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Shocker! CPUC unanimously thumbs down SDG&E

Local utility won't be able to pass on 2007 fire costs to ratepayers

Downtown San Diego skyline during the 2007 wildfires
Downtown San Diego skyline during the 2007 wildfires

After a battle that has gone on for a decade, the California Public Utilities Commission today (November 30) stunned observers by unanimously declaring that San Diego Gas & Electric cannot pass along to ratepayers $379 million of uninsured costs of the 2007 San Diego wildfires.

There is a long history here. First, a commissioner slipped the sting on ratepayers into a document that was not related to the fires. Local activists caught the ruse and an embarrassed commission voted that San Diego Gas & Electric could not pass on these costs to ratepayers. Earlier, two regulatory bodies, including one that is part of the utilities commission, said SDG&E's negligence was to blame for the fires.

But those who know how the utilities commission operates said that SDG&E and the commission would try again. They did. But ratepayers complained bitterly at local meetings. Ratepayers are not supposed to pay for mistakes by management. Two administrative law judges said ratepayers should not have to pay. The commission delayed its decision four times. Finally, it ruled today in favor of the administrative law judges: the ratepayers shouldn't have to pay for the egregious mistakes of management.

Also today, San Diego attorneys Maria Severson and Mike Aguirre released a comprehensive study showing how the commission is run by the three investor-owned utilities — Sempra (SDG&E's parent), Edison International, and Pacific Gas & Electric — it is supposed to regulate. The report shows how the commission through the years has kowtowed to Wall Street, assuring analysts that the regulator is obsessively concerned about utility profits.

Much of the eye-opening material has been reported in the Reader and in other publications, but I had never seen the report on one incident: "Internal emails showed Wall Street analysts threatened to lower their utility stock recommendations unless the governor kept the [commission] free from consumer protection appointees. The current [commission] board is made up exclusively for former governor appointees and staff," says the report.

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Downtown San Diego skyline during the 2007 wildfires
Downtown San Diego skyline during the 2007 wildfires

After a battle that has gone on for a decade, the California Public Utilities Commission today (November 30) stunned observers by unanimously declaring that San Diego Gas & Electric cannot pass along to ratepayers $379 million of uninsured costs of the 2007 San Diego wildfires.

There is a long history here. First, a commissioner slipped the sting on ratepayers into a document that was not related to the fires. Local activists caught the ruse and an embarrassed commission voted that San Diego Gas & Electric could not pass on these costs to ratepayers. Earlier, two regulatory bodies, including one that is part of the utilities commission, said SDG&E's negligence was to blame for the fires.

But those who know how the utilities commission operates said that SDG&E and the commission would try again. They did. But ratepayers complained bitterly at local meetings. Ratepayers are not supposed to pay for mistakes by management. Two administrative law judges said ratepayers should not have to pay. The commission delayed its decision four times. Finally, it ruled today in favor of the administrative law judges: the ratepayers shouldn't have to pay for the egregious mistakes of management.

Also today, San Diego attorneys Maria Severson and Mike Aguirre released a comprehensive study showing how the commission is run by the three investor-owned utilities — Sempra (SDG&E's parent), Edison International, and Pacific Gas & Electric — it is supposed to regulate. The report shows how the commission through the years has kowtowed to Wall Street, assuring analysts that the regulator is obsessively concerned about utility profits.

Much of the eye-opening material has been reported in the Reader and in other publications, but I had never seen the report on one incident: "Internal emails showed Wall Street analysts threatened to lower their utility stock recommendations unless the governor kept the [commission] free from consumer protection appointees. The current [commission] board is made up exclusively for former governor appointees and staff," says the report.

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Comments
23

I don't know how this happened, but somehow, I don't think this is the end of this story.

Nov. 30, 2017

aardvark: Since this has dragged on for ten years, and CPUC/SDG&E keep bringing it back up, you may be right.

If this sticks, it will be a blow for PG&E and Edison, too, because they had joined in the dispute on SDG&E's side. That was to protect their own fannies in similar situations, of course. Best, Don Bauder

Nov. 30, 2017

PICKER MAKES DISTURBING POST-VOTE COMMENTS: AGUIRRE THINKS HE IS SETTING THIS UP FOR A REHEARING AND APPEAL. IF AGUIRRE IS RIGHT, THE BEAT WILL GO ON. San Diego attorney Mike Aguirre, who along with his partner Maria Severson has fought this battle for ten years, is disturbed by remarks that Mike Picker, head of the commission, and Martha Guzman Aceves, a commissioner, made after the decision. Even though it was a unanimous decision, Picker and Aceves are trying to set up a rehearing and appeal, Aguirre believes. Picker referred to a close vote, for example, and noted that certain points could have gone either way.

This is the history of the CPUC since Michael Peevey, Picker's predecessor, took over IN 2002. When a stockholder-owned utility loses, the case will be brought back over and over until the utility wins.

Aguirre points out that both Picker, who replaced the anti-consumer, pro-utility Michael Peevey as head of the commission, and Aceves, are former staffers of Gov. Jerry Brown. Best, Don Bauder

Nov. 30, 2017

And wasn't Kathleen Brown, the Governor's sister, on the Board til this all started getting out to the public?

Dec. 1, 2017

Unless I am mistaken, and I don't believe that I am, she is still on the Sempra board. She was appointed to the board in 2013, after she announced that she would be leaving the GS Chicago office and returning to LA as a partner in a law firm. She is also a board member for several other companies.

Dec. 1, 2017

danfogel: Yes, she is still on the Sempra board. Best, Don Bauder

Dec. 2, 2017

Wabbitsd: Kathleen Brown, the governor's sister, is still on Sempra's board, according to the company's website. Best, Don Bauder

Dec. 2, 2017

According to the story in today’s UT (Business Section ppl C1&C4 on 11/30), Sempra/SDGE “promises to fight the ruling in court and appeal the Commission’s decision to the Superior Court if it went against their demands.

UT Article The collusion between the investor owned utilities and the Commission is the ultimate expression of a corrupt system. If Aguirre is correct, the Federal Govt needs to step in and prosecute under RICO statutes.

Nov. 30, 2017

JustWondering: The laws in California are stacked in favor of the utilities. The assumption is that a fair and balanced CPUC can handle disputes, and there is no need for court suits. But the CPUC, as now constituted, is corrupt -- tilted far in favor of the utilities. The laws have to be changed.

Don't hold your breath waiting for Trump's administration to step into this on behalf of ratepayers. Best, Don Bauder

Nov. 30, 2017

This from the UT story: "The CPUC got it wrong," said Lee Schavrien, the utility's senior vice president and chief regulatory officer. "The 2007 wildfires were a natural disaster fueled by extreme conditions including the worst Santa Ana wind event this region has ever seen, combined with high heat, low humidity and hurricane-force winds."

But CPUC commissioner Clifford Rechtschaffen disagreed.

"The decision does not hold utilities to a standard of perfection. That's a straw man and that's not what we're doing here," Rechtschaffen said. "The burden of proof is on SDG&E to show they acted as a prudent manager and based on a careful review the decision concludes they did not meet that burden."

I love the part about “hurricane force winds”. That needs to be nominated for the 2017 San Diego hyperbole comment of the year!

Nov. 30, 2017

JustWondering: Yes, SDG&E has been claiming from the outset that the CPUC division that blamed SDG&E (along with CalFire) for the 2007 fires was wrong. And you are right: Santa Anas do not hit hurricane force. Best, Don Bauder

Nov. 30, 2017

Maybe SDG&E should lobby the Govenor to have him declare IT as a disaster area. Between "hurricane force winds" causing wildfires and it's nuclear meltdown steam leaks at SONGS, its management team IS a disaster in progress.

Dec. 1, 2017

JustWondering: The CPUC claims utility management must shoulder the blame for its own slip-ups. But it hasn't happened since Peevey took over in 2002 and Picker replaced Peevey a couple of years ago.

Those who profess to believe in capitalism preach accountability-- until they make a boo-boo. Then they want ratepayers to pick up the tab. Best, Don Bauder

Dec. 1, 2017

JustWondering: You have to count San Onofre among its disasters, even though it only owns about 20 percent of it.

Sempra's biggest disaster is that it consistently has the highest rates in the nation. Best, Don Bauder

Dec. 2, 2017

Can we safely assume that if the vote had gone the other way it would have been the end of it? If this sticks, it will represent a sea change in the CPUC. Corrupt or not, some highly visible decisions just have to be decided in one way. This was one of those. Try as they may, I doubt that the ratepayers can be stuck with that tab. But other, less visible and more technical matters can still be tilted toward the utilities.

As to whether Sempra can challenge this decision in superior court, I had the impression that legal actions affecting CPUC had to be done at the appellate level. It should be an uphill battle for Sempra to prevail; the commission was established to evaluate evidence, consider financial implications, and rule. It wasn't designed to be second-guessed by courts. Failure to follow proper procedures and ignoring relevant evidence would be grounds for court involvement, but not the considered judgment of the five members.

Yes, it will be interesting to see how it goes. And I think aardvark is right--this isn't the end of it.

Nov. 30, 2017

Visduh: Unless things have been changed, utility-related suits can't go to the trial level first. They go straight to the appellate level.

Would it be an uphill battle for Sempra? Much depends on the makeup of the appellate panel. Best, Don Bauder

Nov. 30, 2017

"Ratepayers are not supposed to pay for mistakes by management." Except when they are forced to by the chicanery of the utilities and the bogus oversight of the tainted California Public Utilities Commission. Anyway, yippee, finally a ruling in favor of the screwed-over rate-paying public! Thank you to persistent lawyers Mike Aguirre and Mia Severson.

The disgraceful collusion of Governor Jerry Brown with his hand-picked corporate lapdogs on the California Public Utilities Commission will follow him into his cabin retirement off the grid up in Colusa. In this Time of Trump, we don't need such disappointment.

Nov. 30, 2017

monaghan: Remember, Gov. Brown's sister is (or was) on the board of Sempra. I did talk to Aguirre after the decision. He is afraid of a retrial or appeal. Best, Don Bauder

Nov. 30, 2017

Thomas Weller: Yes, Peevey should have been prosecuted for the Polish caper. Edison executives should have been tried criminally for that, too. Best, Don Bauder

Nov. 30, 2017

Mike Murphy: You won't see Peevey around San Diego, though. Best, Don Bauder

Dec. 1, 2017

If you want to vomit, read Sunday's Business Section of the UT. Revisionist history and a shallow self serving interview, Peevey has resurfaces touting a "new" green California book. I love the comment about "secret" plans as this arrogant man professed his innocence over the years. Considering all of the illegal acts perpetrated by Peevey, he must have gonads the size of bowling balls.

Dec. 3, 2017

JustWondering: Yes, I saw that piece on Peevey's book. I didn't read the story. I don't like to vomit before breakfast.

Look at it philosophically. O.J. Simpson wrote a book saying what he would have done had he murdered his ex-girlfriend. But, claimed Simpson, he didn't kill her. Ha! Peevey's book belongs in that category. Best, Don Bauder

Dec. 3, 2017

Mike Murphy: You raise a good point. Study your bills carefully. Best, Don Bauder

Dec. 1, 2017

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