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SDG&E Asks US Supreme Court To Weigh In On Wildfire Costs

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San Diego Gas and Electric wants to bill customers $379 million in unrecovered 2007 wildfire costs. After state regulators and two California courts rejected SDG&E's request, the utility is now taking the fight to the U.S. Supreme Court.

Show transcript

Speaker 1: 00:00 San Diego gas and electric claims. It's constitutional rights have been violated by not being able to have rate payers pick up costs from the 2007 San Diego wildfires. SDG and e is asking the u s supreme court to take the case. The appeal involves $379 million in remaining wildfire costs. The utilities effort to get customers to pay has already been denied by California's Public Utility Commission and two state courts now SDG and e once the highest court in the land to weigh in. Joining me as San Diego Union Tribune reporter Jeff McDonald. Jeff, welcome to the program.

Speaker 2: 00:38 Hello, how are you?

Speaker 1: 00:39 Great, thank you. What is SDG and e's argument that this effort to recover costs is a constitutional issue

Speaker 2: 00:49 because they're required to pay the damages that they should be able to recover the cost from rate payers. The doctrine is known as inverse condemnation, and it's something that's used by governments and public agencies all the time. The utility, thanks. Their position is that because they don't get a choice of paying the damages, that they should mandatorily recover the costs from rate payers as a course of doing business and delivering the electricity as required.

Speaker 1: 01:19 Yeah. It didn't state investigators rule that STG and he was at fault in those fires by not maintaining their equipment properly.

Speaker 2: 01:26 Yes. And that's been the, that's been the legal rub confronting the utility is that when they made their case to regulators, the regulators said, well that's a, a, an interesting theory, but no dice because your equipment caused the fires. They took their field, their commission was acting as a judicial branch at that point. They appealed to the state. Uh, the fourth district court, which is an appellate court, those judges also said, uh, no, and then they appealed to the State Supreme Court and uh, the high court in California said No. So it's an interesting, um, legal position. I think that probably the reason they're litigating it so aggressively is because there's a lot more at stake down the road with future wildfire liability.

Speaker 1: 02:08 I wanted to ask you more about that. And just to be clear, does SDG and e still maintained that it was not at fault and that their equipment did not cause us fires?

Speaker 2: 02:20 Oh, it's never as cut and dry. Yes, we did it. They paid two and a half billion dollars in damages. So if you count it as a, you know, as they paid the money, then maybe that acknowledges they were uh, at fault, but they didn't never formally said we caused the fires. So no, they haven't acknowledged that it's their fault. Their legal position is that the fires were a natural event caused by, uh, a combination of uh, you know, unfortunate, uh, things that uh, that came together. Mostly weather the winds, the temperature stuff that's outside their direct control.

Speaker 1: 02:56 No, as you mentioned, $370 million involved in this dispute is actually a fraction of the costs that Sdg and e has already paid out over the 2007 wildfires. So just looking at it objectively, it's kind of a head scratcher as to why SDG and e is being so persistent in this issue and trying to get the u s supreme court to decide it. So water is the, what are the larger ramifications of this?

Speaker 2: 03:23 Well, the other two investor owned utilities, Pacific gas and electric and southern California. Edison have both had in recent years devastating wildfires that killed a lot of people and burned a lot of homes down and black and a lot of acreage. Uh, the same thing might happen in San Diego County and the service area of SDG and e's in coming months or years. And so I think part of the, uh, thinking, uh, and, uh, this is speculation on my part, but what makes sense is that they're looking forward to liability beyond 2007 and what might, what might be coming, uh, you know, in coming years as they continue to deliver electricity at a time when the climate changes, uh, contributing to more wildfires.

Speaker 1: 04:08 How has the liability issue already excited? SDG and e's bottom line?

Speaker 2: 04:13 Uh, well they say that their insurance rates have gone up, that people are less willing to invest in the stock and that other costs are, uh, making it not as desirable and investment. So they need to think about the wellbeing of their company going forward. And they see this as a huge question mark that they're trying to answer and create certainty so that they're not jeopardized the way Pacific gas and electric is. With this bankruptcy declaration earlier this year,

Speaker 1: 04:38 what kind of reaction have you heard from state regulators about this appeal to the High Court?

Speaker 2: 04:43 Uh, well, they're pretty tight lipped on what they say. It's ongoing litigations. So you hardly ever get the parties to discuss openly what, uh, what they're thinking is they told me officially that they received the petition and it's under review. I press them a little further asking if they plan to respond, which is a big lift. I mean, they have to do a lot of research and they have to present it in a specific format that's a unique to the US Supreme Court. And, uh, it's a big investment of time and resources. So they did not answer that question. It's not clear how many of the other related parties may respond. Also to try and sway the High Court to reject the petition or not. So we'll see. We'll see as it goes forward, we should know later this year what, uh, what the Supreme Court decision is, whether they take it up, they, uh, they take a very small percentage of the cases presented to them every year.

Speaker 1: 05:35 The chances of this one being taken are actually very low.

Speaker 2: 05:38 Well, the chances of any case being taken are very low. But, uh, of course the petitioner in this case, Sdg and e, they say this is a very important question that needs a federal resolution. And the only way to get certainty is to have the high court consider it and make a determination. So like every petitioner, they think their cases important enough to have this decided by the Supreme Court. We'll see where it goes going forward.

Speaker 1: 06:01 I've been speaking with San Diego Union Tribune reporter Jeff McDonald. Jeff, thank you.

Speaker 2: 06:05 You Bet. You're welcome.

Speaker 3: 06:11 Okay.

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KPBS Midday Edition

KPBS Midday Edition is a daily talk show hosted by Maureen Cavanaugh and Jade Hindmon, keeping San Diegans in the know on everything from politics to the arts.