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Utility customers won’t cover San Diego Gas & Electric’s wildfire settlement costs — for the time being.
The state Public Utilities Commission voted Thursday to deny the company’s request to pass more than $460 million in legal costs to ratepayers but didn’t close the door to future petitions for assistance from customers.
The decision followed concerns about last-minute tweaks to both proposals the board considered on Thursday.
First, one of the commissioners revised his written recommendation and called for utility users to pick up most of SDG&E’s costs, a change from his initial proposal, KPBS reported Thursday.
But Commissioner Timothy Simon withdrew his statement after another eleventh-hour update from a fellow board member.
Commissioner Mark Ferron suggested the commission support an administrative law judge’s proposal to deny SDG&E’s ability to pass the buck to its ratepayers but add language that allows the utility company to continue to formally record costs associated with the wildfires.
SDG&E had hoped to increase ratepayers’ bills to recoup at least $464 million not covered by insurers, as former Voice of San Diego reporter Rob Davis explained earlier this year.
SDG&E paid more than $1 billion to victims of the Witch Fire. The 2007 blaze left two dead, 40 firefighters injured and destroyed more than 1,100 homes.
Insurance covered initial settlements but the lawsuits kept coming and SDG&E couldn’t keep up. About 600 cases remain open.
Davis detailed the situation back in February:
SDG&E initially said its customers had little to worry about. They were unlikely to have to pay any damages, a company spokeswoman said in 2008. Yes, the company’s power lines had been identified as the cause of three fires. And yes, the victims were going to want money to rebuild.
But SDG&E’s $1.1 billion insurance policy would likely be enough, the spokeswoman said.
Fast forward to 2012. The utility’s settlements have exceeded its policy. Now it’s taking steps to get regulators to allow it to charge customers — even if the company is found negligent for causing destructive wildfires.
(For more details on why SDG&E was found culpable for the Witch Fire in some reports, check out this 2008 story. VOSD contributor Randy Dotinga also pulled together some good background on San Diego area wildfires last October.)
The company petitioned the Public Utilities Commission, asking if it could pass the cost along to ratepayers rather than its shareholders. SDG&E said the company was entitled to collect additional fees because it assumes risk by providing service to customers in areas prone to wildfires.
But fire victims and activists argued allowing SDG&E to pass the bill along to customers wouldn’t motivate it to improve and properly maintain power lines, or take other steps to prevent wildfires.
On Thursday, community leaders cheered the board’s decision.
“This is a victory for the ratepayers of San Diego,” said Donald Kelly, executive director of the nonprofit Utility Consumers’ Action Network.
Just hours earlier, Kelly’s group held a press conference to ask the board to delay its vote given the last-minute changes.
Still, he and others weren’t disputing Ferron’s belated tweaks to the proposal that ultimately prevailed, even though they weren’t made public before the Thursday meeting.
Diane Conklin of the Mussey Grade Road Alliance, a citizen watchdog group, said in a statement she was pleased with the outcome.
San Francisco-based attorney Nina Suetake, whose group has followed the case, said the process established by the commission’s Thursday vote benefits ratepayers.
The utility company can record its costs but any additional proposals for assistance from ratepayers will be carefully vetted, Suetake said.
SDG&E isn’t criticizing the commission’s vote.
“We believe the Commission today reached a reasonable compromise that gives SDG&E the opportunity to continue to make its case for rate recovery, while also allowing a robust reasonableness review by commissioners in the best interest of its customers,” a spokeswoman wrote in a statement.
Nicholas Sher, an attorney representing the commission’s Consumer Protection Safety Division, said it’s only a matter of time before the company submits another request to the board.
The company has a duty to its shareholders and its tab is only increasing.
“I don’t usually place bets because I lose,” Sher said. “I’d bet my house on this one.”
Lisa Halverstadt is a reporter at Voice of San Diego. Know of something she should check out? You can contact her directly at firstname.lastname@example.org or 619.325.0528.
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