SDG&E takes another shot at picking your pocket

Wants ratepayers to chip in $379 million for 2007 fires

Downtown San Diego skyline during the 2007 wildfires
  • Downtown San Diego skyline during the 2007 wildfires

In recent years, the words “California Public Utilities Commission” have come to mean one thing: corruption. The commission has concentrated on boosting profits of the investor-owned utilities — Sempra Energy, Edison International, and Pacific Gas & Electric — at the expense of ratepayers. The rates of those utilities are among the highest in the nation. San Diego Gas & Electric, a unit of Sempra Energy, may well have the highest rates in the United States.

The commission does not regulate the municipally owned utilities, such as the Los Angeles Department of Water and Power and the Sacramento Municipal Utility District. Their rates can be half as high as San Diego Gas & Electric’s. And the service is generally comparable.

Aftermath of the San Bruno pipeline explosion, 2010

Aftermath of the San Bruno pipeline explosion, 2010

Think of the regulatory/utility corruption that customers of the investor-owned utilities have faced in recent years: the Aliso Canyon gas leak caused by Southern California Gas, a Sempra unit; the shifting of most of the costs of the San Onofre decommissioning to ratepayers, who had nothing to do with the mismanagement afflicting the nuclear plant; the burying of nuclear waste on the San Diego County coast; the San Bruno explosion, which was the result of poor maintenance; the attempt by San Diego Gas & Electric to get ratepayers to pay for uninsured costs of the 2007 San Diego fires, which were caused by the local utility, according to utilities commission investigators.

One of the 2007 wildfires (downtown San Diego in foreground)

One of the 2007 wildfires (downtown San Diego in foreground)

San Diego Gas & Electric itself said, “In investigative reports issued in the aftermath of the 2007 wildfires, the California Department of Forestry and Fire Protection (Cal Fire) and the commission’s Consumer Protection and Safety Division attributed the ignition of three of these wildfires — the Witch, Guejito, and Rice Fires — to SDG&E power lines.”

Michael Peevey

Michael Peevey

While all this was going on, the stocks of the three investor-owned utilities did well. That’s because the commission was spending its time entertaining Wall Street securities analysts, who had a direct line to Michael Peevey, the former commissioner who is now under investigation for his role in arranging the “rape of the ratepayer” at San Onofre.

Now there is a new scandal surfacing — very quietly. There is a history behind it. In 2012, San Diego Gas & Electric tried to get the California Public Utilities Commission to make ratepayers pick up the uninsured costs of the 2007 fires, which the utility caused, according to commission investigators. But one of the commissioners tried a dirty trick. The commission was voting on two matters, neither of which was related to the 2007 fires. This commissioner — no longer there — changed the wording of the issue so that ratepayers would have to pick up those uninsured costs from the 2007 fires.

Michael Aguirre

Michael Aguirre

Local attorney Michael Aguirre caught and exposed the caper, and the commission had to erase the duplicity. San Diego Gas & Electric was turned down. I remember that in 2012 a former commission staffer told me, “They [the commission and the utility] will try to sneak it back in. That’s how they operate.” Sure enough, SDG&E — possibly with the commission’s assistance — is trying to get that money again. “They are back for another bite at the apple,” says April Rose Sommer, executive director of the Protect Our Communities Foundation, a watchdog group. The utility has filed to have ratepayers shell out $379 million to pay for the uninsured fire costs, “and now they are asking ratepayers to pay legal fees.”

San Diego Gas & Electric “wants to be paid for something they caused,” says Aguirre. The local utility had “repeatedly been warned by the City of San Diego that brush-clearing was super-important. San Diego was facing a high risk of a catastrophic fire.” Then the three fires came, investigators blamed the utility’s power lines, and the company tried to pick ratepayers’ pockets. To add insult to injury, San Diego Gas & Electric “wouldn’t give the [utilities commission’s] investigators critical documents.”

“The rationale for SDG&E getting any money is non-existent,” says Aguirre, who was punished for his alertness: the commission wouldn’t give him or his partner any money (called “intervenor fees”) for their work that caught the caper and thwarted it.

Ray Lutz

Ray Lutz

There is another brouhaha in San Diego County. Regulators and utilities want to bury nuclear waste not far from the water near San Onofre. That could be a disaster. “Aguirre, [his partner] Maria Severson, and I went to the [state] coastal commission,” says Ray Lutz of Citizens’ Oversight. “I would like to move [the waste] three miles up the coast on land already owned by the government and guarded by the military. It would be much better than on the beach. But nobody wants to touch it.” The utilities commission and Nuclear Regulatory Commission are among the regulators that would like to pass on the hot potato, although it is their responsibility.

Michael Picker

Michael Picker

A big question is whether the California Public Utilities Commission is any better under Michael Picker, the current president, than under the departed Peevey. “No,” says Bill Powers of Powers Engineering, who founded the Protect Our Communities Foundation. “The problem is the same: the fundamental commitment to facilitating the utilities’ financial objectives.”

Bill Powers

Bill Powers

Powers’s worry is Picker’s “concern about the financial objectives of the utilities.” For example, Sempra’s Southern California Gas is putting a 36-inch pipeline into San Diego County. The purposes of the oversize pipe might be “to open up more alternatives: gas going to China, Japan, Korea. Exporting gas would put another burden on American consumers: the potential for gas prices to shoot through the roof,” says Powers. “Why the hell should we be in the business of exporting finite resources because of domestic abundance?” he asks.

California boasts that it is a national leader in clean energy. But the utilities commission continues to permit the investor-owned utilities to build gas-fired plants, thus exacerbating the pollution problem, notes Powers.

Some important people in the state legislature have plans to reform the commission and perhaps do away with it altogether. But there is “not much of a chance” that will happen, says Powers. The legislature has already passed some “softball” measures, but he doesn’t expect much more. “The [commission] works well for utilities. Their political power remains tremendous,” he says. As bad as the situation is, it might be worse for consumers after a wholesale housecleaning at the commission.

Agrees Lutz, “If they abolish the [commission] and reorganize, the utilities would take control. The utilities have so much money, they have everybody in their pockets.”

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Thank you for your continued excellent reporting Don. As you have stated in your columns, one big reason that allowing utilities to pass on costs of disasters to consumers is the "moral hazard" inherent in such an arangement. By allowing a utility to avoid paying the costs of a disaster there is little incentive for the utility to pay for maintainence and upgrades which help prevent disasters.

ImJustABill. It is worse than you state. Actually, the state's investor-owned utilities are permitted to fatten their profits when they screw up. Examples: Pacific Gas and Electric in San Bruno, and EDison at the nuclear plant. BEst, Don Bauder

Hail Anderson. I will swap an award for a new CPUC. BEst, Don Bauder

Clemente Orozco. RAte payers always get the shaft. BEst, Don Bauder

Jack Wilhelm: Telecom wires the villain? Possible. Best, Don Bauder

Roger Herried; The CPUC was supposed to be a reform effort. Apparently not. Best, Don Bauder

Alpine Mike: Are you certain SDG&E is doing its job now? Best, Don Bauder

Alpine Mike: Yes, the investor-owned utilities are working to thwart solar. Best, Don Bauder

Mike Murphy: Maybe they will wear disguises. Best, Don Bauder

Laurel Kaskurs: Yes, the CPUC permits the building of too many gas plants. And it tries to block solar power, which is the solution. Best, Don Bauder

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