Facts

Arterberry dba Farm ACW, a large avocado farm in Fallbrook, was a customer of San Diego Gas & Electric Co. In late 2000, the Farm's electric bill skyrocketed as a consequence of the state's energy crisis. The Farm chose to disconnect itself from the SDG&E grid and generate its own power from diesel generators, but did not obtain approval from or notify SDG&E of the connection of its generators to the SDG&E grid.

When SDG&E's rates came down, Farm wanted to resume receiving electric service from the utility, but based on safety and tariff issues, SDG&E did not reconnect the farm for nearly five years.

Farm sued for the higher cost of energy it had to supply itself, for damaged nursery trees, for lost profits, and for general and punitive damages.

PLAINTIFF'S CONTENTIONS:
Farm ACW claimed that SDG&E breached its utility duty of service under Public Utilities Code section 2106. SDG&E's alleged tariff issues were adjudicated before the California Public Utilities Commission, which ruled largely in the Farm's favor. Farm ACW disputed the utility's alleged safety issues, pointing out that after five years the utility reconnected the farm with no material changes in the equipment. Farm ACW pointed to evidence of willful, hostile motive on the part of key SDG&E employees.

DEFENDANT'S CONTENTIONS:
Defendant SDG&E asserted that Farm ACW was required to notify SDG&E of the connection of its generators, and that Farm's failure to provide engineering information regarding the connection made it impossible for SDG&E to ensure that Farm's generators could not back feed into the SDG&E grid, creating a life safety hazard to SDG&E employees. It claimed to have otherwise acted reasonably. SDG&E disputed the farm's claimed damages, particularly the lost profits.

Settlement Discussions

The parties conducted one full day and two half-days of mediation, with settlement reached on the last half-day. Case settled for $6.75 million two weeks before trial.

Damages

Farm ACW claimed damages for increased electricity costs of approximately $1 million and another $1 million for the damaged nursery trees. The plaintiff's damages expert was prepared to testify that the lost profits ranged, depending on assumptions, from $5.8 million to $8.9 million. The defendant's damages expert was prepared to testify that Farm's lost profits claim was speculative and otherwise disputed the existence of any damages except perhaps excess electricity costs of less than $1 million.

Other Information

FILING DATE: Jan. 2, 2007.