Accounting for the 2007 wildfires

Accounting for the 2007 wildfires

08 February 2012

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USA — San Diego Gas & Electric has paid out more than $1.5 billion to resolve claims related to the October 2007 wildfires, exhausting its insurance coverage and counter-claim settlements in the process. And yet the utility still is contending with hundreds of millions of dollars in fire related costs.

As of Sept. 30, 2011, SDG&E estimated liabilities from outstanding third-party claims against itself at just over $500 million, including litigation expenses.

The utility, with annual net profits of $369 million in 2010, is pursuing counter claims that could reduce how much it eventually seeks to recover from its customers.

Those counter-suits, expected costs recovered through federal approvals, would reduce SDG&E’s payout to an estimated $463 million. The utility expects to be authorized by the state to recover costs currently estimated at $463 million, according to its financial filings.

Parent company, Sempra Energy, told investors in November that it probably will be allowed to recover “substantially all reasonably incurred costs of resolving wildfire claims in excess of its liability insurance coverage and any amounts recovered from other potentially responsible parties … although such recovery will require future regulatory action.”

Briefings by SDG&E and consumer advocates are scheduled to begin next week. A decision by the commission, however, could be months away.

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