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Customer Advocates Challenge SDG&E’s Proposed Rate Increases

Audio

Aired 3/9/10

San Diego Gas & Electric wants to charge its customers more to pay for higher insurance premiums as a result of the 2007 wildfires. Advocates for customers say the utility hasn't turned over key information to prove its case.

San Diego Gas & Electric wants to charge its customers more to pay for higher insurance premiums as a result of the 2007 wildfires. Advocates for customers say the utility hasn't turned over key information to prove its case.

Since last August, ratepayer representatives have scoured nearly 1,000 pages of documents turned over by SDG&E. The records are meant to support the utility's claim that it must raise customer rates by $29 million to offset increased insurance costs.

But ratepayer advocates say SDG&E didn't turn over all that was requested.

"We have some documentation but believe that additional information is needed in assessing this application. In particular we are seeking an internal audit to better understand SDG&E's figures."

Ed Moldavsky is an attorney for the Division of Ratepayer Advocates, an independent consumer arm of the California Public Utilities Commission. Moldavsky refused to explain exactly what was missing from the documents saying he's bound by a confidentiality order.

However, former San Diego City Attorney Mike Aguirre, who is representing a small business owner challenging the rate hike, did elaborate. He says SDG&E has failed to offer actual invoices from insurance companies proving a new type of coverage called wildfire liability has actually gone up.

"One of the things that ratepayers have a right to ask for is 'Show us your bill and show us in fact that you paid it.' That was not done by SDG&E," said Aguirre.

According to Aguirre. SDG&E says it discussed the new type of coverage in oral conversations with insurance brokers.

"They did not provide any written testimony from an insurance company witness, unlike their general rate case where they did produce someone from their insurance brokerage firms," said Aguirre. "They did not provide anyone from their insurance brokerage firm here. We believe SDG&E stonewalled on this issue."

SDG&E representatives denied requests for interviews. In written comments, the company said it does not intend to get into a debate in the media with ratepayer advocates.

SDG&E did say insurance premiums for all of the state's investor-owned utilities have risen dramatically because of the global recession and the frequency and severity of wildfires in California.

Also, the company has paid out more than $900 million to settle civil lawsuits from the 2007 fires. State investigators have found that SDG&E lines started three of the fires and that the company violated some safety rules.

SDG&E says its insurance payments jumped from $6 million to $47 million for the 2009-10 coverage period.

But not everyone agrees that was unavoidable. Michael Shames is with the Utility Consumers Action Network.

"SDG&E went about it all wrong...that it could have saved a tremendous amount of money had it shopped more aggressively and smarter. Instead, they played it very conservatively and safe and as a result SDG&E's premiums went up a lot when they might have been able to avoid that," said Shames.

SDG&E says if regulators approve the $29-million rate increase, customers' bills will rise between 20 to 70 cents a month.

But more rate increases may be in store. Remaining lawsuits against SDG&E could run in the hundreds of millions of dollars and the company plans to recover the money with rate increases.

Some ratepayer advocates suggest that shareholders at Sempra Energy, which buys insurance for its subsidiary SDG&E, should cover the $29-million proposed rate increase instead of customers.

In 2008, Sempra's shareholders paid its top five executives $29 million in bonuses. The bonuses were not financed by ratepayers.

"Just take the money out of the bonuses and pay off the increase in the insurance rates," said San Diego County Supervisor Dianne Jacob. "We're talking hundreds of millions of dollars each year. That's where the money should come from. This is a company that is responsible for three of those fires in 2007 that causes significant harm, loss of property loss of life because they failed to do what they were supposed to do all along."

SDG&E says the causes of the 2007 wildfires are not at issue in this filing. The Public Utilities Commission has scheduled a public hearing on the proposed rate increase early next month.

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