Regulators block SDG&E from charging customers for 2007 wildfires

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SAN DIEGO – A request by San Diego Gas & Electric to recover $379 million of costs caused by the 2007 wildfires from ratepayers was denied Thursday by the California Public Utilities Commission.

The commission found that SDG&E did not reasonably operate its facilities that were linked to the Witch, Guejito and Rice wildfires, which killed two people, burned nearly 200,000 acres and destroyed more than 1,100 homes.

The October 2007 fires were blamed on power lines that blew down during strong Santa Ana winds.

“There is no dispute that SDG&E facilities caused these fires,” said Commissioner Liane Randolph.

“The question we had to analyze was whether the costs related to the fires should be paid by customers or shareholders,” Randolph said. “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.”

In response, Lee Schavrien, SDG&E’s senior vice president and chief regulatory officer, said the CPUC made the wrong decision, which the utility will seek to overturn.

“The 2007 wildfires were a natural disaster fueled by extreme conditions including the worst Santa Ana wind event this region has ever seen, combined with high heat, low humidity and hurricane-force winds as high as 92 mph,” Schavrien said. “Experts from Cal Fire and the county Office of Emergency Services described the weather as `unprecedented (in) magnitude,’ and `wind conditions being the worst they had ever seen in recent memory.”‘

He said the ruling conflicts with findings made by the Federal Energy Regulatory Commission.

In filings with the agency, SDG&E said it faced $2.4 billion in costs from the fires, including 2,500 lawsuits seeking damages. The company said it has recovered $1 billion from insurance carriers and another $824 million from Cox Communications and three contractors.

In the past, the CPUC has held that for costs to be found reasonable, the utility must prove that they were “prudently incurred by competent management exercising the best practices of the era, and using well-trained, well-informed and conscientious employees and contractors who are performing their jobs properly.”

Unjust or unreasonable costs must not be recovered in rates from customers, according to the agency.

The CPUC said staff evaluated whether SDG&E’s operation, engineering and management of its facilities involved in the ignition of the wildfires was reasonable.

Each of the fires was addressed separately under the CPUC’s prudent management standard that requires that the CPUC not allow recovery of unreasonable costs that were the result of imprudent utility management. For all three fires the CPUC determined that SDG&E’s operation and management of its facilities prior to the ignition of the wildfires was not prudent.

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