Surprise! A Present from Sempra

When the October 2007 Witch Creek fire, which began northeast of Ramona, advanced as far as Kim Crosser’s address in Rancho Santa Fe, there was a chance to save his home. It didn’t happen. Afterwards, firefighters told Crosser that downed San Diego Gas & Electric Company power lines on the other side of Del Dios Highway delayed them an extra half hour.

In the following months, Crosser and hundreds of other San Diego County fire victims received $5000 grants from Sempra Energy Foundation. According to its website, the foundation was established in “late 2007.” The foundation got off the ground through a $10 million gift from Sempra Energy, SDG&E’s parent company. On October 30, 2007, the foundation announced that a fund of $5 million was being set aside for fire victims.

Crosser told me he blames SDG&E for failure to maintain its lines. He is not one of the many San Diego County fire victims who are suing the utility for negligence they claim led to several of the fires. Instead, “I’d rather see the money used to force SDG&E to prevent arcing from happening on its lines and keep them clear of brush. I think they still haven’t changed their behavior.”

Less than two years after Sempra Energy Foundation finished giving the grants to fire victims, the beneficiaries, including Crosser, sing a nearly universal refrain. “I appreciate the gesture but...”

Larry Krupinsky said he was surprised at receiving the gift several months after his home burned to the ground. Sempra Energy Foundation invited him to the Hamburger Factory in Poway. When he walked in the door, a foundation representative handed him a check for $5000. There were no speeches or a program that evening, “just a nice dinner,” he said.

Despite the goodwill, Krupinsky quickly decided what the foundation’s intention was. Even as the conflagrations spread, San Diego Gas & Electric’s power lines were being blamed for starting the Witch Creek, Guejito, and Rice Canyon fires, a charge the utility denied. But Sempra Energy “wanted to buy us out,” Krupinsky told me recently by phone, “so there wouldn’t be lawsuits. The message of the grants was, ‘Look what we’re doing for you.’ It didn’t have any effect. The lawsuits happened.”

With the help of homeowners’ insurance, Krupinsky has rebuilt his Rancho Bernardo home. “It’s not 100 percent done,” he said. “We’re still negotiating with the insurance company over the landscaping.” And yes, Krupinsky has filed a lawsuit against SDG&E for damages beyond the reimbursement his insurance company is seeking.

In November 2007, Sempra Energy Foundation announced that those who wanted a grant would be required to submit an application stating how much damage they suffered in the fires and whether they had homeowners’ insurance. Depending on how much property applicants lost, they would get grants of $1000 to $5000. A final deadline of April 30, 2008, was set for turning in the application. The foundation distributed all money by June 30. In the end, having homeowners’ insurance did not prevent victims from receiving grants.

I spoke with many recipients by phone. Some refused to talk about the money they’d received or to be named for this story. A few gave no reasons, while others worried their lawsuits might be negatively affected. But Ramona resident Milton Rindskopf, who received $5000, emphasized the separate identities of Sempra Energy and Sempra Energy Foundation. “They are different organizations,” he said. He is “appreciative” of the nonprofit foundation’s generosity but disappointed in the for-profit corporation. He hopes SDG&E “has changed its procedures” for maintaining power lines. He said the Witch Creek fire in Ramona destroyed a one-year-old home he had built to the new building codes written after the 2003 Cedar fire. Loss of a home, he said, “changes you forever. I’ve been married for 40 years and have four daughters and four granddaughters. I lost all those home movies, including one of me when I was four.” Rindskopf has rebuilt on the site of his original home. During construction, he and his family stayed with a friend in Rancho Santa Fe.

While Sempra Energy and Sempra Energy Foundation are separate entities, as Rindskopf pointed out, they couldn’t be closer financially. According to the foundation’s 2008 IRS Form 990, its revenue in contributions, gifts, and grants was $10,023,300. Sempra Energy employees added $23,300 to the company’s initial $10 million contribution. There were no other donors. The foundation did earn an additional $461,752 in dividends and interest from securities, bringing its total revenue for 2008 to $10,485,052.

The foundation’s charitable giving for 2008 came to $9,803,302. It gave $200,000 to CaliforniaALL, a Sacramento organization devoted to developing strong leaders and an educated workforce, $300,000 to United Way of Greater Los Angeles, and $250,000 to the Zoological Society of San Diego. The number of fire victims who received money tallied close to 1200, and the amount of the grants totaled $5,220,500. The foundation, through grants and employee programs, also gave $3,832,802 to approximately 600 “various charitable organizations.” Among the latter were a large number of universities, including Yale University, which has a forestry program, San Diego Rural Fire Protection District, and the following: Francis Parker School, the Bishop’s School, SDSU Aztec Athletic Foundation, American Film Institute, American Pastime Girls Fastpitch, Charter Oak Youth Football in Covina, Civil War Preservation Trust, College Opportunity Foundation, Constitutional Rights Foundation, Supreme Council of the Somali Community in America, and organizations in other states and Mexico.

The idea that Sempra Energy Foundation’s grants gained favor with fire victims is not supported by my phone conversation with John and Madelaine Bera, who didn’t recall receiving a grant. The Beras lost their Rancho Bernardo home to the Witch Creek fire. “We didn’t receive a grant from Sempra,” Madelaine Bera told me when I called. She checked with her husband, who was sitting nearby. “But you’re on my list of recipients,” I said. (I had a list of grant recipients that the foundation provided the Reader.) “We found it so difficult to concentrate on anything after our house burned,” she countered. “We were in such a daze that we would not have even known about an application for a grant.” Several hours later, I received an email from Bera. “After I hung up,” she wrote, “my husband and I started to think again of what your inquiry was about. I wanted to drop you a line to let you know that we did receive some money from Sempra.”

Doris Okonsky and her husband Daniel have clearer memories. They lost their Poway home in the Witch Creek fire and received a $5000 Sempra Energy Foundation grant. “It would be nice if they’d kick in more,” Doris Okonsky told me. “No amount is enough, especially when you lose everything, computers, all your clothes, and so on.”

The Okonskys were featured in a November 13, 2007 New York Times story. “Like many of the 14,000 homeowners who suffered losses,” according to the Times, “the Okonskys are discovering that the insurance on their hilltop home in San Diego County might not be enough to rebuild it.

“‘I have about $1.5 million coverage for dwelling only,’ Mr. Okonsky said, or the equivalent of about $230 per square foot of construction. ‘For custom-home construction I am getting prices like $350 up to $500 per square foot.’”

A woman who wanted to remain anonymous wrote me by email, “My feelings about Sempra are not favorable.” She said her home west of Ramona was burned in the Witch Creek fire at a time when she was still “in the process of trying to acquire” homeowners’ insurance. She currently lives in “a guesthouse.” “Irresponsibility should have consequences,” wrote the woman. “I understand that the small amount they offered at the restaurant was an effort to appease some people, but in my estimation there wasn’t much ‘heart’ behind it. And the tiny amount, although helpful, was just a tiny drop in a very large bucket.”

Milan Dimich, who lost his Ramona home, told me that the Sempra Energy Foundation people “were among many who helped after the fire. It was awful to go through that, but we’re just thankful nobody got hurt” in his household. Dimich is rebuilding with the help of homeowners’ insurance. He said he wants to avoid any appearance of complaining about the $5000 he and his wife received. He wants to move on.

Over the long haul, however, Dimich may pay the money back in increased utility rates. On February 25, Sempra Energy held its latest quarterly “earnings results conference call,” recorded for the benefit of shareholders. According to a transcript of the call, the company’s chairman, Don Felsinger, said he wanted to update his listeners “on SDG&E’s litigation regarding the 2007 wildfires.” He suggested that some homeowner claims have already been settled but that “additional costs necessary to resolve the remaining claims are likely to exceed the remaining” insurance of approximately $20 million. Felsinger expected to recover some of the money from “other potentially responsible parties, including Cox Communications, and amounts SDG&E will file [with the California Public Utilities Commission] to recover in rates.” Referring to “our ability to accrue recovery for these costs, either from utility customers or other third parties,” Felsinger said, “we expect to recover the vast majority of these costs.”

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OK. Sempra is paying damages due to its negligence and liability for starting the fires. It now expects to recover those costs from third parties or customers. Ain't that great? The stockholders should pay those damages, not the blameless customers. But just wait and see what happens. SDGE (Sempra) will include the cost of the settlements in its costs of doing business, and the PUC will approve the rate increase.

It wasn't long ago when SDGE wanted to add to its rates to cover the increased cost of insuring itself for negligence. Same thing again.

PG&E (of Prop. 16 constitutional amendment fame), SCE, and Sempra Energy's SDG&E still have their Wildfire Expense Balancing Account (WEBA) application before the California Public Utilities Commission. Under WEBA if later approved, all uninsured wildfire legal expenses and other related costs get lumped together and billed to investor owned utility customers for decades, whether the utilities negligently caused the fires or not.

To make sure we make those payments to them and don't start municipal utilities to replace the investor owned utilities like SDG&E, Prop. 16 goes to a vote in June 2010.

Still counting all of the faulty SDG&E smart meters that were installed and had to be replaced...

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