San Diego Gas & Electric has argued it should be able to charge ratepayers $379 million in costs it incurred following the deadly 2007 wildfires that blazed through parts of San Diego County.
On Thursday, the California Public Utilities Commission (CPUC) is scheduled to vote whether it will buy SDG&E’s argument or reject it.
But in the lead-up to the vote, two other investor-owned utilities — Pacific Gas & Electricand Southern California Edison — have jumped into the case, supporting SDG&E even though the 2007 wildfires in the San Diego area did not occur in their service territories.
What’s going on?
In filings with the CPUC in September, PG&E and Edison each said they wanted to provide input because the outcome of the vote would directly impact them.
But critics of the state’s utilities see PG&E and Edison’s advocacy as a thinly veiled attempt to protect their own interests.
April Maurath Sommer, executive director and lead counsel for the Protect Our Communities Foundation (POC), an environmental group based in San Diego County, said if the CPUC rules in SDG&E’s favor, “there would no impetus whatsoever for the utilities to put money into safety, maintenance and the other things they can do to prevent these disasters.“
“Southern California Edison intervened because wildfires are a statewide issue and all regulated utility providers could be threatened if they must pay costs regardless of fault and denied the ability to socialize those costs,” the statement said.
In an email, PG&E spokesman Donald Cutler said the utility “felt it was important that the Commission hear perspectives of all the energy companies” that operate in California.
“Catastrophic wildfires pose real risks to our entire state,” Cutler said. “They don’t recognize or respect the boundaries of one energy company versus another … Wildfires and the method with which they are treated presently have real world and potential long-term impacts on the operations, risk management and financial standing of every energy company in the state.”
The utilities filed with the CPUC just weeks before the Wine Country wildfires broke out, killing at least 42 and destroying 8,4000 structures, many in PG&E’s service territory.
The 2007 wildfires in San Diego County killed two, destroyed more than 1,300 homes and forced tens of thousands to seek temporary shelter at Qualcomm Stadium.
An investigation one year later by 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.
The CPUC blamed poor maintenance for the sparking of all three fires.
The utility had $1.1 billion of liability insurance in place in 2007, which SDG&E 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 decade since the wildfires, leaving it with about $379 million in outstanding costs.
The utility is asking the CPUC to allow it to pass those costs onto ratepayers, estimating the average customer would pay $1.67 more per month if costs are spread out over a six-year period.
But in August, a pair of administrative law judges recommended commissioners reject SDG&E’s request, saying SDG&E’s management and control of its facilities leading up to the wildfires was “imprudent” and “unreasonable.”
The recommendation from the administrative law judges is just that — a recommendation that the five commissioners at the CPUC can accept, reject or alter.
SDG&E strenuously objected to the proposed decision, saying it was flawed and within days, PG&E and Southern California Edison filed to intervene.
Earlier this month, PG&E and SCE submitted joint comments with the CPUC, saying the administrative law judges’ ruling “commits legal error” and “arbitrarily and disproportionately shifts the entire risk of any uninsured costs arising from a wildfire to a utility.”
San Diego attorney Michael Aguirre, representing a ratepayer advocate challenging SDG&E, said the CPUC should not have allowed PG&E and Edison to intervene in the case.
“SDG&E cannot recover the $379 million from its customers because it acted imprudently when its equipment ignited the fires, according to the (administrative law judges) who decided case,” Aguirre said. “Allowing PG&E and SCE into the case to join SDG&E’s argument is a violation of utility customers’ due process rights under the U.S. Constitution.”
The CPUC last week announced it has launched an investigation into whether PG&E’s maintenance and equipment played a role in the Wine Country fires.
In April, the CPUC fined PG&E $8.3 million for failing to maintain a power line that sparked the Butte Fire in September 2015 that killed two and destroyed 549 homes.
“It’s quite disturbing that the other utilities are permitted to jump in at the 11th hour and make these arguments that are at best academic and at worst fictional,” Maurath Sommer said.
The CPUC originally had scheduled to vote on the SDG&E case last month but has twice postponed making a decision.
The commissioner assigned to the case, Liane Randolph, said in September the commission would allow additional comments from the parties involved. In particular, attorneys from both sides are arguing about a legal notion called “inverse condemnation”— a California constitutional claim that requires just compensation when property has been taken or damaged for the public use.
The utilities point to greater risks of wildfires in recent years due to drought conditions, vegetation growth, climate change and home construction in wooded areas.
“If this commission votes out this (proposed decision) as written, we will have to re-evaluate whether we lower the standards for shutting off the power in our back countries,” Lee Schavrien, SDGE’s chief regulatory officer, told commissioners last month.
“We will have to consider whether we remove trees instead of trimming them,” Schavrien said. “We will have to consider purchasing insurance that is not economical” and have to put forth applications before the commission that “would cost billions of dollars.”
Frank Wolak, professor of economics and an energy expert at Stanford University, would not hazard a guess how the CPUC will vote Thursday.
“The best way I would describe it is, the commission very rarely feels at all constrained by the (administrative law judges’) decision,” Wolnak said. “Their view is, look, we’re the commission, we’re charged with making this decision.”
Wolnak said he was not surprised that PG&E and Edison jumped into the case.
“Yes, it is true that whatever decision comes down has implications for them so they also have a financial interest but I think they can also provide useful input to the process.”