using money collected from ratepayers to pay back the loan.
The appeals court decision comes as another string of deadly wildfires have broken out across California.
The cause of the Camp Fire in Northern California has yet to be determined but questions have been raised whether Pacific Gas & Electric equipment may be linked to the fire’s ignition. Some of the fire’s victims have filed a lawsuit against the utility.
On Monday, Southern California Edison reported an outage near the spot where authorities believe the Woolsey Fire started last week.