Petition for review comes in the wake of losing arguments to regulators and two California courts
After being rebuffed by state regulators and two California courts, San Diego Gas & Electric has taken its years-long quest to be reimbursed for hundreds of millions of dollars in 2007 wildfire costs to the U.S. Supreme Court.
SDG&E filed a 178-page petition with the nation’s highest court late Tuesday, asking the justices to determine whether it is constitutional for states to impose strict liability on private utilities without ensuring they can recover their costs.
Utility officials said they filed the request because they believe the California Public Utilities Commission, the 4th District Court of Appeal and the California Supreme Court violated their constitutional rights by denying the company permission to charge customers $379 million in leftover wildfire expenses.
“Under the legal principle of inverse condemnation, energy companies like SDG&E are held strictly liable for property damage caused by wildfires, regardless of fault, based on the rationale that these companies can spread the costs through the rates,” SDG&E said in a statement. “However, the CPUC denied SDG&E’s ability to do so based on erroneous findings of fault.
“As a result, SDG&E is forced to be the insurer of last resort for wildfire damages, even when the damages occurred due to circumstances beyond our control,” the statement said.
But critics called the U.S. Supreme Court petition a rehash of failed arguments and noted that investigators found the utility responsible for the fires.
“SDG&E is attempting a Hail Mary pass to once again deny their clear liability for their negligence for causing San Diego wildfires,” said Loretta Lynch of the Protect Our Communities Foundation, one of the advocacy groups involved in the proceeding.
“We are confident that California and the opposing parties will prevail again and that the U.S. Supreme Court will not take this appeal,” said Lynch, who also is a former president of the state utilities commission.
Any decision from the high court would ripple well beyond SDG&E. Pacific Gas & Electric and Southern California Edison are suspected of causing recent wildfires that killed at least 125 people and caused tens of billions of dollars in damage.
PG&E already has declared bankruptcy in the wake of last fall’s Camp Fire, which claimed 86 lives and leveled the town of Paradise in Butte County. Edison recently reported a $4.7 billion charge tied to wildfire events within its service territory, the SDG&E filing says.
Still, the likelihood that the U.S. Supreme Court will take up the case is limited. The high court generally receives more than 7,000 such requests a year, and agrees to hear between 100 and 150 of those petitions.
Utility lawyers argue that the disputed issues call for a federal determination.
“The prospect of such liability has increased insurance costs, weakened credit ratings, and discouraged investment in California’s privately owned utilities,” SDG&E wrote in the petition.
“The catastrophic consequences of such liability are not hypothetical; they have already driven one privately owned utility (PG&E) into a recent highly publicized bankruptcy,” they added.
The petition names as respondent the state utilities commission, which originally denied the request for wildfire-recovery costs. It also lists PG&E, Edison, the Protect our Communities Foundation and other consumer advocates as parties to the proceeding.
Commission spokeswoman Terrie Prosper said in an email Wednesday that state regulators are reviewing the SDG&E filing. She declined to say whether the commission would file a reply brief with the U.S. Supreme Court.
The dispute over the $379 million dates back more than a decade, when SDG&E first applied to recover the money from ratepayers.
But investigations into the causes of the Witch, Guejito and Rice fires — three of the worst wildfires in a devastating firestorm that befell San Diego County in October 2007 — found they were sparked by SDG&E equipment that had not been properly maintained.
The three fires combined to kill two people, injure 40 firefighters and destroy 1,300 homes.
In the aftermath of the wildfires, investigators determined that SDG&E had not properly trimmed trees and other vegetation growing near its backcountry power lines. Santa Ana wind conditions and searing temperatures contributed to the fire threat, investigators said. SDG&E said the fires were due to natural causes beyond its control.
The utility was confronted by plaintiffs alleging more than $5.5 billion in damages, but resolved those claims for $2.4 billion, the petition states. It recovered $1.1 billion from insurance and $824 million from legal settlements with third parties, leaving $476 million in unrecovered losses.
SDG&E filed an application to charge customers the $379 million, but regulators refused to approve the request. The 4th District appellate court rejected the argument last year and the state Supreme Court quickly followed.
After the adverse 4th District ruling — a unanimous vote by three judges — SDG&E said Judge Patricia Benke improperly failed to recuse herself from the case because she co-owned a home that was destroyed by the Guejito Fire.
California Supreme Court judges rejected the bias argument as well.
Attorney Michael Aguirre, who represents SDG&E ratepayer Ruth Henricks in the proceedings, said utility customers already paid for the insurance and is also absorbing the ongoing litigation costs. He also predicted that the petition would not succeed.
“They’re spending ratepayers’ money to file with the Supreme Court a specious argument,” he said about SDG&E. “This is a frivolous constitutional case because their damage was caused by their own negligence. It wasn’t based on strict liability.”
The U.S. Supreme Court is expected to determine later this year whether it will hear the case.