Regulator: Utility ratepayers shouldn’t pay for fire settlements

San Diego Gas & Electric Co. should not be allowed to pass on to ratepayers $379 million in settlements paid to victims of a trio of fires in 2007, according to the state utilities regulator.

The California Public Utilities Commission filed a brief Friday in opposition to SDG&E's bid to have the U.S. Supreme Court consider the issue.

The high court petition is the latest effort in a decade-long fight by SDG&E to recover $379 million in uninsured wildfire settlements via rate hikes. San Diego Gas & Electric Co. v. California Public Utilities Commission, 18-1368 (U.S. filed April 30, 2019).

The commission, the 4th District Court of Appeal and state Supreme Court have all rejected SDG&E's effort.

The utility argues that forcing it to absorb the cost of the settlements amounts to an unfair takings in violation of the Fifth and 14th Amendments.

But in its opposition brief, the utilities commission said SDG&E is trying to "create a federal case out of thin air."

SDG&E's objection to state law liability doesn't implicate federal law in any way, the commission argued.

"And that state law is very much in flux: The standard for utility's wildfire liability has yet to be reviewed by the state Supreme Court and the issue of allocating wildfire liability is the subject of focused attention and activity by the state political branches," the commission added. "Petitioner's suggestion that this court should intervene and resolve that issue for California with a sweeping interpretation of the federal Constitution is unfounded."

The U.S. Supreme Court isn't the appropriate avenue to test the strict liability aspect of California's inverse condemnation law, the commission argued. The fight should be taken to the Legislature, which just enacted Assembly Bill 1054 that created a wildfire fund financed in part by utilities and ratepayers to pay claims arising from wildfires, the opposition noted.

The commission further said this case isn't about whether imposing strict liability for inverse condemnation upon a utility violates the Takings Clause, as SDG&E claims. If anything, the state court didn't impose liability on SDG&E; instead, SDG&E voluntarily settled its strict liability claims for $2.4 billion, the commission argued.

The U.S. Supreme Court is scheduled to make a decision in October.

Mike S. Aguirre, attorney for ratepayer Ruth Henricks who opposes SDG&E's petition, agreed with the commission.

"The commission has done a thorough and convincing job in their opposition and it should put to rest any chance the Supreme Court should hear the case," he said Monday.