In a closely watched decision that could impact whether ratepayers are on the hook for billions in costs related to the Napa-Sonoma fires if PG&E is found at fault, the California Public Utilities Commission on Thursday denied a request from San Diego Gas & Electric to charge its customers $379 million in costs related to three huge fires that the utility’s power lines caused in 2007.
By a 5-0 vote the commissioners, who are appointed by Gov. Jerry Brown to regulate utilities, said that San Diego Gas & Electric had not operated its electrical system in a reasonable and prudent manner when the fires began, as state law requires.
As a result, the commissioners ruled, San Diego Gas & Electric’s shareholders, not its ratepayers, must absorb the costs.
“There’s no dispute that each of the fires was caused by SDG&E and that SDG&E did not meet its burden to act as a prudent manager,” said Commissioner Liane Randolph.
Over the past two months, California’s three largest providers of gas and electrical service to the public — PG&E, San Diego Gas & Electric and Southern California Edison — have lobbied the commission furiously to allow San Diego Gas & Electric to pass along the costs to its ratepayers. They have said that with climate change and more people moving into fire-prone areas, it’s becoming more difficult for them to find enough insurance to purchase to cover the risk.
And they have said, it’s not fair that courts have found utilities must face huge liabilities if their power lines, transformers or other equipment causes wildfires that can burn thousands of homes and kill dozens of people, even if they were not negligent, a legal concept known as “inverse condemnation.”
But consumer groups and some elected officials have said that letting San Diego Gas & Electric and other utilities pass along the costs of wildfires caused by power lines to their customers provides a disincentive for the utilities to properly maintain those lines and improve safety, thus increasing the risk of wildfires to the public.
“I am relieved that the CPUC made the right decision to shield ratepayers from being burdened with the costs of the 2007 San Diego wildfires that were caused because San Diego Gas & Electric didn’t reasonably manage its power lines,” said State Senator Jerry Hill, D-San Mateo.
Hill, chairman of a key state Senate subcommittee on gas, electric and transportation safety, said that the case had importance in the wake of October’s devastating Napa and Sonoma County wildfires.
A series of fires that began Oct. 8 in Napa, Sonoma, Mendocino and other Northern California counties burned more than 245,000 acres, destroyed 8,900 homes and killed 44 people, in one of the worst disasters in modern California history.
CalFire continues to investigate the cause, but is looking at whether power lines owned by PG&E were at fault for some of the blazes, which were spread by windy conditions. The utility has told investors it faces massive liabilities if it is found to be at fault.
Last month, according to a review of emergency radio traffic by the Bay Area News Group, Sonoma County dispatchers sent out fire crews to at least 10 different locations across the county over a 90-minute period starting at 9:22 pm on Oct. 8 — the time the first fires were reported — to respond to 911 calls and other reports of sparking wires, exploding transformers and problems with the county’s electrical system amid high winds.
“If the commission had sided with the utility companies, it could have set a dangerous precedent for the future of disaster cost recovery, or at the very least, created a perception of a precedent,” Hill said Thursday. “Today’s decision concludes a decade-long process to rightly assign the costs of the tragic fires to the company responsible for causing them.”
