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SDG&E continues to seek recovery costs

SAN DIEGO — San Diego ratepayers may be billed for hundreds of millions of dollars in expenses from the 2007 wildfires and also for costs of wildfires to come pending the request of SDG&E and Southern California Gas Company (SoCalGas) to raise utility rates. 

SDG&E and SoCalGas have applied to CPUC (California Public Utilities Commission) to raise utility rates to recover the costs from past and future wildfires that are not covered by a utility’s insurance.

The utilities plan to establish a WEBA (Wildfire Expense Balancing Account) to track the wildfire costs that can be recovered from ratepayers.

The utilities’ request was submitted to the CPUC in light of the mounting costs of the fires.

The CPUC’s investigation determined that three of these fires: the Witch Creek, Guejito, and Rice fires were linked to SDG&E power lines.

SDG&E does not know the final costs of the 2007 wildfires that they hope to recover because of outstanding lawsuits and counter claims, said Stephanie Donovan, SDG&E’s senior communications manager.

SDG&E estimated in April that they may attempt to recover up to $400 million through the WEBA.

CPUC Proposed Decisions

The CPUC will vote on the utilities’ request Nov. 29 based on two proposed decisions from the Commission released in mid-October.

Administrative Law Judge Maribeth A. Bushey’s proposed decision denied the request, claiming that the utility companies had not proven that the proposed raised rates were reasonable.

CPUC Commissioner Timothy Alan Simon’s proposed decision partially approved the utilities’ request, limiting the wildfire costs recoverable through the WEBA to 90 percent of the uninsured wildfire costs over $10 million per wildfire. SDG&E, SoCalGas, PG&E, and Edison initially filed the claim in 2009; PG&E and Edison have dropped out of the claim and SDG&E has taken primary responsibility for the request to the CPUC.

SDG&E’s Proposal

SDG&E has claimed that many aspects of wildfire risk and damage are outside of the utilities’ control, and as such utility companies should be able to charge ratepayers for wildfires costs through the WEBA.

SDG&E has claimed in proceedings that even if utilities follow safety regulations diligently, utility companies are exposed to wildfire risk because they must serve everyone in the county regardless of the fire risks in certain areas.

Furthermore, utilities may be held accountable for wildfire damages that result from factors beyond the utilities’ control, including weather, population density, and fire fighting resources.

Considering these factors, SDG&E has argued that recovering the costs from ratepayers is necessary for the utility to remain financially strong.

“We can’t protect our system 100 percent of the time. We are certainly making great strides in the area,” said Donovan.

In recent efforts to preventatively assess the fire risks throughout the county, SDG&E has started to track weather data in real time and has also replaced some wood poles with steel poles, Donovan said.

If the WEBA is approved, it will be another year or two before ratepayers are impacted by these costs, said Donovan.

Objections to WEBA

Those opposing the utilities’ request have argued that if the WEBA is approved, utility companies will not be held financially responsible for wildfires that utility equipment causes.

Bushey’s proposed decision stated, “Financial incentives for prudent risk management and safety regulation compliance are substantially undermined by the presumption of recovery from ratepayers.”

SDG&E claims that under Simon’s proposed decision, the limitation of costs recoverable by ratepayers will provide incentive for utilities to follow safety regulations and avoid fire risk.

“They (SDG&E) just want a blank check to cover the costs of wildfires,” said Mindy Spatt, communications director for TURN (The Utility Reform Network), which has been campaigning for the CPUC to deny the utilities’ WEBA request. “SDG&E needs to be held accountable like any other business for their safety practices.”

2007 Wildfires

The Witch Creek and Guejito fires burned 197,990 acres, including 1,141 homes, as well as killed two people and injured 40 firefighters. The Rice fire burned 9,472 acres, including 206 homes.

“We do not dispute the fact that our power lines were the ignition source,” said Donovan, of the 2007 wildfires.

However, she said that the wildfires would not have occurred without the extreme wind conditions.

SDG&E maintains that the company did not break safety or maintenance requirements in regards to the 2007 fires, said Donovan. “There has been no agency or court to date that has found that SDG&E has done anything wrong.”