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SDG&E “Settlements on Management Failure” not Fines nor Penalties?
Recent televised comments by a San Diego Gas and Electric Company (SDG&E) spokesperson clarified SDG&E's position on settlement money paid to the California Public Utilities Commission (CPUC) for management failures revealed in consumer protection wildfire investigations and in other business before the state commission.
Pre-judgment settlements to various state and federal agencies stemming from Sempra Energy's utility management failures at SDG&E have the convenient effect of halting on-going official investigations into management practices regarding the causes of the 2007 San Diego County wildfires, lapses in the Sunrise Powerlink application, and illegal trading practices.
In other words, the $14.8 million settlement amount paid by SDG&E to CPUC for SDG&E's part in causing 2007 wildfires is not a fine or penalty. This is because the investigations were terminated before CPUC could make an official commission finding that would turn the $14.8 million settlement paid by SDG&E to CPUC into a fine or penalty.
Regardless of what SDG&E may choose to call it, the underlying reasons for making the payment in the first place are material facts that may be considered by the City Council of San Diego to determine if SDG&E is or is not adhering to the terms of the 1970 electricity franchise. That franchise agreement governs SDG&E's role as the franchise grantee. According to that agreement, its terms are to be strictly interpreted for the City and against the franchise grantee in any dispute, where each separate franchise term "is a material and essential condition to the granting of the franchise." Any breach of those conditions is to be noticed by the City Manager, and if not corrected in 30 days, the franchise is forfeit.
Clearly, if the City Council finds that SDG&E is operating its electricity franchise in a manner that places public safety in jeopardy, then the City Council has the right to adjust the 3% franchise fee upwards. In addition, the citizens of San Diego have the right to increase that fee as a majority-vote ballot initiative, providing a measured economic incentive for SDG&E to put all of its overhead power lines underground.
A move by San Diego to appropriately increase the electricity franchise fee would offset the potential ratepayer liability if CPUC approves the Wildfire Expense Balancing Account (WEBA) proposal submitted by SDG&E, SCE, and PG&E (of Prop. 16 fame).
Remember: Just because you may end up paying for SDG&E negligence that just might have caused a couple of raging wildfires or a few relatively minor wash trades, you are not being fined or penalized. It's just Sempra Energy's SDG&E in its normal operation of business, something that happens every day.