How Sacramento shifted $13.5 billion of future wildfire costs to consumers
By JEFF MCDONALD
The San Diego Union-Tribune
DEC. 22, 2019

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New law reverses 100-plus years of regulatory practice

San Diego Gas & Electric executives spent 10 years seeking permission to charge customers hundreds of millions of dollars for company losses due to three backcountry wildfires started by its equipment in 2007.

Lawyers for the power monopoly were thwarted at each turn — first by regulators, then by a state appellate court, the California Supreme Court and finally, in early October, when the U.S. Supreme Court declined to take up the case.

The judges all concluded that SDG&E should not be able to recover $379 million in damages left over from the Witch, Guejito and Rice fires. Investigations showed that the three wildfires were the result of negligence and mismanagement committed by the utility — a finding the company never conceded.

In reaching their decisions, the judges relied on what’s known as the “just and reasonable” standard — the rule that utilities can only pass along to customers those costs that fairly serve consumers’ interest. It has been a cornerstone of California energy regulation for more than 100 years.

Under Assembly Bill 1054, which was introduced, passed and signed into law within a matter of days over the summer, the legal standards have changed.

Now power companies are permitted to get future wildfire damages covered by ratepayers as long as they create a wildfire mitigation plan and receive a “safety certification” from the California Public Utilities Commission, whose regulatory authority dates back to 1911.