Recent comments by Sempra Energy on placing more emphasis on its public utility units may mean good things in store for potential wildfire victims in San Diego County.
The comments by Sempra Energy were made while it was preparing to sell off interests in the RBS Sempra Commodities deal, a lucrative commodity trading venture with RBS also known as Royal Bank of Scotland.
RBS is recently listed as the number two asset holder in the world among the top Forbes 50 global companies. RBS figured in the news last year on Dubai's urgent request to delay debt servicing as the leading underwriter of Dubai World debt which led to a multi-billion bailout by Abu Dhabi. Dubai was previously fingered in a CBS 60 Minutes report as a destination for conflict gold smuggled out of the Congo through Uganda, where the estimated annual volume of smuggled golden nuggets into Dubai is roughly $300 million a year. RBS has been ordered to sell off its commodity trading assets as part of receiving a bailout in the Crash of 2008.
If Sempra Energy puts significantly more emphasis on its owned utilities such as San Diego Gas and Electric Company (SDG&E), then there is hope that power lines in San Diego County could all be underground long before SDG&E's previously-stated estimated completion date in 2063.
At present, the California investor owned utilities (IOUs such as SDG&E, Pacific Gas and Electric, and Southern California Edison) are pursuing a plan to bill customers for uninsured wildfire-associated legal costs and other expenses. Insurers have substantially raised prices to IOUs for wildfire coverage after the overhead power line disaster of the 2007 San Diego County wildfire complex that killed at least two people, displaced tens of thousands to emergency evacuation centers, and destroyed well over 1000 homes. SDG&E liability for the 2007 debacle is estimated by SDG&E to exceed its $1+ billion wildfire coverage for that year, prompting the IOUs' Wildfire Expense Balancing Account (WEBA) proposal now before California's Public Utilities Commission (CPUC).
Former San Diego City Attorney Michael Aguirre announced last week his intervention in the CPUC wildfire insurance process, and within days CPUC accepted SDG&E's prompt voluntary offer of an investigation-ending settlement into the utility's wildfire ignition points, where ratepayers would not be liable for the $14.8 million penalty-like assessment.
CPUC's Division of Ratepayer Advocates (DRA) performed its own analysis of the WEBA proposal and found it to have the effect of an open-ended wildfire tax on consumers who would be held responsible for IOU employee negligence that may cause future wildfires from overhead power lines and other utility equipment. DRA is now protesting the WEBA application, where IOU attorneys claim that CPUC has a “constitutional duty” to allow uninsured corporate wildfire costs to be passed on to consumers “regardless of the limits on the Utilities to control such costs” (IOU Responses to WEBA Protests, p. 4).
SDG&E owner Sempra Energy continues to pay out quarterly dividends of about 3% of stock price, approaching 40% of retained earnings. The question now is whether Sempra Energy has the ability to maintain that level of dividend payout to flight-to-quality investors while preventing the anticipated growth of an unlimited WEBA tax on consumers that may kill off any California economic recovery from the Crash of 2008.
This blogger has no direct equity stake in any California IOU or any other firm mentioned in this blog.
http://www.cpuc.ca.gov/EFILE/REP/108609.pdf" rel="nofollow">IOU Responses to WEBA Protests