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San Diego County's Mussey Grade Alliance today (Jan. 17) formally requested that San Diegans have a chance for a public hearing on a planned San Diego Gas & Electric caper that in my opinion could be one of the county's all-time swindles if OK'd by the California Public Utilities Commission (CPUC). And, astonishingly enough, SDGE is so confident that it will succeed at the ripoff that its corporate parent, Sempra Energy, has already told shareholders that it expects to haul in its loot. That statement was made in Sempra's last annual report to the Securities and Exchange Commission (SEC), even though the arrangement has not been formally OK'd by CPUC, and in fact the payment request had not been made at the time of the SEC filing.

Background: after the 2007 fires, regulators said that SDGE had violated state regulatory rules by improper transmission design and brush management failures. Some lawsuits were filed and settled but more remain. The settlements exceeded SDGE's insurance coverage. Then SDGE, SCE and Pacific Gas & Electric went to the CPUC and asked that consumers -- the victims of the fires -- pay for costs of future fires, rather than shareholders. The utilities said that fire insurance had become so expensive that they wanted consumers to pay for liabilities above their insurance coverage. SCE and Pacific Gas & Electric dropped out in November.

In the original application, there was no request for coverage for the 2007 fires. But in December, SDGE quietly added a sentence saying they wanted coverage for the 2007 fires, too. There were hearings Jan. 11-13 in which these matters were discussed. Mussey attorney Diane Conklin raised the issue of public hearings for San Diegans and got little response from the administrative law judge. San Diego attorney Mike Aguirre asked that, if Sempra is so confident of getting the money, had there been a secret meeting? He got little response. Aguirre and administrative law judge tangled throughout the hearings. A SDGE witness for the first time admitted that the amount the company would receive under its scheme would be $463.9 million for the 2007 fires alone. That number would grow because of the current lawsuits. This could balloon to more than $1 billion, says Aguirre, plus coverage for future fires is a blank check.

Any public hearing in San Diego would focus on whether there was a backroom deal, how much San Diego customers would have to pay SDGE each year, and why the liability should not be picked up by the shareholders of Sempra rather than consumers.

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Comments

Don Bauder Jan. 17, 2012 @ 7:42 p.m.

NOTE: I erred in calling Diane Conklin an attorney. While she has a law degree, she has not passed the bar and not practiced law. Best, Don Bauder

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Dennis Jan. 18, 2012 @ 12:41 p.m.

SDGE is the poster child for why public utilities should not be run by private companies. Holding ratepayers responsible for corporate neglect is the height of arrogance.

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Don Bauder Jan. 18, 2012 @ 6:40 p.m.

I agree 100%. The customers should not have to pick up the tab for SDGE's negligence. I went through the entire transcript of the Jan. 11-13 hearings -- hundreds of pages -- and got the definite impression that both SDGE and the administrative law judge (clearly biased toward the CPUC) consider this a done deal. Sempra's putting it in its 10K definitely suggests that there was a backroom deal -- typical of the way the CPUC operates. If this goes through -- with or without public meetings in San Diego -- SDGE customers should figure out ways to make SDGE pay for it. Best, Don Bauder

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Fred Williams Jan. 18, 2012 @ 10:49 p.m.

Say I'm a restaurant owner, and I serve my customers rotten food that makes them sick.

I'm legally obligated to pay those customers' hospital bills and something for their pain and suffering.

I don't have enough insurance to cover all these bills. I also don't want to change my awful rotten food for good food. So instead I go to the judge with a plan:

"Every customer from now on must pay not only for their own nasty rotten food, but for these legal bills I've already incurred AND any future legal bills for serving more unfortunate customers rotten food."

Does that have the flavor of this deal?

I guess the biggest difference here is that the customers of the restaurant could go to find different, better food. Sempra customers are not allowed such freedom of choice -- plus, Sempra is one of the biggest donors to political campaigns in California, so their monopoly is secure.

Pitchforks and Torches time? Is there any other practical way to get these crooks attention and prevent them from stealing yet more public money?

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Don Bauder Jan. 18, 2012 @ 11:18 p.m.

Yes, metaphorically, it's pitchforks and torches time. Your restaurant analogy is brilliant. It's similar to the argument -- which turned out to be futile -- against the subsidized ballpark. If a restaurant wants fatter profits, should it threaten to move to another city unless it gets a gigantic subsidy? Best, Don Bauder

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Don Bauder Jan. 19, 2012 @ 12:01 p.m.

NOTE: Conklin of Mussey Grade Alliance suggests that San Diegans wanting a public participation hearing on SDGE's attempt to get customers to pay for fire insurance costs, rather than shareholders, call CPUC Commissioner Timothy Simon at 415-703-1407. Best, Don Bauder

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MURPHYJUNK Jan. 20, 2012 @ 8:31 a.m.

And while you have them on the phone, ask if Timothy Simon ever sees daylight from inside sdges pocket.

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Don Bauder Jan. 20, 2012 @ 12:07 p.m.

Great question. No one will get through to him, I am sure, but everybody should leave a message about this outrageous attempted thievery. Best, Don Bauder

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Burwell Jan. 20, 2012 @ 2:14 p.m.

Sempra should transfer ownership of the transmission lines to an AG in Switzerland. The next time there's a fire Sempra can claim it can't be sued because it doesn't own the transmission lines. Sempra CEO Don Felsenshyster should get on it right away.

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Don Bauder Jan. 20, 2012 @ 2:41 p.m.

Brilliant. Sempra could move many operations offshore, including the vehicle by which it pays money to allies in Mexico. Then it could evade criminal investigation as well as civil liabilities. Best, Don Bauder

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Burwell Jan. 20, 2012 @ 2:38 p.m.

SEMPRA shareholders should pay the full tab to settle the lawsuits. To protect ratepayers when the lawsuits are settled the plaintiff's should receive SEMPRA shares with a cash value equal to the value of the settlements. SEMPRA should be forced to pay off the lawsuits by issuing new shares and diluting the existing shareholder's stake in SEMPRA. With this settlement structure SEMPRA would not be able to soak the ratepayers. SEMPRA should also be forced to pay for any insurance through dilution, by issuing new shares instead of gouging ratepayers.

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Don Bauder Jan. 20, 2012 @ 3:01 p.m.

Sempra wails that if it has to pay huge insurance costs, its bottom line will suffer grievously. Boo hoo. Your plan is a good one. The victims could get Sempra shares whose value would be determined BEFORE the dilution takes place. The trouble is that the CPUC is completely in the pockets of the utilities. San Bruno victims will find that out. San Diegans must fight this attempt to get ratepayers to pay for insurance that should be on the shoulders of stockholders. I think this is a rigged deal, worked out earlier in secret meetings with CPUC officials. Some way, participants must be forced to talk under oath. Best, Don Bauder

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Burwell Jan. 21, 2012 @ 12:02 p.m.

Sempra's market capitalization is over $13 billion and its dividend payout ratio is low. An article at the Seeking Alpha website indicates that Sempra could easily double its dividend payout to investors without straining finances. It appears that Sempra could easily pay off $1 billion or more in fire claims merely by issuing shares of stock to the victims without hammering the stock price and existing investors. Sempra could maintain the stock price in a dilution scenario merely by increasing the dividend payout.

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Don Bauder Jan. 21, 2012 @ 6:01 p.m.

Correct: Sempra stock yields 3.5%, which is lower than the yield for other similar utilities. Wall Street thinks Sempra is well managed and has pushed the stock price up as the yield has gone down. Sempra's board apparently thinks the stock will do fine with a dividend yield below that of its peers. Wall Street likes the regulatory climate in California -- completely pro-utility and anti-consumer. Best, Don Bauder

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dwbat Jan. 21, 2012 @ 1:05 p.m.

Will the "Fleece Job" hearings be posted on EweTube?

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Don Bauder Jan. 21, 2012 @ 6:03 p.m.

I doubt that those hearings -- which lasted 3 days -- will be show publicly. If there is an open meeting in San Diego permitting customers to hear about the fire fleece, I would imagine TV stations would cover a little of them. Best, Don Bauder

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MURPHYJUNK Jan. 22, 2012 @ 9:10 a.m.

The real meetings take place over drinks and other activities out of the public eye.

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Don Bauder Jan. 22, 2012 @ 2:02 p.m.

You're right, Murphyjunk. And we're fearful that is exactly what has happened in Sempra's scheme to have ratepayers shoulder the fire insurance burden instead of stockholders. Best, Don Bauder

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Twister Jan. 24, 2012 @ 10:30 p.m.

I nominate Don for the Mencken Mensch award. It's looong overdue.

No other journalist of which I am aware has done more to afflict the comfortable and comfort the afflicted than Don. There may be others, but then, I'm not that widely read. My inbox runneth over and I'm too lazy.

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