California Public Utilities Commission rules San Diego Gas and Electric can’t pass fire lawsuit costs onto customers

State regulators moved Thursday to deny a California utilities giant the ability to pass costs from a wildfire legal settlement onto its customers - a decision that could have broad implications for the fire-ravaged North Bay.

With its unanimous 5-0 vote, the California Public Utilities Commission rejected San Diego Gas & Electric’s request for authority to hike rates to cover ?$379 million in uninsured damages it must pay stemming from three costly wildfires in 2007. Ahead of the meeting, commission staff recommended against granting the petition that both PG&E and Southern California Edison supported. Two of the agency’s administrative judges wrote a lengthy opinion outlining how they found the publicly traded utility’s control and management of its facilities before the wildfires to be “imprudent” and “unreasonable.”

“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 Liane Randolph said Thursday.

In the 2014 settlement that satisfied the bulk of 2,500 lawsuits, SDG&E paid $2.4 billion in compensation and legal fees but avoided admitting fault for the Witch, Guejito and Rice fires that left two dead, injured 40 firefighters and destroyed more than 1,300 San Diego County homes. To recoup about one-sixth of those costs, the utility company sought to raise rates by what it estimated would be $1.67 a month for the average customer over a six-year period.

The commission’s long-awaited vote had been shelved four times for further review before finally taking place Thursday. And some believe the decision has the possibility of setting a precedent that precludes public utilities from shirking similar financial obligations in future fire litigation. The cause of October’s Northern California firestorm that killed 24 and destroyed 5,130 homes in Sonoma County remains under investigation. The results of a Cal Fire inquiry could still be months away, and PG&E stated in November its preliminary review suggests that private power lines maintained by a third party might have been the origin. Still, lawsuits have already begun to stack up against the region’s utility company.

Four state lawmakers representing the Bay Area have said they will introduce a bill in January that would prevent electric utility companies found liable from having consumers shoulder wildfire costs. Sen. Mike McGuire, D-Healdsburg, is among those who plan to sponsor the legislation, and, despite calling Thursday’s decision “gratifying,” he said the bill will still be advanced forward.

“North Bay residents experienced unbearable tragedy over the past two months, and neighbors should never have to pay for a corporation’s potential negligence. It would be simply unconscionable,” said McGuire. “We believe there needs to be uniform statewide standards on this issue.”

This report includes information from the Associated Press. You can reach Staff Writer Kevin Fixler at 707-521-5336 or at kevin.fixler@pressdemocrat.com.