Support grows for hearing on wildfire costs

By Karen Brainard

Mussey Grade Road Alliance is getting support in its push for a public hearing on a San Diego Gas and Electric proposal that the Ramona group says will lead to utility rate increases for wildfire recovery costs.

SDG&E, however, says that a public hearing “is not necessary at this time” as the utility is only seeking approval for a balancing account.

Diane Conklin, spokesperson for the Mussey Grade Road Alliance, has been monitoring SDG&E’s application to the California Public Utilities Commission (CPUC), submitted in August 2009, to establish a Wildfire Expense Balancing Account (WEBA) to record and recover costs from the 2007 wildfires. Conklin said such an account will lead to SDG&E increasing rates to recoup $463.9 million for the utility’s uninsured costs related to the 2007 wildfires.

“It is safe to assume that the public does not know about WEBA or understand its implications,” Conklin said in her Jan. 17 motion for a public hearing with the CPUC.

Three organizations, based in San Francisco — the Utility Reform Network, Center for Accessible Technology and Division of Ratepayer Advocates of the CPUC — have thrown in their support for a public participation hearing. In their Jan. 25 filing with the CPUC, the three intervenors acknowledged that SDG&E’s application does not specifically request recovery of any costs at this time, but said the mechanism at issue will burden ratepayers with costs of wildfires.

“San Diego ratepayers should be given the opportunity to voice their concerns about proposals presented in this application and the potential impacts the proposals may have on their electric and gas rates,” stated the three San-Francisco-based groups.

SDG&E sees it differently. Stephanie Donovan, spokesperson for SDG&E, stressed that the WEBA proceeding does not ask the CPUC to approve recovery of any costs but is asking for approval to set up an administrative mechanism.

“Balancing accounts are a standard method utilities use to keep track of costs that are hard to predict and hard to manage under- and over-collections in rates,” she told the Sentinel.

The WEBA was proposed to record costs related to the 2007 wildfires that involved SDG&E’s equipment — Witch Creek, Guejito and Rice fires — as well as any future wildfires, she said.

Those three fires burned nearly 200,000 acres, destroyed more than 1,300 homes and killed two people. Cal Fire determined in its investigation that each of those fires was caused by power lines.

“We are not opposed to a public hearing as part of the proceeding at some point down the road, which would be if and when we file for cost recovery of the litigation-related expenses over and above what has been covered by insurance and third-party settlements,” said Donovan.

Even if the CPUC approves the balancing account, Donovan said SDG&E must file a separate application seeking Commission authorization before any balances in the account could be recovered in rates.

Conklin maintains a public hearing must be held now.

“This is like SDG&E saying that ‘We are constructing a guillotine, but you don’t need to have any public comments now,” said Conklin. “Wait until the blade is against your neck and then let’s have a public hearing.

“We also have to remember that this $463.9 million could be only the beginning if this scheme is approved,” Conklin said. “This application is for uninsured wildfire costs of SDG&E into the future. We would be on the hook for the rest of our lives for fires they ignite.”

Donovan said SDG&E believes the amount for which it would seek to recover will be much smaller than $463 million, the amount that was reported in SDG&E’s third quarter Form 10-Q. That total reflects settlement amounts minus insurance payouts, minus money received from third-party settlements, including $444 million from Cox Cable, but includes the utility’s estimate of the total demands of parties who have not yet settled.

The company reported in its Nov. 3, 2011 quarterly report to the Security & Exchange Commission (SEC) that SDG&E’s settlements of claims and defense costs have exceeded its $1.1 billion of liability insurance coverage and it expects that its wildfire reserves and amounts paid to resolve wildfire claims will continue to increase as it obtains more information. But Donovan also said the utility company expects to receive future settlements from other third-parties that could amount to millions of dollars.

Conklin noted that SDG&E told its shareholders “it is probable” it will be permitted to recover all reasonably incurred costs of resolving wildfire claims from its customers.

If the CPUC approves the application without a public participation hearing, Conklin said the Commission risks being tarred with charges of collusion with the public utility.

Conklin asked the Commission to rule on a public hearing by Feb. 1. Check www.ramonasentinel.com for updates.