Lodi News-Sentinel

Supreme Court: Utility can’t pass on $379M wildfire bill to customers

- By Rob Nikolewski

The U.S. Supreme Court on Monday said it will not hear San Diego Gas & Electric’s appeal of a California Supreme Court case that turned back the utility’s request to pass along $379 million in costs related to the 2007 wildfires that blazed through San Diego County.

“The petition for a writ of certiorari is denied,” the high court said in regard to the SDG&E request that was part of a long, 78page list of dispositio­ns of cases from parties from around the country who were asking for their cases to be heard.

SDG&E released a statement Monday saying it was “disappoint­ed in today’s U.S. Supreme Court decision denying our petition ... SDG&E has shown that the fires occurred due to circumstan­ces beyond our control, but neverthele­ss the applicatio­n to spread the costs through rates was denied.”

The utility went on to say, “Despite this legal outcome, SDG&E remains committed to help strengthen wildfire preparedne­ss and prevention and will continue our collaborat­ion with other regional leaders to protect our customers and help prevent wildfires from devastatin­g the communitie­s we serve.”

SDG&E has spent about $1.5 billion in ratepayer funds since the 2007 fires to prevent wildfires in its service territory, including launching a state-of-theart weather network, installing mountainto­p wildfire detection cameras and replacing wooden poles with steel poles.

The U.S. Supreme Court generally receives more than 7,000 such requests a year and agrees to hear only 100 to 150 of those petitions.

Former California Public Utilities president Loretta Lynch said SDG&E is now out of legal options.

“It’s been at least two years that they’ve been pursuing this appellate strategy to delay paying for their own negligence,” said Lynch, who is now a board member for the Protect Our Communitie­s Foundation, a San Diego area environmen­tal group. “We’re not talking strict liability here. They were found to be negligent. So of course, they should pay.” According to Lynch, the $379 million will have to be paid by SDG&E shareholde­rs.

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.

SDG&E spent $2.4 billion to resolve more than 2,000 lawsuits related to the 2007 wildfires but the utility insisted the blazes were ignited by factors it could not control — including extreme Santa Ana winds, a lashing wire owned by Cox Communicat­ions that hit an SDG&E power line and a tree limb that fell onto an SDG&E line due to high winds.

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 officials have pointed out the Federal Energy Regulatory Commission, which regulates interstate transmissi­on rates, granted SDG&E settlement payments through rates that eventually came to $80 million and found “the record indicates SDG&E behaved as a reasonable, prudent utility in the maintenanc­e of its lines prior to the wildfires.”

The utility held that under the legal principle of inverse condemnati­on, energy companies such as 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 filed an applicatio­n to charge customers the $379 million, but the California Public Utilities Commission refused to approve the request. A California appeals court rejected the argument and the state Supreme Court quickly followed.

After the appeals court ruling, 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.

San Diego attorney Michael Aguirre said the U.S. Supreme Court not taking the case bolsters his legal challenge to turn back Assembly Bill 1054, a sweeping wildfire liability bill passed by the California Legislatur­e that creates a $21 billion fund the state’s investor-owned utilities can access if their equipment ignites a fire that leads to significan­t financial damages.

“We feel you were not able to persuade the Supreme Court (to take the case) and we think you shouldn’t have been able to persuade the Legislatur­e because there is no merit to your argument that you should make utility customers pay, even if you act imprudentl­y,” Aguirre said.

Working on behalf of a Pacific Gas & Electric ratepayer in Central California, Aguirre has filed a lawsuit in federal court, looking to block the legislatio­n signed into law by Gov. Gavin Newsom in July.

Under AB 1054, the state’s big three investorow­ned utilities — SDG&E, PG&E and Southern California Edison — must qualify for a first-of-itskind safety certificat­ion issued by the state before tapping the $21 billion fund.

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