Nicholas Sher, attorney for consumer protection and safety at the California Public Utilities Commission, is opposing the application by San Diego Gas and Electric Company (SDG&E) and other investor-owned utilities (“IOUs”) to pass on wildfire legal expenses onto consumers through a Wildfire Expense Balancing Account scheme. The WEBA scheme calls for lumping all wildfire legal expenses together that are no already paid by a utility's wildfire insurance, then adding a fee of undefined size and duration to consumers' bills until the balance is paid off.

In the Consumer Protection and Safety Division (CPSD) opposition statement filed with CPUC on October 5, 2009, Sher and senior utilities engineer Raymond Fugere requested that, “Based on CPSD’s initial review of this Application, CPSD recommends, that unless modified, the Commission reject the applicant’s filing.”

The CPSD opposition statement continues: “While insurance premiums may have increased and while such premiums may cover less liability, granting the Utilities their requested relief will result in a perverse incentive, where the Utilities, if fully insured by ratepayers, would not need to keep their systems as safe and reliable as they do now. In order to incent [encourage] proper and full compliance with Commission Rules and General Orders (like General Order 95) the Commission must require that the Utilities have 'hats in the ring.' For example, the Commission should require that the Utilities’ shareholders pay 20% of the cost to cover wildfire liability. (This includes increased premium costs). In addition, because ratepayer funding would drastically reduce the Utilities’ risk, Utilities should be required to decrease their authorized return on equity by at least 100 basis points (for both transmission and distribution returns). These types of modifications would result in the continued provision of safe and reliable electric and gas services to the Utilities’ ratepayers.”

CPUC has yet to rule on the WEBA application. If it approves the WEBA scheme, then SDG&E and other investor owned utilities that are sued for wildfire damage may transfer their courtroom losses by judgment to WEBA and then pass on the uninsured portion to consumers with added fees on their monthly bills.

This writer is thankful for the interest shown by CPSD, as SDG&E and the other investor owned utilities are demanding that CPUC enforces a rule that forbids public hearings on the WEBA application's merits.

The CPSD opposition appears to raise valid points. With a WEBA financial model where consumers invariably pay the check no matter how little is done to put power lines underground, there will never be a utility financial incentive to protect the public from those power lines sparking future catastrophic wildfires. For SDG&E's part, owner Sempra Energy is already on record as looking for its increasing share of profit from its unregulated businesses. So little regulation exists over putting power lines underground that SDG&E projects the job will not be complete until at least 2063. At the same time, quarterly profits from SDG&E to Sempra Energy are in the $100 million range, but Sempra Energy's contribution toward public safety by crating a fireproof underground power line grid in San Diego County is non-existent; instead, corporate attorneys file documents demanding that CPUC exercise its statutory and constitutional duty to rule in its favor and protect utility stockholders from accountability for the lack of utility investment in safe power infrastructure and that public utilities have the right to expect such rulings as part of their business model.

Neither SDG&E nor the other IOUs have anything to say about the more senior right of the people of California to demand that utilities uphold public safety as a greater good, ahead of corporate profits and shareholder dividends.

Recent moves to dump most or all of Sempra Energy's RBS Sempra Commodities venture with Royal Bank of Scotland appear designed to cover the vast portion of wildfire liability that insurers are now reasonably clued-in enough to not cover at any price.

Rain in San Diego County now probably means increased wildfire danger later this year, the power lines won't be underground until 2063, and Sempra Energy won't lower its dividend rate, so the public must prepare to suffer another stadium sleep-over at the emergency evacuation site yet again. Apparently, Sempra Energy's financial model for avoiding regulated businesses rates Jack Murphy Field more useful for that than it ever will be for another superbowl.

If CPUC cannot protect us from WEBA, then San Diego voters may have to take action on our own.


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