In a case with financial implications for the devastating October wine country wildfires, state regulators Thursday denied a Southern California utility’s efforts to charge ratepayers for costs related to a series of 2007 fires.
The Public Utilities Commission rejected San Diego Gas & Electric’s request to charge customers $379 million to cover a portion of the utility’s damage claims from the Witch, Guejito and Rice Fires. Cal Fire investigators said the fires, which killed two people and destroyed 1,300 homes, were caused in part by problems with power lines and other SDG&E equipment.
The SDG&E case was being closely watched for its potential impact on the claims that are piling up against against Pacific Gas and Electric Co. in the wine country disaster. Already a host of lawsuits have been filed against the utility, arguing that PG&E’s poorly-maintained power lines were to blame for the deadly October fires. Multiple clusters of fires killed 43, destroyed thousands of homes and caused billions of dollars of damage. The vast majority of the deaths and damage took place in Sonoma and Napa counties.
The San Diego decision “reinforces that if a utility did not reasonably operate its facilities prior to the fire, it can’t charge ratepayers,” said Elizabeth Echols, director of the PUC’s Office of Ratepayer Advocate.
Whether the San Diego ruling will affect PG&E’s status “will depend on what the facts show,” she added.
PG&E and Southern California Edison filed legal arguments on the San Diego utility’s behalf, saying wildfire costs must be shared.
PG&E’s stock price dropped 82 cents, to $54.24, on the news. Speaking at a climate event in San Francisco, PG&E CEO Geisha Williams said she was “disappointed” with the decision.
“If these wildfires become endemic and part of the effects of climate change day in and day out, I don’t believe it is sustainable for utilities to absorb that on a long-term basis,” Williams said, according to Bloomberg news. “I don’t think it is fair to put the burden on energy companies.”
The PUC announced in October that it was investigating PG&E and directed the utility to “preserve all evidence with respect to the Northern California wildfires in Napa, Sonoma and Solano counties.” That included “all failed poles, conductors and associated equipment from each fire event.” PG&E, in a Securities and Exchange Commission filing, told investors that its liability insurance for potential losses from the fires totals $800 million.
In terms of financial effect on PG&E, the October wildfires could easily eclipse the fatal 2010 San Bruno gas explosion, which cost the utility $1.6 billion in fines and other expenses.
PG&E has estimated that its losses from the 2015 Butte Fire, which killed two people and destroyed 900 homes in Amador and Calaveras counties, will total at least $750 million.