ENERGY: SDG&E increased powerline maintenance in years leading up to wildfires

ENERGY: SDG&E increased powerline maintenance in years leading up to wildfires

08 March 2012

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USA– San Diego Gas & Electric Co. increased its spending on powerline maintenance in the years leading up to wildfires in 2007, the utility said Thursday in response to an attorney who is suing the utility.

State investigators blamed SDG&E’s powerlines for causing the Witch Creek, Guejito and Rice fires in 2007 that killed two people and caused $395 million in combined damage in North San Diego County.

An expert for a plaintiff’s attorney said the utility had been reducing its expenditures on powerline maintenance in the years preceding the fires, according to a filings with the California Public Utilities Commission. But documentation from the Federal Energy Regulatory Commission provided to the North County Times by the utility showed that between 2003 and 2006, SDG&E increased its operating and maintenance spending on powerlines in three out of four years, rising 52 percent to $380 million in 2006.

The disagreement comes just as the commission considers a request by the utility to bill ratepayers, rather than shareholders, for wildfire expenses.

Leonardo Giacchino, an expert on regulatory economics for the plaintiffs, made the claim of reduced maintenance expenditures in documents filed with the state commission.

“Instead of increasing the budget, my review and analysis of documents that SDG&E submitted to the CPUC and the Federal Energy Regulatory Commission in proceedings during the years 2003 to 2008 reflect that it substantially reduced its actual expenses in overhead lines,” Giacchino said in the filing.

Mitch Wagner, the plaintiff attorney who hired Giacchino for his case, would not make the expert available for an interview, nor did he offer specific numbers as to how much SDG&E cut its powerline maintenance budget, saying he preferred to reveal the details in court. When alerted to SDG&E’s documents, he said, Giacchino “stands by that comment.”

Stephanie Donovan, a spokeswoman for SDG&E, said the utility had met its obligations.

“We don’t know where the plaintiffs’ lawyers and their consultant got their numbers, because they have not provided them, so we have no basis on which to evaluate their speculative claim that we decreased our spending on maintenance of our overhead lines,” she said in an email. “However, the numbers in the reports of our spending that we filed with the Federal Energy Regulatory Commission tell a much different story.”

In 2004, the utility raised total operations and maintenance spending on distribution and transmission lines by 28 percent, from $251 million to $321 million, according to the federal regulatory filings. In 2005 it spent 0.3 percent less than the year before, and in 2006 it spent 19 percent more than in 2005, bringing the total to $380 million.

While SDG&E has not been found negligent in causing the wildfires, there’s no dispute that sparks from powerlines and equipment owned by SDG&E and Cox Communications started the conflagrations.

Damages from wildfire-related lawsuits cost SDG&E more than $1 billion by the end of last year, exceeding the utility’s liability insurance coverage, SDG&E said in documents filed with the Securities and Exchange Commission. SDG&E expects to need an additional $563 million to cover outstanding damage claims.

Last week, SDG&E reported $431 million in profits for 2011, and the utility’s parent company, Sempra Energy, reported $1.1 billion in profits, both up from the year before.

In December, SDG&E injected a request for money from ratepayers, to cover the 2007 wildfires costs, into a larger proceeding started in August 2009, in which it asked the commission to create a special bank account that would cover uninsured wildfire expenses for future wildfires.

“From our perspective, it’s important that the CPUC maintain transparency,” said Wagner, the plaintiffs attorney. “And wait to decide SDG&E’s application until all the evidence is in concerning whether SDG&E was at fault and the degree of that fault. And that should necessarily be after all the jury trials.”

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