SDG&E Asks CPUC to Add Partial 2007 Wildfire Costs to Rates

SDG&E first owed $463 million to firestorm victims after an independent report by Cal Fire determined its power lines caused the massive 2007 wildfires in San Diego

San Diego Gas and Electric (SDG&E) asked the California Public Utilities Commission (CPUC)  to approve a new electricity rate hike that will ask customers to pay almost $380 million in settlement fees associated with the 2007 wildfires, SDG&E said Friday. 

SDG&E first owed $463 million to firestorm victims after an independent report by Cal Fire determined its power lines caused the Witch, Rice, and Guejito fires. Two people died and 1,300 homes burned down. Losses have run upwards of $2 billion.

Initially, SDG&E faced 2,500 lawsuits related to the 2007 fires and $4 billion in claims, but the company settled most of them at a cost of $2.4 billion. The cost of some of the settlements was taken from the company's liability insurance and recoveries from third parties. 

Today, $420 million in costs remains unpaid.

On Friday, SDG&E filed paperwork in an attempt to pass along the costs to ratepayers. Shareholders would pay 10 percent of the remaining bill, or $42 million. Customers would pay for the remaining $379 million of that legal tab. 

SDG&E said the average customer's bill would cost $1.70 more per month for a customer using 500 kilowatt-hours of electricity a month. The company has said it would take six years to pay off the sum at that rate. 

“We have gone to great lengths to minimize the impact to our customers by successfully settling these lawsuits rather than taking them to trial, which would have been significantly more costly,” said Lee Schavrien, chief administrative officer for SDG&E, in a statement. “We are in the final stages of this proceeding, and after eight years, we believe that, as a company, a community and a region, we are much better prepared for a future fire emergency.”

If the change is approved, it would likely take effect in 2017. 

Since the 2007 fires, SDG&E said it has taken steps to prevent similar incidents from happening by installing over 170 weather stations across its service territory. Those stations enhance operational safety and overall situational awarness, SDG&E says.

This is not the first time SDG&E has asked CPUC to approve a new electricty rate hike. In Dec. 2012, CPUC denied a request from the company to retroactively impose a rate hike of nearly half a billion dollars to cover the cost of power-line caused fires in 2007, plus the cost of future damages.

SDG&E had asked that ratepayers cover 95 percent of the losses with Sempra investors on the hook for the rest. The company said this would cost the average customer around $190, payable at the rate of $3 to $4 per month for up to four years.

Former City Attorney Michael Aguirre said his law firm, Aguirre & Severson, plans to file suit against the SDG&E's efforts to charge ratepayers for the wildfires. 

In a statement, Aguirre called the the proposed rate increase "outrageous."

CPUC will likely issue their final decision by the first quarter of 2017. 

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