California Regulators Reject Utility’s Bid to Pass Wildfire Costs on to Customers

(CN) – In a much-anticipated vote, the California Public Utilities Commission unanimously rejected a bid by San Diego Gas & Electric to pass on to Southern California ratepayers $379 million in costs incurred from 2007 wildfires.

The vote came Thursday after the hearing had been postponed multiple times over the past couple months, triggering suspicions that the utility may have been considering rejecting the opinion of two utility commission administrative law judges that found SDG&E’s management of its facilities leading up to the wildfires was “imprudent” and “unreasonable.”

A ratepayer even sued the utilities commission last month for repeatedly delaying the vote, claiming it gave SDG&E more time to lobby its way off the hook.

The 2007 San Diego wildfires killed two people and destroyed more than 1,300 homes. Because its poorly maintained power lines were blamed for the devastation, SDG&E owed $2.4 billion for settlement costs and legal fees. Of that, $379 million remains outstanding.

Ultimately, the commissioners denied SDG&E’s request to pass the $379 million on to ratepayers, which would have bumped utility customers’ fees up an average of $1.67 every month over a six-year period, according to an estimate by SDG&E.

In an emailed statement, SDG&E’s senior vice president Lee Schavrien said the utility commission “got it wrong” and that the utility plans to “pursue all available avenues to overturn this decision.”

Eschewing responsibility for the wildfires, Schavrien called them a natural disaster “fueled by extreme conditions,” including 92 mph winds.

“This decision is not supported by the evidence and is not consistent with the determination made by the Federal Energy Regulatory Commission (FERC) … We find it difficult to understand how federal regulators understood the law and applied it appropriately, while the CPUC adopted a flawed interpretation,” Schavrien said.

But the utility commissioners found that SDG&E failed to be a prudent manager of its facilities.

Commissioner Cliff Rechtschaffen said the decision resulted from a “very, very careful review” and does “not hold utilities to perfection.”

He added that approving SDG&E’s request would “send the wrong message.”

“We want to encourage and incentivize prudent management. Our obligation is to rule that the utility can’t recover unless they acted prudently,” Rechtschaffen said.

Utility Commission President Michael Picker said the fire hazard in California is growing due to climate change and people moving into areas with elevated fire risk. He said almost 42 percent of California’s land mass is at risk for wildfires.

Thursday’s decision “may or may not have any precedent on any future fire,” according to Picker. He joined commissioner Martha Guzman Aceves in filing a joint concurrence asking the state legislature to allow the utility commission to portion liability when multiple causes for a wildfire exist, rather than leaving a utility entirely on the hook for costs.

But commissioner Liane Randolph, who presided over the proceeding, said in a statement the commission determined customers should not have to bear SDG&E’s wildfire costs.

“There is no dispute that SDG&E facilities caused these fires. The question we had to analyze was whether the costs related to the fires should be paid by customers or shareholders. The CPUC undertook a careful review of the facts of each fire and determined in each case that customers should not have to bear these costs,” Randolph said.

 

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