Ruling expected on fire liability
Regulators to decide if customers must pay
California regulators on Thursday may finally decide whether an electric utility sued over wildfire damage can pass those costs on to its customers.
But the long-running and closely watched case — which took on new relevance after October’s deadly Wine Country fires — may not set much of a precedent.
The California Public Utilities Commission is scheduled to vote Thursday on a request from San Diego Gas & Electric Co. to make its customers pay some of the costs of settling lawsuits tied to several 2007 wildfires sparked by the company’s equipment.
SDG&E has paid $2.4 billion to settle the suits and wants its customers to shoulder $379 million of those costs, potentially adding $1.67 to a typical customer’s monthly bill. The commission’s staff has recommended denying the
request.
Lawsuits arising from wildfires have turned into a persistent, expensive problem for the state’s utility companies, and both Pacific Gas and Electric Co. and Southern California Edison support SDG&E’s request.
PG&E already faces more than $1.1 billion in lawsuit costs from the 2015 Butte Fire in Amador and Calaveras counties, and state investigators are now exploring whether the company’s equipment sparked the recent North Bay fires. Under a legal doctrine known as inverse condemnation, utilities whose equipment starts a fire can be held liable for economic damages even if the company followed all relevant safety regulations.
The utility companies argue that in cases of inverse condemnation, they should be able to pass along to their customers wildfire-lawsuit costs not covered by insurance, spreading those costs around.
But a proposed decision posted Tuesday on the commission’s website rejects that argument, at least in the case of SDG&E and the 2007 fires.
Inverse condemnation is irrelevant, it says, because SDG&E’s own missteps in managing its system helped lead to the fires. And even if a court were to find that inverse condemnation applied in the 2007 fires, no case law would force the commission to let utilities make their customers pay those costs.
“In other words, inverse condemnation is not going to save your bacon,” said Thomas Long, legal director of The Utility Reform Network consumer group, which opposes the utilities’ position. “This is an appropriate and stinging rebuke of the utilities’ arguments, if it gets voted out.”
Although SDG&E does not dispute that its equipment played a role in starting each of the fires covered in the case, the company maintains that the blazes were the result of circumstances beyond its control. The fires erupted during a powerful Santa Ana wind storm that lasted several days, raking Southern California with hot, dry gusts.
A spokeswoman with San Diego Gas & Electric said the company strongly disagreed with the proposed decision.
“We remain hopeful that the commissioners are conducting a thorough examination of all the facts before making their decision,” said spokeswoman Colleen Windsor.
The utilities commission has scheduled a vote on the issue several times this year, only to postpone it. The same could happen again at the commission meeting Thursday. However, a list posted Monday afternoon of meeting agenda items that would be delayed until future hearings did not include SDG&E’s request, suggesting the commission plans to go ahead with a vote.
Even though investigators with the California Department of Forestry and Fire Protection have not determined the causes of the Wine Country fires — and may not do so for months — some area residents have already sued PG&E. In a regulatory filing Monday with the U.S. Securities and Exchange Commission, the company cited 32 lawsuits that have been filed in Napa, San Francisco and Sonoma counties related to the fires, which destroyed 8,900 structures and killed 44 people. The plaintiffs include former San Francisco Mayor Frank Jordan and his wife, who lost a home in Santa Rosa.
PG&E has argued that the most destructive of the fires — the Tubbs Fire — may have been caused by electrical lines installed and owned by someone else.
Should PG&E be found liable for some or all of the fires, the company’s liability could be “substantially more than $3 billion,” Monday’s filing warns. PG&E has about $800 million in liability insurance.
Three state lawmakers say they plan to introduce legislation in January that would prevent utilities from making their customers pay lawsuit costs from fires caused by the companies’ negligence.