Jeff Smith 3 p.m., March 10
- Community Blog
- Encanto Gas Holder
Electrical Corporations: Too Big to Fail, but also Too Big to be Wrong?
“Businesspersons are not all necessarily angels, anymore than any other group; the illegal, fraudulent, or sharp operator must be held responsible for misconduct and punished where appropriate” (Milton R. Wessel, The Rule of Reason: a new approach to corporate litigation)
Recently, as ordered by the California Public Utilities Commission (CPUC), the local electrical corporation and representatives from many county districts and agencies have been meeting about the San Diego Gas & Electric Company (SDG&E) plan to cut off power to county customers because of the high-wind dry heat threat of wildfire conditions.
CPUC did previously fine SDG&E and Cox Communications $17 million relating to the roles of these public utilities in the 2007 San Diego County wildfires. In addition, SDG&E was ordered to officially apologize to CPUC for obstruction of the CPUC wildfire investigations. CPUC earlier fined SDG&E $1 million for withholding information in testimony to CPUC regarding the Sunrise Powerlink proposal, where concerns about future wildfires were noted in many public comments against the proposal. In both cases, SDG&E refused to acknowledge any actual wrongdoing on its part, despite the payment of fines by the public utility's liability insurance carrier.
Quite possibly, the public utility is too big to be denied insurance coverage, no matter what the circumstances are.
SDG&E has sued homeowners with 2007 wildfire loses for not clearing brush and debris on their properties, even though CPUC found that public utility equipment failures were the main wildfire cause. It has yet to be proven that individual homeowner actions on their own property could have prevented SDG&E transmission lines from starting the home-consuming wildfires.
CPUC approval of any mediation results leading to an order permitting SDG&E to cut power is absolutely vital to protecting the future payout of Sempra Energy dividends from negative growth, due to losses of SDG&E income from liabilities from SDG&E implementing any unauthorized power cutoff plans. According to Section 2775 of the California Public Utilities Code, “No electrical or gas corporation which reduces or discontinues service in accordance with any order of the commission issued pursuant to this chapter shall be liable for any damages to any person or property resulting from such reduction or discontinuance.”
In other words, once CPUC greenlights SDG&E's power cutoff plans, all of the county districts and agencies are on their own.
County homeowners near SDG&E power lines are not amused.
It is safe to assume that SDG&E and its parent Sempra Energy are doing everything within legal limits to gain approval of the power cutoff plan.
Others are assuming that SDG&E just might cross the line between ethical behavior and doing whatever it takes to get that relief from liability. Dianne Jacob, a county supervisor taking part in the pre-mediation meetings, has already stated her distrust of the public utility. For those at the Utility Consumers' Action Network (UCAN), the recent millions in CPUC fines against SDG&E do not inspire confidence in the public utility or its parent of putting the interests of customers ahead of or even on par with the need to pay out dividends to Sempra Energy stockholders.
A socio-economic theory emerging from the Crash of 2008 is that in any corporation, the stockholders tend to be individual and institutional investors least offended by that corporation's policies and principals. This theory helps to explain why stocks sold off and lost value so rapidly during the Crash, and may also predict the approval by stockholding speculators of corporate acts that are good for those receiving dividend payouts but not necessarily in the best interests of customers, voters or the public in general.
In 2000, Sempra Energy advertised in its annual report to investors Sempra Energy's ability to perform the most complex energy trades while seeking to avoid regulation of an increasing share of its revenues from operations. In that same year, SDG&E denied doing anything wrong during the rolling blackouts and power outages that ultimately resulted in the recall of Gray Davis. With state National Guard units being readied for deployment to Afghanistan, it was the first time that the voters of California moved to unseat an incumbent governor and militia commander in chief during wartime.
So far, there is no evidence that Sempra Energy has hired the ex-governor or former SEDC president Carolyn Smith as a consultant on how to avoid state or federal power company regulations over income sources.
After Sempra Energy hired the retiring local head of the Federal Bureau of Investigation as chief of corporate security (http://legacy.signonsandiego.com/uniontrib/20070330/news_1n30fbi.html), SDG&E won its motion for retrial in United States of America v. SDG&E (2007) and was successful in having asbestos test sample evidence thrown out in that case, resulting in the local United States Attorney's office moving to dismiss the District Court criminal matter.
In other news, SDG&E is reported to have received state approval to purchase power generated by a Montana wind farm with a 300 megawatt generating capacity. No details were provided on the number of extension cords needed to make a connection from Montana to the proposed Sunrise Powerlink, or if the utility instead plans to draw that power through intermediary Powerlink connections with CPUC-unregulated wholesale vendors in Mexico. (http://www.snl.com/Interactivex/article.aspx?CdId=A-10389376-11055)
No word has been given on when SDG&E customers could expect to see the Sunrise Powerlink go subterranean. Undergrounding of other local power lines by the public utility are not expected to be completed until at least 50 years after the previously reported end of the Mayan calendar. No investment in the undergrounding of any power lines by Sempra Energy are planned at all.
A public utility and its owner are looking for dividend-saving advantages over customers and the commission, every day.