Southern California Edison has filed a status update in the investor-owned utilities' request to bill customers for uninsured legal costs and other expenses stemming from future wildfire involving power utility liabilities as an ordinary cost of doing business.

The filing, dated May 28, states that by June 14, the California Public Utilities Commission will be notified of what "procedural next steps" the parties for and against the application will be proposing to CPUC.

The joint application for each corporate utility authority to establish a Wildfire Expense Balancing Account (WEBA) for each non-municipal utility is opposed by CPUC's Division of Ratepayer Advocates as an unlimited, open-ended consumer liability, with no reviews for reasonableness, corporate utility negligence, or violations of CPUC regulations or other legal standards. If CPUC grants the authority, all uninsured damages will be passed on to consumers until the balances are paid off.

In a reply brief to SDG&E's wildfire Z-Factor application, attorneys for SDG&E testified that declining insurance coverage is beyond its control and was a surprise to the utility, even after the tragic loss of homes and lives from the 2008 Guejito-Rice-Witch wildfire complex that forced the largest single evacuation in San Diego county history. According to Sempra Energy's Keith Melville and Aimee Smith, the higher cost for reduced wildfire insurance available to SDG&E after 2007 has been "an unforeseen circumstance largely outside the control of the utility..."

SDG&E recently settled the wildfire causation inquiry matter with CPUC, effectively shutting down consumer protection investigations that pointed toward failures by SDG&E programs to anticipate the potential for causing wildfires from overhead power lines. The settlement came only a week after a KUSI report on former San Diego City Attorney Michael Aguirre's intervention into wildfire insurance issues being argued before CPUC.

SDG&E previously stated that it plans to have all power lines underground by 2063.

Proposition 16-WEBA Connection

PG&E's Proposition 16 appears to be a critical part of the WEBA scheme if approved by CPUC. If passed by voters on June 8, Proposition 16 will make it much more difficult for California cities and towns to start competing municipal utilities or offer community choice aggregation (CCA) options that compete with the for-profit utilities such as SDG&E, PG&E, and SCE (the investor owned utilities or IOUs). The difficulty is in the proposed constitutional amendment setting a two-thirds voter approval standard for municipal competition in existing for-profit utility service areas.

Currently, voters in the City of San Diego have a simple-majority right under the City's existing 1970 electricity franchise to avoid SDG&E as a power monopoly if consumers are saddled with unlimited open-ended WEBA payments.

SDG&E Contract Compliance Review Requested

In other news, SDG&E has requested CPUC review of its 2009 contract compliance for power distribution under a "least cost dispatch" standard. A review of supporting testimony by SDG&E employees shows that neither wildfire damage to county residents nor uninsured wildfire utility liabilities are considered to be part of the cost of power distribution subject to contract compliance review.

Without such consideration, it is unclear that the utility actually purchases and distributes power to ratepaying customers "in a manner that minimizes ratepayer costs" as required by CPUC standards.

SDG&E has requested that CPUC hold no public hearings as part of its review of SDG&E contract compliance.

Joint IOU WEBA Status Report to CPUC

SDG&E Wildfire Insurance Z-Factor Reply Brief

SDG&E Request to CPUC for Contract Compliance Review where supporting SDG&E employee testimony may be found at SDG&E A10-06-01


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