The California Public Utilities Commission decided San Diego Gas & Electric cannot charge ratepayers for $379 million in uninsured costs from three 2007 fires ignited by the utility's equipment.
The utility company wanted to pass on the costs of those fires onto its customers.
It was seen as a victory for ratepayers because if CPUC had ruled in favor of the request, they would have been on the hook for $1.67 a month over six years
On September 25, 2015, SDG&E filed an application seeking CPUC approval to recover $379 million, which represents a portion of the $2.4 billion in costs and legal fees incurred by SDG&E to resolve third-party damage claims arising from the Witch, Guejito, and Rice Wildfires, according to a press release issued by the commission.
"While it may be tempting for people who don't know a lot about this case to think your facilities were involved in these fires, you must have done something wrong--in fact, all three fires occurred because of circumstances beyond our control," Chris Lyons, Senior Counsel for SDG&E told NBC 7 earlier this year.
However, the commission found that SDG&E did not reasonably operate its facilities linked to the wildfires, which thereby prohibits the utility from recovering those costs in rates.
The CPUC evaluated whether SDG&E's operation, engineering, and management of its facilities involved in the ignition of the wildfires was reasonable.
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SDG&E Senior Vice President Lee Schavrien said he strongly disagrees with the decision.
"The CPUC got it wrong. 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 in a statement.
“We will vigorously pursue all available avenues to overturn this decision.“
Although SDG&E has not admitted any liability in the wildfires, the company has paid more than $2 billion in settlements and other costs.
The CPUC had postponed the vote on the issue four times before Thursday’s meeting.
In 2007, the Witch, Guejito and Rice fires destroyed more than 1,300 homes in the county and killed two people.
San Diego County Supervisor Dianne Jacob said state regulators did the right thing.
"SDG&E’s bid to stick ratepayers with the bill was outrageous and an insult to all those affected by the 2007 disaster. Folks died in these fires and many lost their homes," she said. "Today’s decision does not change that, but brings some justice against a utility that cares more about shareholder profits than public safety.”
SDG&E says the Witch Fire was caused by unprecedented winds and the Guejito Fire was started by a branch that fell and knocked down a power line. The Rice Fire was due to a third-party facility that contacted their lines.
Read SDG&E's statement in full below:
“SDG&E strongly disagrees with today’s decision. The CPUC got it wrong. 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. 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.’
“This decision is not supported by the evidence and is not consistent with the determination made by the Federal Energy Regulatory Commission (FERC). FERC conducted its own inquiry and found SDG&E acted reasonably and approved the FERC-jurisdictional portion of the wildfire cost request. We find it difficult to understand how federal regulators understood the law and applied it appropriately, while the CPUC adopted a flawed interpretation.
“The decision wrongly concludes that the applicability of inverse condemnation by California courts to privately owned public utilities is irrelevant. Under inverse condemnation, a utility is strictly liable, regardless of fault or foreseeability, if its facilities are involved in an ignition. Courts apply inverse condemnation to utilities on the grounds that utilities can spread the costs through rates, but this decision has failed to recognize or acknowledge the role inverse condemnation played in the incurrence of the costs and has failed to allow SDG&E to spread the costs as the courts envisioned.
“We will vigorously pursue all available avenues to overturn this decision.“
