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Environment & Energy Report

Utility’s Costs for Wildfires Won’t Get High Court Review

Oct. 7, 2019, 1:35 PM

The Supreme Court won’t step into a multimillion-dollar dispute over an electric company’s role in California wildfires, a case with important implications as utilities increasingly foot big bills for their role in disasters.

The justices on Oct. 7 declined to take up an appeal from San Diego Gas & Electric Co., which said it should be able to raise electricity rates to offset payments it made to landowners after a series of infernos in 2007.

Other electric utilities have watched the case closely, concerned about their own liability for devastating wildfires in California and other states. PG&E Corp. filed for bankruptcy protection in January, facing skyrocketing potential costs for recent fires linked to its equipment.

SDG&E’s case centers on its agreement to pay $2.4 billion to settle claims from residents who alleged the company’s power lines were partially to blame for Southern California’s Witch, Guejito, and Rice fires in 2007. California’s inverse condemnation law allowed landowners to pursue claims without showing SDG&E acted negligently. The company has maintained that other factors, including wind and communication wires, were responsible for the blazes.

Much of SDG&E’s costs were covered by insurance and settlements with other parties. The California Public Utilities Commission refused to let the company collect the remaining $379 million from ratepayers. Lawyers for the utility said that decision amounted to an unconstitutional taking, violating the Fifth Amendment.

California officials countered that SDG&E voluntarily entered into the settlement and that it would be inappropriate for the Supreme Court to get involved in the issue as state officials consider updating the law that controls wildfire liability.

The case is San Diego Gas & Electric Co. v. California Public Utilities Comm’n, U.S., No. 18-1368, cert. denied 10/7/19.

To contact the reporter on this story: Ellen M. Gilmer in Washington at egilmer@bloombergenvironment.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergenvironment.com; Renee Schoof at rschoof@bloombergenvironment.com