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Motion for WEBA Protest at Issue before CPUC
Protest party Ruth Henricks and her attorney Michael Aguirre have filed a motion to reply to investor owned utility (IOU) response opposing Henrick's eaarlier motion to file protest in the uninsured wildfire liability billing authority matter now before the California Public Utilities Commission.
Aguirre argues that it is appropriate for CPUC to grant motions to file protest and/or to reply to the IOU response to establish a record in the proceeding, as Aguirre signals in the motion to file reply that there is an intent to take the matter before the Court of Appeals. Like a small fighter against a planet-sized starbase, Aguirre intends to launch a legal torpedo against a plan to bill customers for IOU's uninsured wildfire legal costs and related wildfire response and recovery expenses, even those legal and other expenses arising from industry standards that may amount to utility negligence in doing business. According to Aguirre and others, the IOU shareholders and not customers should bear the financial burden for paying the tab.
Actually, Aguirre's strike package may include several lethal legal torpedoes.
In December 2009, CPUC issued an order to San Diego Gas and Electric Company (SDG&E), Pacific Gas and Electric Company (PG&E) and the Southern California Edison components that they needed to amend their initial Wildfire Expense Balancing Account (WEBA) billing authority application A0908020, a necessary step in the proceeding to grant the authority for meeting concerns brought up by CPUC's Division of Ratepayer Advocates (CPUC DRA) and Consumer Protection and Safety Division (CPUC CPSD). The order by both the assigned commissioner and administrative law judge required a response within 45 days that all partied had met and conferred, and that SDG&E, PG&E and SCE components amend their application.
DRA opposes the initial WEBA application as an “unlimited” consumer liability for IOU inability to insure operations for wildfires after the 2007 wildfire season. Current SDG&E estimates are that claims stemming from the 2007 San Diego County wildfires will outstrip the over $1-billion coverage purchased for that year. Since then, insurers have either raised prices, lowered coverage, or left the wildfire insurance market altogether, but the utilities have been slow at changing the major feature of power industry standards that leads to utility-caused wildfires: overhead power lines and transformers.
For example, SDG&E's proposed Sunrise Powerlink heavy transmission line project will be partially underground through Alpine's business district, but other portions such as that through the Cleveland National Forest will be above ground, raising concerns among East County residents and at least one member of the County Board of Supervisors about increased wildfire dangers.
CPSD had been conducting hearings into SDG&E's role in causing the wildfires that highlighted some of the practices that led to untrimmed trees despite reports that trees needed trimming in the next “0-3 months” at the start of one wildfire and that exploding overhead equipment triggered another wildfire. CPSD wildfire-cause investigations were cut short by a voluntary settlement offer by SDG&E shortly after Aguirre intervened in CPUC wildfire proceedings.
Since the December 2009 order for an amended WEBA application, no details in the monthly SCE status reports have been offered as to progress in the months since the CPUC order was issued.
According to the California Public Utilities Code, if the CPUC finds that utilities have failed to do what has been ordered by CPUC in violation of the CPUC's order, the Commission's attorney is to sue the utilities in Superior Court to recover damages that are cumulative daily in addition to any other applicable penalties.
Aguirre has previously mentioned in the media his frustration with the cozy nature between CPUC commissioners and utility senior executives, where it is not unusual for utility executives and commissioners to meet and dine at Hawaiian resorts and San Francisco jazz clubs.
A WEBA prehearing conference has been scheduled, but in the absence of a filed amended WEBA application by the utilities, the potential exists for CPUC to deny the current operative but unamended application until the utilities can get their act together. A denial of the application in any case would have consequences for the utilities and their holding companies.
According to a previous CPUC ruling, holding companies of investor owned utilities have a first priority condition on their corporate relationship that requires the holding company to infuse capital into its owned utility in economic difficulty. The reason for this is that the utility must be able to fulfill its obligation to serve the public as part of CPUC granting permission to operate a public utility. In that decision, CPUC recognized that holding companies such as Sempra Energy enjoy the profits from their utility holdings such as SDG&E in good times, to the degree that Sempra Energy profit requirements take capital away from SDG&E that SDG&E could have otherwise used to improve its own utility assets for serving the public. On that basis, it is reasonable for Sempra Energy to infuse all forms of capital into SDG&E as needed during weak economic conditions, even if doing so results in a loss for Sempra Energy.
Sempra Energy, in attempting to sell its part of RBS Sempra Commodities, has declared that it will concentrate its efforts on its utility holdings. Sempra Energy took in about $8 billion last year, down from roughly $11 billion during the Crash of 2008 year and about $11 billion in 2007. To date, Sempra Energy is not infusing capital into SDG&E as part of its first priority condition but does maintain a quarterly dividend to shareholders of about 35-40% of retained earnings.
At the current time, Sempra Energy's SDG&E projects that county power lines will be underground some time after 2060.