San Diego utility can't pass 2007 fire costs onto customers

California regulators rejected a request Thursday from a San Diego utility to force customers to shoulder $379 million in costs from deadly blazes ignited by power lines in 2007 — a decision seen as possibly precedent-setting for cases in which devastating wildfires tore through wine country this fall.

The California Public Utilities Commission voted unanimously to uphold an August decision by two judges, who said San Diego Gas & Electric did not act reasonably in managing its equipment and could not pass along costs from the three fires to ratepayers. State law allows utilities to recover costs from customers only if they act in a "prudent" manner.

Pacific Gas and Electric Co. and Southern California Edison had pushed regulators to rule in the utility's favor, saying the case highlighted a need to fairly distribute costs from wildfires, which are proving to be more destructive due to drought conditions and home construction in backcountry areas.

Environmental and consumer groups and some elected officials had said ruling for the San Diego company could set a precedent for other utilities to pass along the costs of wildfires ignited by power lines and discourage them from properly maintaining their infrastructure.

In the San Diego case, the California Department of Forestry and Fire Protection and utility commission investigators concluded that three blazes from 2007 were caused by San Diego Gas & Electric's electrified wires.

"There is no dispute that each of the fires were caused by SDG&E facilities and in each instance we find that SDG&E did not meet its burden to show that it acted as a prudent manager," Commissioner Laine Randolph said.

Lee Schavrien, San Diego Gas & Electric's senior vice president and chief regulatory officer, said the decision is not consistent with findings made by the Federal Energy Regulatory Commission, which determined the utility "acted reasonably" and approved the portion of the wildfire cost request it had jurisdiction over.

"We find it difficult to understand how federal regulators understood the law and applied it appropriately, while the CPUC adopted a flawed interpretation," he said.

Schavrien said SDG&E "will vigorously pursue all available avenues to overturn this decision."

The blazes destroyed more than 1,300 homes, killed two people and injured 40 firefighters. The utility faced 2,500 lawsuits from people with fire damage and settled most of them for $2.4 billion.

The $379 million it wanted to charge ratepayers remained after court proceedings, settlements and insurance payouts.

"If the commission had sided with the utility companies, it could have set a dangerous precedent for the future of disaster cost recovery, or at the very least, created a perception of a precedent," Democratic state Sen. Jerry Hill said. "Today's decision concludes a decade long process to rightly assign the costs of the tragic fires to the company responsible for causing them."

Hill pointed out that Pacific Gas and Electric Co. has said if it is found liable in last month's devastating Northern California wildfires, which killed 44 people and destroyed 8,900 homes and other buildings, it also will seek regulators' permission to pass along the costs.

Hill and other legislators have said they will introduce a bill in January to prevent electrical utilities found responsible in wildfires from passing their uninsured liabilities along to customers.