“CPUC Rules Against SDG&E in 2007 Wildfire Case”
The California Public Utilities Commission rejected a request from San Diego Gas & Electric to pass onto ratepayers $379 million in costs related to three deadly wildfires that blazed through the area ten years ago.
In making the decision, the commissioners ruled 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.
SDG&E officials have maintained the wildfires that enveloped Southern California in October 2007 represented an unprecedented event and insist the utility responsibly managed its service territory.
Even though two commissioners expressed that their votes were “close calls,” all five members voted Thursday morning in San Francisco to reject the utility’s request.
What the vote means
If SDG&E’s request had been approved, it was estimated the average ratepayer would have paid $1.67 more per month over the space of six years.
The decision has been watched closely in relation to the degree California utilities are culpable for financial damages that could run into the billions of dollars for wildfires, particularly in rural and remote regions of their service territories.
Here are some details of the decision
Within moments of the vote, SDG&E officials blasted the decision and promised to continue the fight in court.
“The CPUC got it wrong,” said Lee Schavrien, the utility’s senior vice president and chief regulatory officer. “The 2007 wildfires were a natural disaster fueled by extreme conditions including the worst Santa Ana wind event this region has ever seen, combined with high heat, low humidity and hurricane-force winds.”
But CPUC commissioner Clifford Rechtschaffen disagreed.
“The decision does not hold utilities to a standard of perfection. That’s a straw man and that’s not what we’re doing here,” Rechtschaffen said. “The burden of proof is on SDG&E to show they acted as a prudent manager and based on a careful review the decision concludes they did not meet that burden.”
Groups who aligned against SDG&E during the nearly decade-long legal fight cheered the result.
“Hopefully this decision will serve as motivation for all the public utilities to improve their safety practices to prevent such disasters in the future as money seems to speak to these companies in a way that public outrage does not,” said April Maurath Sommer, executive director and lead counsel for the Protect Our Communities Foundation, an environmental group based in San Diego County.
Thursday morning’s vote affirmed a proposed decision a pair of CPUC administrative law judges recommended in August, arguing SDG&E’s request should be denied because the utility “did not reasonably manage and operate its facilities” leading up to the fires.
But while CPUC president Michael Picker and commissioner Martha Guzman Aceves joined in the 5-0 ruling, they expressed reservations.
Picker went so far as to say that a record could support a finding that SDG&E acted prudently in most decisions, given the information available.
“This is a challenge as you’re depending on engineers and humans standing there on the ground trying to make the best judgment based on what they can see and what they can do at the time,” Picker said.
And while the administrative law judges sided with a scientist who estimated the winds that helped ignite the wildfires were about half the speed that SDG&E’s experts claimed, Picker said he and Guzman Aveces “believe SDG&E’s contention that wind conditions were severe and unprecedented.”
That rankled Michael Aguirre, an attorney for ratepayer advocate Ruth Henricks, who said the remarks by Picker and Guzman Aceves were “calculated to undermine the viability of the decision should SDG&E decide to appeal.”
Investigations by Cal Fire and the CPUC determined the Witch and Rice Canyon fires were caused by sparks from downed wires and the Guejito fire was caused when a lashing wire owned by Cox Communications hit an SDG&E power line.
SDG&E’s insurance covered approximately $1.1 billion of damages. The utility paid more than $2 billion in settlements and other costs in the aftermath of the wildfires, although it never admitted any liability.
Since 2007, SDG&E said it has invested about $1 billion in fire safety.
The company has created a weather center staffed with three full-time meteorologists, expanded its weather sensor network to 144 weather stations and spent money on firefighting efforts ranging from heli-tankers that can carry 2,650 gallons of water or fire suppressants to replacing 2,100 existing wood poles with steel poles.
Commissioner Liane Randolph said SDG&E “has taken innovative steps to become an industry leader in this area” but added, “this case has nothing to do with the current management of their system.”
Instead, Randolph said the decision is “a snapshot in time” from 2007 and “SDG&E did not meet its burden to show it acted as a prudent manager.”
In recent months, two other utilities — Pacific Gas & Electric and Southern California Edison — jumped into the case, arguing on SDG&E’s behalf. The utilities say the case highlights greater risks of wildfires in recent years due to drought conditions, vegetation growth, climate change and home construction in wooded areas.
“We want to encourage and incentivize careful, prudent management,” Rechtschaffen said. “If we ruled that recovery is possible with something less than prudent management, we’d send the wrong signal.”
In the past few months, SDG&E attorneys argued that it should be able to recover costs from the wildfires through 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.
The commissioners rejected that argument Thursday but said the notion should be clarified by the Legislature or the court system.
“The law of inverse condemnation is unsettled,” Guzman Aceves said.