SAN DIEGO — The CPUC’s (California Public Utilities Commission) continued its hearing into SDG&E’s request to establish a Wildfire Expense Balancing Account (WEBA) for the recovery of uninsured 2007 wildfire–related costs by holding two public participation hearings April 5. The process of which began back in August 2009, when SDG&E, PG&E, Edison and SoCal Gas filed the initial application requesting CPUC authority to establish a balancing account to allow each utility to recover costs from its ratepayers.
In both hearings, the majority of the public’s response was in opposition to the proposal that could eventually lead to increased rates for SDG&E customers.
“We certainly didn’t expect that we would be able to change anybody’s mind by making our presentation,” said Stephanie Donovan, a spokesperson for SDG&E. “But we did want to get the facts out on the table as to what it was that we actually were asking for,” she said.
The proceedings, taking into consideration all facts and legal matters, are designed for the CPUC to rule on whether the WEBA mechanism is justified. If so, SDG&E would then file for a separate application to request rate recovery once final numbers of the wildfire-related costs are known. The process could take anywhere from 18 months to two years, explained Donovan.
What SDG&E would be asking for in terms of rate recovery, Donovan said, is very consistent with existing regulatory policy and legal interpretation.
At this point, SDG&E is operating on a hypothetical as to how much of a rate increase customers would incur if the CPUC rules in favor. But the preferred mechanism would be a 95/5 split between customers and shareholders. The CPUC hasn’t issued any date for a ruling on the WEBA proceeding.
“While we understand a rate increase of any kind can be difficult for customers,” Donovan said, “we do believe that in this case, there has been no wrongdoing found on the part of SDG&E by any courts or public agencies.”
San Diego County Supervisors Dianne Jacob and Pamela Slater-Price, with Solana Beach Deputy Mayor Dave Roberts attended the hearings in opposition to the proposed rate increases.
Slater-Price, who will be vacating her seat on the board of supervisors after serving the third district for 20 years, said she attended the hearings out of growing concern about the rights of the ratepayers, starting with the solar issue.
“The fact that SDG&E’s been trying now to prevent people from benefitting from the solar installation by charging them a differential fee by splitting the cost…it seems to me that every time I turn around SDG&E is trying to raise the rates for the ratepayers while protecting their stockholders and their corporate management.
“And I think it’s wrong, especially when it comes to some issue such as fire protection, which is their corporate responsibility…this is something that was an anticipated problem; it’s a risk that they took, they knew it could have gone bad and they chose not to follow more of a conservative way of thinking and preparing for the worst.”
Donovan said the reason SDG&E is seeking the proceeding and the eventual rate recovery comes down to a couple of things that have put the utility in a box. “SDG&E serves all of its customers without exception,” Donovan said. “We are not able to refuse to serve someone who lives in a high fire risk area, or charge them more, even though, in serving customers in the back country there’s an inherent risk involved whenever you have to string lines through dense brush and areas that are very often going to see strong Santa Ana winds.”
Due to the utility company’s obligation to serve, and because of California courts’ interpretations on concepts called strict liability, utilities are on the hook if equipment was responsible for causing property damage regardless of the circumstances.
Donovan explained the interpretation as such: “It could be a drunk driver hits a power pole, knocks it down; the line sparks a fire that destroys property. Not the driver of the car, but the utility would be held strictly liable for reimbursing the damages that were caused.”
Roberts, a candidate for third district supervisor, said he had heard from constituents in Solana Beach about the concerns of the rate increase. “Many people remember the fires and of course the damage that was done over on the eastern side of the county, and to now make ratepayers pay the cost of recovery, I just think is the wrong business.”
“Not only would it unfairly punish people who’ve already been punished, but it would also indemnify the company against all future liability, because all of that can be shifted onto the backs of the ratepayers,” said Slater-Price.
Slater-Price thinks the public participation hearings served as an educational wakeup call to the CPUC officials in attendance.
Donovan added there’s still a long way to go to have this fully resolved because there are so many things that are still outstanding, incuding a number of lawsuits that have as yet to be resolved. She said SDG&E really can’t file an application to seek great recovery until that number is finalized.
“We’re not looking at seeing any impact on rates any time in the near future,” Donovan said. “And should the Public Utilities Commission approve an application to recover whatever these excess costs are in rates, we would ask them for permission to spread out those costs over a period of years. So it could be three to four to five years, and the longer…you spread it out over time, the impact is much less significant to the customer’s bill.”