by Lucas O’Connor / Two Cathedrals / Jan. 19, 2012
In 2007, massive wildfires swept through San Diego, destroying more than 1,000 homes and hundreds of other structures. Investigation into the cause of the Witch Creek fire found that SDG&E power lines were largely responsible for starting the second-largest wildfire in California’s history. The thing is, SDG&E’s insurance only covered $1 billion in damages, and it now looks as though SDG&E practices are leading to fire settlements totaling at least $2 billion.
That’s a big gap, which might sound like bad news for SDG&E and for the profits of its parent company Sempra Energy. But SDG&E has a different plan — making ratepayers cover the extra billion dollars that the wildfires cost. They’re petitioning the Public Utilities Commission to allow the additional costs to be passed along to the customers even though the customers weren’t the ones at fault at any point:
SDG&E has filed hundreds of pages of documents in its quest to have ratepayers cover costs of future wildfires caused by electrical lines. Now, in one sentence inserted in a filing last month, the company proposes that its damages from the 2007 fires also be paid by customers.
And in the meantime, SDG&E is working to delay a court case that would allow a public airing of evidence and a determination by a jury as to just who bears responsibility — in practice and in cost — for the fire damage. The trouble for SDG&E of course is that a jury is much more likely to side with ratepayers since, you know… they are ratepayers. Much better odds for SDG&E in an obscure CPUC hearing than in a court of law, where there’s much less opportunity for public awareness or accountability
Meanwhile, attorney Mitch Wagner, who sued SDG&E on behalf of some of the hundreds of people who lost their homes in the 2007 fires, said any decision by commissioners on that request is premature.
“The CPUC ought not to do anything until after there’s a trial in the civil cases when all of the evidence comes out,” Wagner said. “If the jury concludes SDG&E was not only negligent but reckless, the PUC would have a very difficult time giving any credence to SDG&E’s application.”
Of course, this is an abject lesson in how the public and private interests diverge, even when a public good is being delivered. Sempra’s responsibility is to its shareholders and the protection of its stock price. Having to swallow a billion dollars would undo all the excitement over record profits that Sempra has recently been reporting.
And in this case, the fundamental divergence is deepened still further since SDG&E holds a monopoly on the electricity market — it isn’t as though consumers can just take their business elsewhere. The one option that even vaguely addresses this — installation of solar panels to provide, in part, one’s own electricity — received a temporary reprieve from SDG&E’s attempted money grab, but SDG&E has not given up the cause.
They’re granted their monopoly with the understanding that profits will not trump the public interest, but as we’re seeing, it’s often exceedingly difficult to enforce motivations. Especially when SDG&E has the ‘what else are you gonna do?’ argument on its side.
But consumers deserve to have a court determine whether SDG&E is at fault before being forced to buoy Sempra’s stock price. The next question is whether anyone cares enough to prevent it.
A motion to request a public participation hearing has been filed with the California Public Utilities Commission, asking that members of the public be able to learn about and offer comment on the proposed rate hike.
CPUC Commissioner Simon’s telephone number to request the hearing is 415-703-1407.